Gender and the Law Prof Blog

Editor: Tracy A. Thomas
University of Akron School of Law

Wednesday, November 27, 2019

How a Credit Card Can be Sexist

Can a Credit Card be Sexist?

The Apple Card controversy illustrates how a history of bias in credit lending, coupled with discriminatory AI algorithms, hurt women

{T]he New York Department of Financial Services, prompted by Hansson’s tweets, announced it would open an investigation into whether Goldman Sachs discriminates on the basis of sex in the way it sets its credit limits. “Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law,” a spokeswoman for the agency said in a statement Saturday.

 

Apple has deferred to Goldman Sachs for requests for comment. Andrew Williams, a spokesperson for the bank, said in a statement that Apple Card applications are “evaluated independently.” The company evaluates an individual’s income and an individual’s creditworthiness, which “includes factors like personal credit scores, how much personal debt you have, and how that debt is managed.”

 

“We have not and will not make decisions based on factors like gender,” Williams said. He added that the company is looking to enable joint family accounts in the future.***

 

The story illustrates how potential biases in credit lending manifest: On the one hand, women have long lacked credit parity with men — women only received legal protection from credit discrimination in the 1970s. But today, with the rise of AI algorithms determining everything from credit lending to hiring to advertising, women face another potential source of discrimination.

 

“These algorithms are trained on data that are a reflection of the world we live in or the world we lived in in the past,” says Meredith Whittaker, a research scientist at New York University and co-founder of the university’s AI Now Institute. “This data irreducibly imprints these histories of discrimination, these patterns of bias.”

 

That discrimination is “intersectional,” Whittaker says, and disproportionately hurts women of color.

***

 

Well into the 20th century, women struggled to get approved for credit cards. As the Smithsonian reports, any woman looking to open a card was subject to discriminatory questions — whether she was married, if she planned to have children. Many banks required single, divorced or widowed women to bring a man along with them to cosign for a card.

 

It wasn’t until 1974 that the Equal Credit Opportunity Act made it illegal for any creditor to take gender, race, religion or national origin into account. But discrepancies still exist today. An analysis from the Federal Reserve found that single women under 40 had lower credit scores than comparable single men, which reflected that single women had “more intensive use of credit” — an outcome, the study author notes, that may reflect economic circumstances, employment and “men and women being potentially treated differently by the credit market and institutions.” As many note, women’s lower credit is also tied to the gender pay gap.

https://lawprofessors.typepad.com/gender_law/2019/11/how-a-credit-card-can-be-sexist.html

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