Apple Inc. (AAPL) - Get Report shares slipped lower Monday amid a series of questions over the fairness of the algorithm linked to its Apple Titanium credit card and a potential investigation by financial services authorities in the state of New York.
Apple, which launched Titanium earlier this year with Goldman Sachs GS, has been accused of allowing the card's algorithm to set credit limits for some applicants based on gender following a torrent of comments on Twitter over the weekend that included the voice of co-founder Steve Wozniak. The allegations prompted a response from Linda Lacewell, the Superintendent of New York State Department of Financial Services, who noted the so-called 'black box' problem of opaque nature of credit scoring and the lack of consumer visibility in the process of correcting errors.
"New York law prohibits discrimination against protected classes of individuals, which means an algorithm, as with any other method of determining creditworthiness, cannot result in disparate treatment for individuals based on age, creed, race, color, sex, sexual orientation, national origin, or other protected characteristics," said Linda Lacewell, the Superintendent of New York State Department of Financial Services, in a Saturday blog post.
"Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law," she added
Apple shares were marked 0.4% lower Monday at $258.93 each, but are still riding a year-to-date gain of more than 64% following stronger-than-expected second quarter earnings and the successful autumn launch of the iPhone 11.
Goldman Sachs shares, meanwhile, slipped 0.9% to $220.84 each, trimming their 2019 gain to around 33%.
The Apple Card controversy began late Thursday after a series of Tweets from David Heinemeier Hansson, the entrepreneur behind the Ruby on Rails web application framework, who claimed he was given a credit limit that was ten times that of his wife's, despite the pair filing joint tax returns.
His complaint was followed by a supporting Tweet from Apple co-founder Wozniak, who blamed both the bank and Apple for the alleged unfairness.
Goldman Sachs spokesperson Andrew Williams said in a late Sunday statement that the bank evaluates credit worthiness independently, based on factors such as "personal credit scores, how much debt you have, and how that debt has been managed."
"Based on these factors, it is possible for two family members to receive significantly different credit decisions," he said, before adding: "In all cases, we have and will not make decisions based on factors like gender."