Apple Card Gender Bias? Don't Assume its Discrimination, Experts Warn

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Francesco Carta Fotografo/Getty; Card: Apple

There may be a lot less than meets the eye to social media charges of gender discrimination against the Apple Card and its joint partners, Apple Inc. and Goldman Sachs—charges that went viral this weekend and continue to gain traction. Although the secret nature of credit card algorithms at the heart of the dispute make it impossible to know for sure, experts believe less nefarious factors likely explain why the wives of two tech titans were given far lower credit limits than their husbands—and that the issues involved are not unique to Apple and Goldman Sachs but rather are common throughout the credit card industry.

"Gender inequality is a huge issue but it's not clear that is what's at play here," says Taylor Tepper, a credit card analyst with Wirecutter, the product review site. "Too little is known about the particulars of the people involved or the factors Apple and Goldman used in the credit-decision process to draw any conclusion that's not steeped in Twitter outrage."

The controversy started over the weekend when tech entrepreneur David Heinemeier Hansson, creator of the web-development tool Ruby on Rails and co-founder of the software development firm Basecamp, fired off a series of tweets voicing outrage over the fact that he'd been given a credit limit on his Apple Card that was 20 times as big as the credit line his wife got on her card—even though she has a higher credit score and the couple file "joint tax returns, live in a community-property state and have been married a long time."

Appeals to customer service representatives for an explanation and a higher credit limit went nowhere, Hansson fumed, until he went public with his complaint. Apple then gave his wife the "VIP bump" to match his credit limit, with no further questions asked.

Apple co-founder Steve Wozniak was among the many who replied to Hansson's tweets, saying he'd had a similar experience. He'd gotten 10 times the credit limit on his Apple Card as his wife had received, he said, even though "We have no separate bank or credit card accounts or any separate assets." The resulting Twitter blow-up even prompted the New York Department of Financial Services to open an investigation to determine whether any state laws had been violated. On CNBC's Squawk Box on Monday, Linda Lacewell, the agency's superintendent, said, "States have got to be there to make sure that these kinds of discriminatory policies are not being tolerated."

Goldman Sachs, in turn, has denied any wrongdoing, stating, "We have not and will not make decisions based on factors like gender."

In common practice, the factors that Hansson and Wozniak mentioned as reasons that their wives should have gotten higher credit limits are not among the factors that credit card issuers typically use to determine creditworthiness, experts say. "Filing jointly on your taxes doesn't matter and you generally don't list your assets or net worth on an application either," says Matt Schulz, chief industry analyst at Comparecards.com. "For the most part, it's about income, spending habits and credit history. That is, it's more about what you're bringing in than what you have or what you're worth."

A wife who is primarily a homemaker or who earns a lot less than her husband and lists only her own income on a card application may end up with a much lower credit limit even if she has an excellent credit score, Schulz points out. A number of the negative Apple Card tweets alluded to this as an example of how the algorithm might inadvertently discriminate against women, who are more likely to make less money or not work outside the home than men.

But under a rule change from the Consumer Financial Protection Bureau in 2013, spouses can include their partner's income when applying for a credit card so that this inadvertent bias doesn't occur. And, in fact, the Apple Card application clearly lists "shared income from someone else that is regularly deposited into your individual account or into a joint account"—in other words, money you have ready access to—as one of half dozen examples of income that you should include for consideration.

How much you regularly spend on your cards is also a key consideration in setting credit limits. "Someone with an excellent credit score and a high income who doesn't spend a ton of money on their cards would be less likely to get a sky-high credit limit than someone with a similar score and income who charges a lot every month," Schulz notes. "Someone who, say, in the course of running a business, might spend $20,000 a month on their credit card, all else being equal, would get a significantly higher credit limit than someone who doesn't charge nearly as much."

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Jennifer Bailey, vice president of Apple Pay, speaks during an Apple product launch event at the Steve Jobs Theater at Apple Park on March 25, 2019 in Cupertino, California. Controversy broke out over the weekend when it was revealed the wives of two tech titans had smaller credit limits on their Apple Cards than their husbands. Getty Images

Credit expert Michelle Black of CreditWriter.com is sympathetic to the Hansson's feelings of outrage, but also doubts that gender discrimination occurred, especially bias that was blatant or intentional. "I can understand why Hansson and his wife would be upset about the vastly different credit limits issued and why this looks bad on the surface," she says. "But the only way to determine if real gender discrimination occurred would be to compare apples to apples. You would have to review the Apple Card applications of two spouses side by side to see if they contained different information. And, then, you'd need a bigger sample size of borrowers than just two to see if there was a trend."

What all sides agree on: The lack of transparency about the factors that go into the credit card decisions—not just from Apple and Goldman Sachs but from all issuers—makes it tough to really know how eligibility, credit limits, financing rates, and other cardholder decisions are made. Which means it's challenging from the outside looking in to accurately assess whether discrimination, even inadvertent, is involved.

"We don't know exactly what credit card issuers take into account because it's proprietary information—the black box problem," Tepper says. Lacewell at the New York Department of Financial Services, expressed a similar sentiment on CNBC's Squawk Box, noting, "It's a black box for consumers, it's a black box for regulators, and consumers are entitled to know how these decisions are being made that affect their daily lives."

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Walker and Walker/Getty

Whether Lacewell's investigation will do anything to change that remains to be seen. But in the meantime, there are some simple steps you can take right now to ensure you get the credit line you're entitled to for your financial situation. Experts advise the following:

  • Pump it up. When you apply for a new card, be sure to include income from all of the sources that are allowed, including your spouse's salary as well as your own, Tepper says. Other income sources allowed by the Apple Card and many other issuers include self-employment and retirement income, interest and dividends from investments, and public assistance.
  • Ask for more. Roughly eight out of 10 cardholders who asked for a higher credit limit in the past year were successful, with an average increase of $1,500, according to a 2019 CompareCards study. Yet only 28 percent of cardholders made the request. "If you're not happy with what your credit limit is, you have the power to negotiate," says Schulz. "It's not just millionaire tech founders who can do this."
  • Share the wealth. If your spouse, for whatever reason, qualifies for a much high credit limit than you do, or vice versa, you can often gain access to his or her additional spending power by becoming an authorized user on the account, Schulz suggests. Or you might apply for one card as a joint account, if the lender includes that as an option.

Experts also caution not to draw too many conclusions about the Apple Card or the potentially discriminatory nature of credit card algorithms from this particular Twitter brouhaha, since the experiences of the very wealthy cardholders involved may not be entirely pertinent to the average consumer. "This is a very specific situation where you're dealing with folks with such high incomes who are living in a space that most of us don't live in," says Schulz.

Even Jamie Heinemeier Hansson, the wife of the tech entrepreneur whose lower credit limit sparked the controversy, acknowledged their very different financial circumstances and the role that may have played in her getting a bigger credit line less than a day after her husband complained on social media. In a statement she said, "This is not merely a story about sexism and credit algorithm black boxes, but about how rich people nearly always get their way."

"Justice for another rich white woman," she added, "is not justice at all."

Apple Card Gender Bias? Don't Assume its Discrimination, Experts Warn