Wells Fargo Can’t Duck Dreamers’ Claim of Lending Bias

SAN FRANCISCO (CN) – A federal judge refused to dismiss a class action claiming Wells Fargo unlawfully turns down non-U.S. citizens for student loans.

University of California, Riverside, junior Mitzie Perez sued Wells Fargo in January, a few months after she applied for and was denied a student loan through its website. Perez says the denial happened after she answered a question about her citizenship status, a violation of equal rights to enforce contracts under 42 U.S. Code § 1981.

“We think Wells Fargo has common policies that treat noncitizens and DACA recipients differently than they would citizens,” Mike Litrownik, one of Perez’s attorneys, said in a phone interview Thursday.

While not a citizen, Perez is one of some 800,000 young people who has been granted protection from deportation through Deferred Action for Childhood Arrivals, or DACA. The program created through executive order by President Barack Obama in 2012 protects qualified applicants from deportation if they were brought here as children and have clean records. They may apply for and be granted work permits good for two years, which can be renewed. In addition to being a DACA recipient, Perez also holds a federal work permit.

Litrownik said Perez and the other plaintiffs offered to have a U.S. citizen co-signer to guarantee the loan, but were still denied credit. Perez says she had to cover her tuition with credit cards.

In a ruling late Thursday, U.S. District Judge Maxine Chesney denied Wells Fargo’s motion to dismiss, rejecting its argument that the statute is precluded by the Equal Credit Opportunity Act, which doesn’t cover non-citizens.

“Congress, by enacting the ECOA, did not intend to authorize creditors to discriminate on the basis of alienage or otherwise to remove protections against discrimination afforded under other statutes,” Chesney wrote.

In a statement, Wells Fargo spokesman Jason Vasquez said Chesney’s ruling isn’t an indication that the plaintiffs will prevail.

“The court’s decision to allow the lawsuit to proceed, while disappointing, in no way suggests that the claims ultimately will prevail and we are prepared to defend our record as a responsible lender,” he said.

While the plaintiffs’ major civil rights claim will go forward, Chesney dismissed their unfair competition law claim with leave to amend, finding no proof that any of them lost money as a result of the credit denials. She also ruled that Perez and another plaintiff, Teresa Diaz Vedoy, were unable to show that they were financially harmed by using their credit cards for tuition.

Litrownik said the ruling underscores the importance of equal treatment in lending policies.

“We’re extremely pleased with the court’s decision denying Wells Fargo’s motion to dismiss. The court reaffirmed that all people, including those with DACA status and other noncitizens, should be treated equally in accessing credit,” he said.

 

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