LOS ANGELES – A federal judge has granted final approval to a class-action settlement between a class of credit applicants represented by MALDEF (Mexican American Legal Defense and Educational Fund) and a California credit union that denied a DACA (Deferred Action for Childhood Arrivals) recipient a loan because of her immigration status.

The agreement with Valley First Credit Union in Modesto, Calif., provides for policy changes and a $120,000 settlement for class members. It is one of several settlements MALDEF has reached with financial institutions on behalf of DACA recipients denied financial services because of their immigration status.

“We are pleased that Valley First will compensate the potential members harmed by its discriminatory practices,” said Thomas A. Saenz, MALDEF President and General Counsel. “Credit unions have historically performed an important role in opening up banking to more Californians; this settlement puts Valley First back into a position of continuing that historic role.”

The class-action lawsuit challenged Valley First’s policy on behalf of Karla Ayala, a recipient of Deferred Action for Childhood Arrivals (DACA) in 2022. Ayala was an employee of the credit union at the time she applied for a loan through Valley First’s website. The credit union required her to become a member, so she opened a savings account and paid the membership fee. As part of the membership process she uploaded a copy of her Social Security card. As a DACA recipient, Ayala is 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. MALDEF sued Valley First because its rejection of Ayala’s application violates California’s Unruh Civil Rights Act and Section 1981 of the federal Civil Rights Act of 1866, which prohibits discrimination based on alienage.

Under the settlement, Valley First must pay each member of the class, including Ayala, $2,500 as well as attorneys’ fees and other costs.

“This case highlights that even when a DACA recipient is an employee of the credit union, they are still denied for no other reason than because of their immigration status,” said MALDEF staff attorney Luis Lozada. “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.”

Since 2017, MALDEF (Mexican American Legal Defense and Educational Fund) has filed 11 lawsuits in federal and state courts challenging the policies of financial institutions that discriminate against recipients of Deferred Action for Childhood Arrivals and other immigrants.

Read the settlement order HERE.