Wells Fargo accused of online discrimination

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June 26, 2000
Web posted at: 10:43 a.m. EDT (1443 GMT)

by Ronna Abramson

(IDG) -- Less than 24 hours after a community group in Dallas accused Wells Fargo Bank of redlining on the Internet, controversial neighborhood descriptions disappeared from the bank's Web site Thursday. But the site's neighborhood search engine, the focus of charges that the San Francisco-based bank has been directing prospective homebuyers to regions according to race, continues to operate.

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"Wells Fargo Home Mortgage, Inc. has decided to disable our 'Community Search Service' link at www.wellsfargo.com/mortgage/ until we can determine if the editorial content is compatible with our demonstrated commitment to low- and moderate-income and minority homebuyers," the company said in a statement released late Thursday.

The announcement from Wells Fargo came a day after the Association of Community Organizations for Reform Now, a nonprofit group with 125,000 members, announced it was joining a lawsuit against the bank. Originally filed by Dallas attorney Michael Daniel against Norwest Bank, which later merged with Wells Fargo, the lawsuit was brought on behalf of Ruth Isaac, a Dallas resident and ACORN board member.

Daniel amended the lawsuit Wednesday to include charges that Wells Fargo perpetuated racial segregation in the Dallas area through the racial classifications on its Web site.

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"The descriptions are incredibly stereotypical of both minorities and whites," Daniel says. The site said residents in so-called distressed neighborhoods "splurge on fast-food and chicken-dinner restaurant takeout," according to ACORN. The site said residents in its "low income" lifestyle category are 86 percent African-American and rank high "for using pest-control services." Middle-class urban families are "top-ranked for owning four-plus televisions and for drinking wine coolers," another description stated. The site then used those lifestyle categories to describe various neighborhoods, identified by zip code.

The suit also charges that the Web site's "Community Calculator," a neighborhood search engine, steers prospective homebuyers to areas where their own race predominates. Liz Wolff, head organizer for Texas ACORN, likened the search engine to a real estate agent showing an African-American client houses in only predominantly black neighborhoods, violating federal housing laws. The Web site's lifestyle descriptions removed by Wells Fargo on Thursday added insult to injury, Wolff said.

Wells Fargo defended its lending practices in a statement released Thursday, calling itself the nation's leading lender to ethnic minorities and second-largest lender to low- and moderate-income homebuyers.

For years, minority groups have accused banks of refusing to issue loans in neighborhoods with large minority populations. But the Wells Fargo case is at least the second redlining suit this year with a new economy twist. In April, the Washington, D.C.-based Equal Rights Center filed a lawsuit against Internet delivery company Kozmo.com, charging it with redlining certain minority neighborhoods in the six cities it serves.

The cases illustrate that although the Internet may hold the potential to become a color-blind medium, it is not immune to discrimination, said David Berenbaum, executive director of the Equal Rights Center, a nonprofit civil rights group.

"The reality is, we're dealing with some very institutionalized forms of discrimination," Berenbaum says. "What we're beginning to see at the ERC is that in real estate, employment and public accommodations, some of the traditional issues that we've dealt with for years in society are creeping into cyberspace."

Wells Fargo noted that its community-search service is provided through a link to an independently owned and operated site, Homefair.com, which is licensed to more than 2,000 other Web properties. Homefair, a subsidiary of Homestore.com (HOMS) , draws information from another company, CACI Marketing Systems. Representatives at Homestore and CACI Marketing could not be reached to comment.

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