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Apple Card program accused of discriminating against women

When Apple launched its Apple Card program, it was reported that the acceptance rate for the credit card was unusually high. The reason, according to CNBC, was that Apple wanted to approve as many of the more than 100 million iPhone users in the U.S. as possible. But it turns out that while the Apple Card approval process may be about as strict as a turnstile, not all approvals are made equal. Allegations have surfaced online that Goldman Sachs, the company in charge of issuing the Apple Card, has been offering significantly larger credit lines to men than it has to women.

Flags of apparent gender disparities were raised late last week when software developer David Heinemeier Hansson took to Twitter to complain about the card approval process. According to Hansson, he was offered a credit line 20 times higher than the one offered to his wife even though they file joint tax returns and he has a worse credit score. Steve Wozniak, the co-founder of Apple, replied to Hansson to note that the same thing happened to him and his wife. According to Wozniak, they share the same bank account, credit card accounts and don't have any separate assets between them. Despite this, he received 10 times the credit limit that his wife. "It's big tech in 2019," Wozniak said.

While Hannson's issue was eventually addressed by Apple and his wife's credit limit was boosted to be even with his own, the floodgates started to open. A number of people started to tweet about similar experiences they had with the Apple Card. One person claimed to have been offered the maximum credit limit with the lowest available APR (annual percentage rate) while his wife received a lower limit and higher APR even though she has a higher credit score. Another person reported receiving a much higher credit limit despite having a worse credit score and making less money than his wife.

Apple and Goldman Sachs have yet to provide any real insight into what the actual process is when it comes to credit approvals. Mic reached out to Apple for additional details but the company has not responded to request for comment. For now, the process operates as a black box: all of the information about your financial situation is tossed into it, an algorithm crunches those numbers and spits out a credit limit. What information is looked at, how it is processed and how it affects a person's credit allowance remains relatively vague. In a tweet issued over the weekend, Goldman Sachs provided the closest thing to a glimpse into the black box as we've gotten, though it provided little clarity. According to the company, it looks at a person's "credit worthiness," which includes credit score, debt and history of managing debts — things that are often already taken into account when calculating a person's credit score. The company claimed, "In all cases, we have not and will not make decisions based on factors like gender."

What Goldman Sachs' response to the situation ignores, of course, is that credit crd companies have historically discriminated against women. In the 1960s and 1970s, as more women were entering the work force, they were considered to be a significantly greater risk by credit issuers than men. Single women in particular faced challenges simply getting approved for a credit card. According to the Smithsonian, many banks required single, divorced or widowed women to bring a man with them to cosign for a credit card — they weren't permitted to get a line of credit on their own. It wasn't until the passage of the Equal Credit Opportunity Act of 1974 that women were finally granted similar access to credit. The law prevented creditors from discriminating against applicants on the basis of race, color, religion, national origin, sex or marital status.

Of course, that law hasn't solved the issue of discrimination. Here's the thing: financial institutions don't take into consideration a person's gender when calculating their credit worthiness. There is no automatic points deduction or credit cap placed on an applicant because they are a woman. However, the way the process is constructed systematically disadvantages women, even if there is no direct initiative that states "give less credit to women." The issue stems in part from the gender wage gap. According to the Washington Post, women on average earn 80.5 percent of what men do for the same full-time, year-round jobs. With less money available to them, women often have a slightly higher credit utilization level than men — meaning they use a higher percentage of the credit lines made available to them. Women also typically pay a half a percent higher interest rate than men because they are often considered higher credit risks, which puts them at a disadvantage when paying back their debts. Women already typically make smaller payments toward that credit, again likely because they generally have less actual cash available to them because of pay discrepancies. Because credit utilization and debt repayment are two of the primary factors considered when determining a person's credit score, women often have a lower score than men. This is a failure of a system that disadvantages women from the very start, and fails to realize that, in general, women are better at managing their money. A study conducted by Credit Sesame found that women carry less overall debt than men and typically have lower credit balances despite higher credit utilization — though none of this explains the anecdotal issues raised by the Apple Card, in which women have higher credit scores and earn more.

The response to the Apple Card fiasco has been rather swift. The New York Department of Financial Services, one of the biggest Wall Street regulators, announced over the weekend that it is starting a probe into Goldman Sachs' credit approval process to determine if its algorithms are discriminating against women when establishing credit limits. More than likely, it won't find anything. Apple and Goldman Sachs don't have to explicitly discriminate against women in order to come to a result that offers them lower lines of credit and higher interest rates. The entire economy, from how industries pay wages to how credit scores are calculated, is already designed to bake in that discrimination from the start.