MALDEF Sues Credit Union for Denying Loan to DACA Recipient

MALDEF, May 3, 2024

"A Latino civil rights organization filed a class-action lawsuit today against a Southern California credit union for unlawfully denying a loan to a DACA (Deferred Action for Childhood Arrivals) recipient on the basis of his immigration status.

MALDEF (Mexican American Legal Defense and Educational Fund) filed the suit challenging the lending practices of Kinecta Credit Union on behalf of Rogelio Esqueda of Huntington Park. According to the lawsuit, Kinecta unlawfully discriminated against Esqueda when it denied him an auto loan because he obtained his social security card through DACA.

“Credit unions undermine our economy when they engage in discrimination against immigrants,” said Thomas A. Saenz, MALDEF president and general counsel. “Like other similar cases we have pursued to favorable resolution, here we look forward to vindicating the legal rights of DACA recipients to be free of unfair discrimination.”

Attorneys say Kinecta’s action violated Section 1981 of the federal Civil Rights Act of 1866 and the California Unruh Civil Rights Act. Both laws prohibit discrimination based on national origin, citizenship, and immigration status.

“It is apparent that lenders making these decisions do not appreciate the impact of these discriminatory practices on people and their families,” said Eduardo Casas, staff attorney with MALDEF. “Lenders should not hinge their decisions on arbitrary internal estimates of how much longer they expect someone to be in this country.”

On Oct. 5, 2023, Esqueda, 42, applied for a $16,000 auto loan through Kinecta’s website. Although he was not a member, he lived in a zip code that Kinecta serves. Esqueda received an automated reply telling him his application was being reviewed. The following day, Esqueda received another email indicating that Kinecta could not verify his identity which was necessary for opening an online account. However, a few hours later, he received an email congratulating him on the approval of his loan.

Esqueda received a fourth email from a Kinecta representative who worked in the credit union’s Manhattan Beach office. The email said Esqueda had been pre-approved for the loan with a 6.99 percent interest rate, which could be lowered if he set up automatic payments through Kinecta. The email listed some requirements for processing the loan, including providing his driver’s license, the signed purchase contract for the car, and a copy of both sides of his social security card. Esqueda supplied the documents but received no response. A week later, he called the loan representative and was told his application had been rejected because he was not a permanent resident.

Esqueda’s wife went to the Kinecta branch to get more information and was told the only way Esqueda could get a loan was for him to get an Individual Taxpayer Identification Number (ITIN). The federally issued ITINs are used to process taxes for people who do not have a social security numbers. Esqueda’s wife explained that her husband’s social security number was valid, but the Kinecta representative told her the only option was an ITIN.

The Kinecta representative told her that Esqueda could use the ITIN to build credit until he could get a “real” social security number. As a DACA recipient, Esqueda has a social security number that authorizes him to work in the U.S. After Esqueda was denied the loan, his credit score dropped. He was eventually able to obtain a car loan, but at a much higher interest.

“I have always looked forward to purchasing a car through my own sweat and tears,” said Esqueda. “Despite working hard, I was almost denied this opportunity simply because they judged me for having DACA.”

Kinecta Federal Credit Union, based in Manhattan Beach, has 32 offices in three states with assets in excess of $6.5 billion and more than 200,000 members.

This lawsuit is the 12th filed by MALDEF since 2017 challenging the policies of financial institutions that discriminate against DACA recipients.

Read the complaint HERE."