Discover Bank to pay up in DACA loans suit
Discover Bank has agreed not to discriminate against DACA recipients in its lending practices and will pay $979,500 to settle a Bay Area suit by migrants who said the bank denied them loans because they were under 16 and undocumented when they entered the United States.
Immigrant-rights groups announced the settlement Monday after it was approved by U.S. District Judge Susan Illston of San Francisco. Discover Bank, a major lender that operates online, denied discriminating against wouldbe borrowers based on their immigration status but has now agreed to provide equal treatment to participants in the Deferred Action for Childhood Arrivals program.
The suit, filed in 2020, said the bank required borrowers either to be U.S. citizens or to have their loan applications cosigned by a U.S. citizen or legal permanent resident. About 17,000 DACA recipients who have been denied loans since July 2018 will be eligible for compensation, the plaintiffs said in their latest court filing — up to $2,500 apiece for those living in California, under the state’s Unruh Civil Rights Act, and up to $250 for residents of other states.
“The denial of access to credit seriously restricts their ability to pay for college, buy homes, and otherwise promote their financial stability,” plaintiffs’ attorney Ossai Miazad said in a statement. The Mexican American Legal Defense and Educational Fund also took part in the case.
Discover Bank did not respond to a request for comment.
DACA was established by President Barack Obama in 2012 and is open to those who entered the United States before age 16, have attended high school or served in the military, and have not committed any serious crimes. The nearly 600,000 current DACA participants are protected from deportation and can obtain work permits.
President Donald Trump sought to end DACA, arguing that Obama had lacked authority to create it, but the Supreme Court upheld the program in June 2020. A federal judge in Texas, however, barred DACA from accepting new applicants last July, saying the program needed approval from Congress, and the issue may be headed back to the Supreme Court.
The lead plaintiff in the class-action suit, Iliana Perez of San Francisco, initially obtained a $15,000 student loan from another bank, but the loan was later acquired by Discover. She applied for refinancing in 2018 and was turned down after disclosing her undocumented status to a bank representative, who told her she “should not have been granted the loan in the first place,” the plaintiffs said in a court filing. She is now executive director of the advocacy group Immigrants Rising and a legal U.S. resident.
Discover Bank sought to remove Perez’s case from court and submit it to an arbitrator, citing a provision of its loan contracts in which borrowers agree to take loan disputes to arbitration. But Illston ruled against the bank in 2022, saying Perez had never agreed to take a discrimination claim to arbitration. The 9th U.S. Circuit Court of Appeals upheld her ruling last July, keeping the case in court and clearing the way for the settlement.