SAN FRANCISCO – A class-action lawsuit challenging a national bank’s policy of denying loans to DACA recipients and other immigrants because of their immigration status is being expanded, according to documents filed in federal court last week.
MALDEF (Mexican American Legal Defense and Educational Fund) amended its complaint against Discover Bank to include a Northern California man represented by Outten & Golden LLC. The man was denied a home equity loan because of his status as a recipient of DACA (Deferred Action for Childhood Arrivals) in violation of state and federal civil rights laws, according to the amended complaint. The two initial plaintiffs in the suit were denied student loans and other related financial services by the bank for the same reason, according to the lawsuit.
“It is not only bad business practice, but unlawful under federal statute, for Discover Bank to discriminate against DACA recipients in its consumer banking operations,” said Thomas A. Saenz, MALDEF president and general counsel. “We look forward to resolving this case so that DACA recipients nationwide can receive fair treatment from Discover Bank.”
In July 2020, MALDEF filed a class-action suit against Discover in California state court challenging the bank’s denial of student loans and other related services to applicants who are not U.S. citizens or permanent residents. Six months later, the lawsuit was expanded to include class members who reside in states other than California, and a claim that the bank’s policy of assessing loan applicants based solely on their immigration status, instead of their credit-worthiness, violates federal law was added.
The lawsuit alleges that Discover Bank violated federal and state civil rights laws, including 42 U.S.C. § 1981 and the California Unruh Civil Rights Act, which prohibit discrimination based on alienage and immigration status.
“Policies that deny equal access to credit to Dreamers who have lived in the U.S. since they were children and are setting out to finance their education, to buy homes and start businesses, are incredibly destructive to their ability to live and thrive in the U.S.,” said Ossai Miazad of Outten & Golden who is counsel for one of the plaintiffs.
The three DACA recipients representing the class are:
• Josue Jimenez-Magaña, of Modesto, called Discover Bank’s customer service to inquire about applying for a home equity line of credit (HELOC) in March. Jimenez-Magaña, a registered nurse who worked with COVID-19 patients, was looking for financing to start a business. During the call, after giving the bank representative his credit information, the bank representative asked Jimenez-Magaña about his citizenship status. When Jimenez-Magaña told the bank representative he was a DACA recipient, he was told the bank did not extend credit or loan money to non-legal permanent residents.
• Iliana Perez of San Francisco secured a $15,000 student loan in 2010 with The Student Loan Corporation, a subsidiary of Discover Bank. When she applied to refinance the loan at a lower rate with the bank in 2018, the company informed her it would not be able to grant her request because of her immigration status.
• Flavio Guzman Magaña, of Los Angeles, applied for a $35,500 loan to attend grad school in 2016. Because he is a DACA recipient, Discover Bank required him to apply for his loan as an international student and with a U.S. citizen or permanent resident co-signer, a condition that is not required of U.S. citizen or permanent resident applicants.
In all cases, Discover Bank rejected each plaintiff’s application based on their immigration status and not on their credit-worthiness, according to the complaint.
“Discover Bank’s discriminatory lending policies are not limited to student loans,” said Deylin Thrift-Viveros, MALDEF staff attorney. “We are looking forward to continuing with Josue as a plaintiff to ensure that economic opportunity is available to all applicants for Discover Bank’s products, regardless of their immigration status.”
Read the amended complaint HERE.