Upstart automated consumer lending: discrimination

Published: October 2022
Updated: November 2022

Law firm Relman Colfax has found that a loan decision model deployed by San Mateo-based AI consumer lender Upstart produced 'significant disparities' in how often loans were made to Black and non-Hispanic white borrowers.

Upstart assesses and predicts creditworthiness using so-called 'Alternative Data', including a person's educational and employment history. The company says its approach is more inclusive than the underwriting methods used by many banks.

Critical response

The AI lender claims its algorithmic lending model approved 30% more Black borrowers than traditional models in 2020. However, academic research indicates discriminatory pricing exists in both traditional and fintech lending.


In July 2022, Upstart directors were hit by a class-action investor lawsuit claiming it made false and misleading statements about its business, operations, and prospects.

The company went public in 2020.

Operator: Upstart Holdings; Multiple
Upstart Holdings
Sector: Banking/Financial services
Assess creditworthiness
Machine learning
Bias/discrimination - race, ethnicity, education, employment
Transparency: Governance; Black box; Marketing - misleading

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