News Flash: Lawsuit Accuses SoFi of Denying Loans to Immigrants

On Monday, April 12, 2021 a federal judge refused to dismiss “a civil rights class action against Social Finance Inc. (SoFi), a San Francisco-based online lending platform, that allegedly denied loans to immigrants who were legally residing in the United States when they applied for credit.”

The lawsuit was filed in May 2020 in the U.S. District Court for the Northern District of California.

Plaintiffs

Both plaintiffs in this case are non-citizen immigrants who are legal residents of the U.S. Ruben Juarez is a Deferred Action for Childhood Arrivals (DACA) recipient. Calin Constantin Segarceanu, a Romanian national, is a green card holder with a “conditional permanent resident” immigration status.

Juarez, born in Mexico, has lived in the U.S. since he was ten years old. He got his DACA status and a Social Security number in 2012.

“He went to college in New York and obtained a bachelor’s in accounting and a master’s degree in global finance from Fordham in 2016. After graduating he began to work in finance for several well-known companies, including JPMorgan Chase.”

According to the complaint, to pay for his education, Juarez took out a private student loan for $40,000 with a fixed interest rate of 8.6 percent from Discover Bank. He also discovered that his peers who had similar credit scores and income, but without DACA status, had lower interest rates on their loans, which is what led Juarez to try to refinance his loan.

In 2016, Juarez received SoFi promotional materials touting interest rates of 3-4 percent. He applied online, but “because Mr. Juarez is not a U.S. citizen, LPR, or visa-holder, SoFi’s online application process did not allow him to complete and submit his application to refinance his student loans.”

According to the complaint, “since 2012, and continuing through early-December 2019, SoFi had a blanket policy of refusing to make Loans available to non-U.S. citizens who resided in the U.S. and held Deferred Action for Childhood Arrivals (DACA), which granted them federal work authorization and Social Security numbers (SSNs).”

Segarceanu joined the lawsuit in July 2020. He “came to the U.S. in 2015 on a student visa and earned bachelor’s and master’s degrees in computer science from Illinois Institute of Technology. The complaint says he is employed as a software engineer for Amazon Web Services. In 2018 he married a U.S. citizen. He then applied for permanent residency and obtained a conditional green card.”

He attempted to apply to SoFi for a personal loan hoping to reduce the nearly 20 percent interest rate on his credit card but was rejected because of his immigration status. Segarceanu also claims SoFi accessed his credit report without permission.

Claims Against SoFi

Equal Rights Violation

In the lawsuit, Juarez and Segarceanu assert an equal rights claim based on the language found in 42 U.S.C. § 1981:

“All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts … and to the full and equal benefit of laws and proceedings for the security of persons and property as is enjoyed by white citizens…”

According to the order issued by U.S. District Judge Hawyood Gilliam, he cites precedent which states that “the U.S. Supreme Court has interpreted ‘all persons’ to include all lawfully present immigrants. And DACA recipients and CPRs are considered lawfully present immigrants.”

SoFi claims it does not discriminate on the basis of citizenship status, or alienage, at all, but rather takes immigration status into account. SoFi further argues that discrimination based on immigration status and discrimination based on citizenship should be treated differently. Lastly, “SoFi asserts that it does not discriminate against non-citizens because some non-citizens—namely LPRs and some visa-holders—are still eligible to contract for credit with SoFi. This distinction, however, is not supported by the language of the statute.”

Because both Juarez and Segarceanu are immigrants lawfully present in the United States, Judge Gilliam stated that Plaintiffs have adequately alleged that SoFi’s policies discriminated against them in violation of § 1981.

Motion to Compel Arbitration Denied

SoFi also claims that the case must be resolved through private arbitration, since when signing up for his online account in 2016, Juarez had checked a box agreeing to accept the terms of the Arbitration Agreement contained within a clickable link. But Judge Gilliam found the scope of that agreement was limited to Juarez’s 2016 application and did not apply to his subsequent attempts to apply for credit in 2017, 2018 and 2019.

Class Action Claim

SoFi requested that the court strike the class action allegations of the complaint on the grounds that plaintiffs challenge SoFi lending activities beyond the loan categories that they applied for, specifically, student loan refinancing and a personal loan.

Judge Gilliam stated in his order that courts generally disfavor motions to strike in this context because they are usually premature. Further, he highlights that “the conduct and injury to class members are the same regardless of the specific type of loan sought.” Therefore, he concluded that class action challenges should be asserted in the future at the class action certification stage.

This Is a Novel Case

According to KPIX 5 CBS San Francisco, “Moira Heiges-Goepfert, counsel for the plaintiffs, said the case was one of a small group of ‘novel’ cases that apply the post-Civil War civil rights statute to alienage as well as race in the context of lending.”

“The case highlights the purpose behind the DACA. ‘It was to help… immigrants who were brought into the country as children to come out of the shadows and have the ability to participate in American life.'”

About SoFi

SoFi was founded by Stanford business school students in August of 2011 using an alumni-funded lending model to connect recent grads with alumni in their community. Then in May 2012, SoFi introduced Student Loan Refinancing, becoming the first company to refinance federal and private student loans.

Today, with over 1.6 million members, “the SoFi online platform offers members discounted loans, financial advice, as well as the ability to invest in stocks (including IPOs) and cryptocurrencies.”

Shihab Burke, LLC, Attorneys At Law Can Help

If you are an immigrant with any questions or concerns regarding your immigration case, LPR status, visas, green card applications, or any other legal matter, speak at once to an experienced Columbus immigration attorney. A good immigration lawyer can help you and your family with any immigration issue you face and defend you if you’re accused of violating immigration law.

Our immigration attorneys will review your forms and applications for thoroughness and accuracy. Immigration laws will continually change, but an experienced immigration attorney will always be able to give you the most up-to-date immigration advice you need.

We have offices in Dublin and Columbus, Ohio, Michigan, and Texas. But our full suite of immigration law services is available to clients nationwide and even around the world.

Contact us today!