Goldman Sachs cleared of Apple Card discrimination claims
Goldman Sachs did not break any fair lending laws, an investigation into discriminatory allegations against the Apple Card underwriter reveals, but a regulator adds those same rules need to be strengthened and modernized.
In 2019, Goldman Sachs was accused of discriminatory behavior, where some Apple Card customers claimed they received longer lines of credit while others did not. The allegations claimed some of the discrepancies were gender-based, but Goldman Sachs insisted they were based on creditworthiness.
The New York State Department of Financial Services issued a report on an investigation into the matter regarding Apple Card. It summarized an investigation that reviewed several thousand pages of records, interviews with witnesses and applicants, and analysis of approximately 400,000 New York State Apple Card applications, and did not find any evidence of unlawful discrimination under fair lending law.
While customers complained spouses should have received comparable Apple Card offers due to sharing bank accounts and assets, underwriters aren't required to do so, and can consider other factors.
On the subject of gender, the Department's data analysis found that applications from men and women with similar characteristics generally had similar outcomes. Of those who complained about the outcomes, the decisions were found to be explainable, lawful, and consistent with the bank's credit policy.
Even so, the Department found that "deficiencies in customer service and a perceived lack of transparency undermined consumer trust in fair credit decisions."
Goldman Sachs and Apple are noted in the report to have taken steps to improve transparency, as well as implementing a program to assist denied applicants to improve their credit score.
At the same time, Superintendent of Financial Services Linda A. Lacewell points out "While we found no fair lending violations, our inquiry stands as a reminder of disparities in access to credit that continue nearly 50 years after the passage of the Equal Credit Opportunity Act (ECOA).
The current laws and regulations barring discrimination in lending "are in need of strengthening and modernization to improve access to credit," said Lacewell. "Consumer frustration with the Apple Card policy of not permitting an account holder to add an authorized user drew attention to the following: a person who relies on a spouse's access to credit, and only accesses those accounts as an authorized user, may incorrectly believe they have the same credit profile as the spouse."
Apple is believed to be in the process of introducing joint Apple Card account functionality, which would allow multiple users of an Apple Card account.
The Superintendent continued "This is one part of a broader discussion we must have about equal credit access."
The allegations were initially raised publicly by David Hansson, the creator of Ruby on Rails, who posted to Twitter that Apple Card was a "sexist program." After insisting he had filed joint tax returns, lived in a "community property state," and had been "married for a long time," Hansson asserted "Apple's black box algorithm thinks I deserve 20x the credit limit" of his wife.
Hansson is a co-founder and CTO of Basecamp and a developer of Hey, an email app that had its updates blocked by the App Store review process in 2020. Another Twitter complaint by Hansson along with other responses prompted Apple to re-examine the situation.
In 2019, Goldman Sachs was accused of discriminatory behavior, where some Apple Card customers claimed they received longer lines of credit while others did not. The allegations claimed some of the discrepancies were gender-based, but Goldman Sachs insisted they were based on creditworthiness.
The New York State Department of Financial Services issued a report on an investigation into the matter regarding Apple Card. It summarized an investigation that reviewed several thousand pages of records, interviews with witnesses and applicants, and analysis of approximately 400,000 New York State Apple Card applications, and did not find any evidence of unlawful discrimination under fair lending law.
While customers complained spouses should have received comparable Apple Card offers due to sharing bank accounts and assets, underwriters aren't required to do so, and can consider other factors.
On the subject of gender, the Department's data analysis found that applications from men and women with similar characteristics generally had similar outcomes. Of those who complained about the outcomes, the decisions were found to be explainable, lawful, and consistent with the bank's credit policy.
Even so, the Department found that "deficiencies in customer service and a perceived lack of transparency undermined consumer trust in fair credit decisions."
Goldman Sachs and Apple are noted in the report to have taken steps to improve transparency, as well as implementing a program to assist denied applicants to improve their credit score.
At the same time, Superintendent of Financial Services Linda A. Lacewell points out "While we found no fair lending violations, our inquiry stands as a reminder of disparities in access to credit that continue nearly 50 years after the passage of the Equal Credit Opportunity Act (ECOA).
The current laws and regulations barring discrimination in lending "are in need of strengthening and modernization to improve access to credit," said Lacewell. "Consumer frustration with the Apple Card policy of not permitting an account holder to add an authorized user drew attention to the following: a person who relies on a spouse's access to credit, and only accesses those accounts as an authorized user, may incorrectly believe they have the same credit profile as the spouse."
Apple is believed to be in the process of introducing joint Apple Card account functionality, which would allow multiple users of an Apple Card account.
The Superintendent continued "This is one part of a broader discussion we must have about equal credit access."
The allegations were initially raised publicly by David Hansson, the creator of Ruby on Rails, who posted to Twitter that Apple Card was a "sexist program." After insisting he had filed joint tax returns, lived in a "community property state," and had been "married for a long time," Hansson asserted "Apple's black box algorithm thinks I deserve 20x the credit limit" of his wife.
Hansson is a co-founder and CTO of Basecamp and a developer of Hey, an email app that had its updates blocked by the App Store review process in 2020. Another Twitter complaint by Hansson along with other responses prompted Apple to re-examine the situation.
Comments
The conclusion that Goldman Sachs didn't break any law is one thing, but the other thing is what should the law be to address this? What is fair? What is woke? I think in the end the simplest solution is to leave the decision to the banks, and people can choose whichever bank gives them what they need. If people want a bank that divides credit limits in half, then they can choose such a bank.
But one thing's for sure: if a married couple has a combined credit limit of $X, they shouldn't both be allowed to run their credit up to $X. It's their combined limit that's $X, so that is either divided by 2 for each of them, or one person gets $X-n and the other gets $n.
Ultimately, this is an issue of liability. If one person in a couple does all the earning, the bank gives each person a $20k limit, and the couple splits, what then? Couples break up all the time. The banks have statistical data (effectively actuarial tables) on the risk of breakup and how that affects the risk of default on the line of credit. If the couple splits and the person liable for $20k of debt no longer has income, they default, and bankruptcy court says that money is just gone (a simplification, but not too far from what happens).
I can see two solutions to this. Either keep finances separate and split paychecks into multiple bank accounts, or form an LLC (which is legally a single entity) to control the shared accounts and get shared credit under that. The LLC path is obviously gross for a lot of reasons, not least of which is business banks generally don't care about credit scores, they care about cash flow. Until you can demonstrate a lot of cash flow, they aren't going to lend to an LLC.
David Hansson could have made enquires with the bank, an independent credit bureau or even a totally different provider and come up with the correct answer to the disparity in credit limits. Instead he ran to the public with false accusations and simultaneously outted his wife’s lack of credit worthiness. Stellar move bozo.
It’s not surprising to see that his name is attached to other shaky apple slander campaigns.
https://www.consumerfinance.gov/about-us/newsroom/the-cfpb-amends-card-act-rule-to-make-it-easier-for-stay-at-home-spouses-and-partners-to-get-credit-cards/ <--
The fact that you don't realize this shows you are missing the point. The point is that in a marriage the credit card issuer can issue a credit limit that is combined for the two members of the marriage and assign it all to a single person. The second person won't be eligible for any more credit since it was all assigned to the first one. This is perfectly legal. I don't know how much clearer I can make it. You need to ask yourself how credit limits can be divided between two people in a marriage. Once you think about this, you will understand the problem.