Judges Order Approvals of Credit Union-DACA Class Action Lawsuit Settlements

Federal judges approved the settlements of class action lawsuits against two credit unions for allegedly violating state and federal discrimination laws when they denied loans to Dreamers – persons brought to the U.S. as minors who are not lawful permanent citizens.

A California judge ordered the preliminary approval of a class action lawsuit last week involving the $18.4 billion Alliant Credit Union for allegedly violating state and federal discrimination laws in 2021 when it denied a car loan for a member, Yuliana Camacho, because of her immigration status as a recipient of Deferred Action for Childhood Arrivals (DACA).

What’s more, in a separate DACA class action lawsuit initiated by an employee of the $1 billion Valley First Credit Union in Modesto, Calif., a federal judge in Fresno ordered the final approval of a settlement last month, according to court filings. Both credit unions, which disputed the lawsuits’ allegations and denied any wrongdoing, decided to negotiate settlements to avoid the additional expense, inconvenience and distraction of the litigation.

Nevertheless, Valley First and the Chicago-based Alliant agreed to the settlements’ corrective action provisions regarding their underwriting criteria to eliminate any present or future risk of denying applicants for consumer credit products based on their immigration status, unless required by law, rule or regulation.

Alliant agreed to create a $86,750 settlement fund, according to documents filed in U.S. District Court in San Jose.

From the fund, 28 California residents, who were denied Alliant loans because of their DACA immigration status, will each be paid $2,500. Additionally, 67 individuals living in other states, who were also denied Alliant loans because of their DACA immigration status, will each be paid $250, court documents showed.

Camacho is expected to receive a $5,000 service award for her contributions to the class action lawsuit.

Attorneys representing the Mexican American Legal Defense and Educational Fund (MALDEF) in Los Angeles, which filed the class action lawsuit, will be paid up to $50,000, according to the settlement.

MALDEF lawyers also represented Karla Ayala, who was an employee at Valley First when she applied for a loan in 2022. She was a DACA recipient who was authorized to work in the U.S. and holds a Social Security number for employment purposes. However, after initially approving the loan, Valley First informed Ayala that her membership and loan were being rejected because she had a “work-only” Social Security number and was not a U.S. citizen or lawful permanent resident.

Valley First agreed to create a $120,000 fund for $1,200 payments for each of the 48 individuals who are part of the class action lawsuit, and to pay $30,000 in attorney fees and a $5,000 service award for Ayala.

“As one of the few credit unions available in Central California, this settlement and policy changes will allow DACA recipients and immigrants access to life-changing financial products and credit to improve their lives,” MALDEF staff attorney Luis Lozada said.

Since 2017, MALDEF has filed 11 lawsuits in federal and state courts challenging the policies of financial institutions that discriminate against DACA recipients and other immigrants.