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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.