Online Lenders Charge Minority Borrowers Higher Rates, Just Like Humans Do

Robert Bartlett quoted in Hartford Courant, November 20, 2018

“Even controlling for credit worthiness, we see discriminatory effects in the rates at which borrowers obtain mortgages,” Bartlett said.

Researchers said the racial disparities could result from algorithms that use machine learning and big data to charge higher interest rates to borrowers who may be less likely to shop around. For example, the algorithms may take into account a borrower’s neighborhood — noting who lives in banking deserts — or other characteristics such as their high school or college. The consumers least likely to comparison shop also happen to be black or Latino.