Regulator Opens Probe Into Apple Card Over Discrimination

A US regulator confirmed it has begun an investigation into the way Goldman Sachs sets credit limits for the Apple Card after a tech entrepreneur said he had been given a limit 20 times that of his wife.

The controversy emerged even as a rise in its share price returned Apple to the status of the world’s most valuable listed company, at some $1.16tn (£90bn).

New York’s Department of Financial Services (DFS) said it had contacted Goldman and that any discrimination, whether intentional or not, “violates New York law”.

Beginning on Thursday, David Heinemeier Hansson, creator of the Ruby on Rails web application framework, issued a series of tweets criticising the Apple Card for giving his wife a dramatically lower credit limit, Bloomberg reported on Saturday.

Machine learning

Hansson said Goldman’s algorithm had evidently discriminated against his wife, whose credit rating he said is better than his.

“It does not matter what the intent of individual Apple reps are, it matters what the algorithm they’ve placed their complete faith in does,” Hansson said in a tweet.  “And what it does is discriminate.”

His wife’s limit was raised after he raised the issue, Hansson said.

Apple co-founder Steve Wozniak said his wife had been given a limit 10 times less than his on the Apple Card.

The couple have no separate bank accounts, credit cards or assets of any kind, and have the same limits on their other cards, Wozniak tweeted in reply to Hansson.

The DFS said it would be “conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex”.

“Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law.”

“We know the question of discrimination in algorithmic decisioning also extends to other areas of financial services,” added Linda Lacewell, the superintendent of the New York State Department of Financial Services, in a blog post.

Services push

The Apple Card, issued in August, is the first credit card for Goldman, which is primarily an investment bank.

The bank said in a statement that applicants were evaluated independently according to factors such as income and creditworthiness, taking into account personal credit scores and personal debt.

“We have not, and will not, make decisions based on factors like gender,” the bank said.

Apple did not immediately respond to a request for comment.

The Apple Card is part of the company’s expansion into services after years of relying on iPhone sales for its revenues.  The company this month launched a subscription television service as part of that drive.

Apple’s services arm saw $46 billion in revenues in the year to September, up from $20bn for all of 2015.

That growth has helped push Apple’s share price higher this year, in spite of declining profit margins and revenues, to close at a record high on Friday that values the company at $1.16tn.

The valuation pushed Apple ahead of Microsoft and returned it to the status of the world’s most valuable listed firm.

Apple’s share price is up 65 percent so far this year, three times the gain for the S&P 500 index, while Microsoft is up 44 percent.