“Created by Apple, not a bank” was Apple’s moniker as it tried to popularize the new credit card; this undoubtedly caused friction with Apple’s new partner. Perhaps the company should have involved a bank.
First the industry saw an issue where the shiny new titanium Apple card was vulnerable to discoloration and scratching, which Apple countered with special instructions for caring for the credit card.
You never needed to take such care with your trusty-old American Express or Chase Freedom credit cards. I’ve carried those cards in my wallet, bottom of my sneaker, in a lunch bag, in the front pocket of a pair of blue jeans, thrown inside of my Ogio knapsack, and even in a fishing tackle box without issue. Starting out with a pretty-but-unreliable-card is only part of the bad mojo.
Here is another problem we haven’t seen at significant creditors.
According to some pretty harsh tweets, there are claims of unfair lending practices. In one example, discussed in the New York Times, a California CTO, and author of an NYT bestseller, reported that his card came with a credit line 20 times (that’s 2000%) higher than his wife’s.
And it wasn’t just the California CTO. Steve Wozniak, Steve Jobs’ original Apple partner, had some issues in his household, where his net worth exceeds $100 million in a community property state. The NYT reported:
- On Saturday, Wozniak chimed in with a similar experience, saying he got ten times more credit on the card, compared with his wife.
- “We have no separate bank or credit card accounts or any separate assets,” Wozniak said on Twitter, in reply to Hansson’s original tweet.
- “Hard to get to a human for a correction, though. It’s big tech in 2019.”
In the Empire state, regulators responded with a tweet, by the NYS Department of Financial Services:
- If you have been subjected to discrimination, step forward and email us at firstname.lastname@example.org. We also invite experts and members of the tech community to reach out to us at email@example.com.
Back to the New York Times:
- New York’s Department of Financial Services said it was beginning an inquiry into Goldman Sachs’ credit card practices.
- “New York law prohibits discrimination against protected classes of individuals,” Linda Lacewell, the superintendent of the New York State Department of Financial Services, wrote in a blog post. ( http://bit.ly/2Ny1TUA )
- That barred an algorithm, like any other method of determining creditworthiness, from disparate treatment based on individual characteristics such as age, creed, race, color, sex, sexual orientation, national origin, among others, she added.
It was only last week that Apple Card’s issuing bank David Solomon bragged “…we believe [this] is the most successful credit card launch ever.” Rickety (but pretty) credit cards. Now sexist claims in underwriting. What is next?
“Created by Apple, not a bank” was not the way to enter the credit card market. Next time, bring your banker.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group