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Apple CEO Tim Cook introduces Apple Card during a launch event at Apple headquarters on March 25, 2019, in Cupertino, California Image Credit: AFP

Apple Inc (AAPL.O) co-founder Steve Wozniak joined in the online debate over accusations of gender discrimination by the algorithm behind the iPhone maker’s credit card, fuelling scrutiny of the newly launched Apple Card.

The criticism started on Thursday, after entrepreneur David Heinemeier Hansson railed against the Apple Card in a series of Twitter posts, saying it gave him 20 times the credit limit his wife received.

The much anticipated titanium credit card, part of a broader effort by Apple to derive greater revenue from services after years of heavy reliance on iPhone sales, was launched in August, in partnership with Goldman Sachs Group Inc (GS.N).

In an email, Goldman said Apple Card applicants were evaluated independently, according to income and creditworthiness, taking into account factors such as personal credit scores and personal debt.

It was possible for two family members to receive significantly different credit decisions, the bank said, but added, “We have not, and will not, make decisions based on factors like gender.”

Hansson, who is the creator of web-application framework Ruby on Rails, did not disclose any specific income-related information for himself or his wife but tweeted that they filed joint tax returns and that his wife had a better credit score.

Goldman Sachs Probe

A Wall Street regulator is opening a probe into Goldman Sachs Group Inc.’s credit card practices after a viral tweet from a tech entrepreneur alleged gender discrimination in the new Apple Card’s algorithms when determining credit limits.

“The department will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex,” said a spokesman for Linda Lacewell, the superintendent of the New York Department of Financial Services. “Any algorithm, that intentionally or not results in discriminatory treatment of women or any other protected class of people violates New York law.”

Apple Card only offers individual accounts and it is possible for two family members to receive significantly different credit decisions, a Goldman spokesman said. “In all cases, we have not and will not make decisions based on factors like gender,” he said.

Hansson said Goldman’s response doesn’t explain what happened after he started airing his issues on social media.

“As soon as this became a PR issue, they immediately bumped up her credit limit without asking for any additional documentation,” he said in an interview. “My belief isn’t there was some nefarious person wanting to discriminate. But that doesn’t matter. How do you know there isn’t an issue with the machine-learning algo when no one can explain how this decision was made?”

This is the second such action from the regulator in recent weeks. NY DFS opened a probe against health care giant UnitedHealth Group Inc. after a study found an algorithm favored white patients over black patients.

Goldman’s growing ambitions for main street is bringing increased scrutiny and a new set of challenges it hasn’t faced previously. The Apple Card is a joint venture between Apple Inc. and the New York-based bank, which is responsible for all the credit decisions on the card. The card was rolled out earlier this year and executives at both firms hailed it as the most successful launch ever.

Traditional lenders are upping their use of machines to decide who gets how much credit as part of a strategy to reduce costs and boost loan applications. Meanwhile, technology companies are moving in on the financial services industry’s turf, with businesses such as Amazon, Apple, Facebook and Google offering loans and payment options.

Black-Box Algorithms

Hansson said his posts had led to an internal review and that he was hopeful it would spark a conversation about black-box algorithms and the inherent biases in those systems.

The 40-year-old Dane is known for being the creator of the popular programming tool Ruby on Rails. He’s a partner at Basecamp, a web-based software development firm, and also known to regularly take part in automobile endurance races, including the 24 hours of Le Mans in France.

“Goldman and Apple are delegating credit assessment to a black box,” Hansson said. “It’s not a gender-discrimination intent but it is a gender-discrimination outcome.”

The use of algorithms by lenders in credit decisions has drawn scrutiny in Congress. In June, the House Financial Services Committee heard about examples of algorithmic decision-making where researchers have found instances of bias targeting specific groups even when there was no intent to discriminate.

Some lawmakers already are demanding a federal response. Sen. Elizabeth Warren, a Massachusetts Democrat and contender to challenge President Donald Trump in the 2020 presidential election, told federal regulators in June that the government “will have to take action to ensure that anti-discrimination laws keep up with innovation.