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Financial Services Law Insights and Observations

District Court says bank discrimination suit can proceed

Courts State Issues Michigan Discrimination Consumer Finance


On July 21, the U.S. District Court for the Western District of Michigan denied a bank’s motion to dismiss plaintiff’s allegations that she was discriminated against on the basis of race when her account was frozen due to a purported suspicious deposit. Plaintiff, an African-American woman, sued the bank claiming violations of both federal and state anti-discrimination laws after she was allegedly questioned by bank employees about the authenticity of a check she tried to deposit in the amount of $27,616, which was money she received from a legal settlement. Plaintiff claimed that the bank maintained the check was fraudulent and soon afterward froze her account and deactivated her debit card. Plaintiff further stated that her debit card remained frozen even after her attorney explained the legal settlement to the bank and her check was cleared. Claiming the bank’s treatment was racially discriminatory, plaintiff maintained that because bank “employees assumed that her ‘having money must be evidence of fraud or wrongdoing,’” she suffered financial hardships and “significant emotional and physical distress.” The bank argued that plaintiff failed to state a claim because she has not shown a connection between the bank’s actions and her race and claimed the bank employees were acting to prevent fraud.

The court disagreed, ruling that due to the bank’s alleged actions and the fact that plaintiff’s account was frozen in violation of its own policies, discriminatory intent is plausible. The court noted that “most significantly,” plaintiff’s account remained frozen for eight days after the check cleared and the possibility of fraud was discounted. The court reasoned that defendant failed to explain why its fraud-prevention policies would justify keeping an account frozen after a check has been cleared. “[A] defendant’s hostile treatment of a plaintiff can allow for an inference of discriminatory intent even if the defendant’s actions lack a direct connection to race,” the court wrote, noting that fraud prevention does not fully explain all of the bank’s actions, which “went beyond” simply conveying suspicion about a potentially fraudulent check or freezing plaintiff’s account.