A.B. & S. Auto Service, Inc. v. South Shore Bank of Chicago

A. B. & S. Auto Services, Inc. (AB & S) (plaintiff) was an automobile-repair shop owned by Jerry L. Bonner (plaintiff), a Black man with a criminal record. AB & S applied for a business loan from South Shore Bank of Chicago (South Shore). South Shore participated in a business-loan program sponsored by the Small Business Administration (SBA). The SBA required applicants to disclose whether they had a criminal record and tasked participating banks with deciding whether an applicant’s criminal record should disqualify him from receiving a loan. Bonner disclosed his criminal record, and South Shore denied the application, finding that Bonner’s record reflected poorly on his character. Prior to denying AB & S’s application, South Shore had never denied an application because of a criminal record. South Shore had previously accepted loan applications from applicants with criminal records, including one Black applicant. AB & S and Bonner filed a lawsuit against South Shore in federal district court, alleging that South Shore violated the Equal Credit Opportunity Act (ECOA) by considering an applicant’s criminal record when determining whether to grant a business loan. AB & S and Bonner argued that South Shore’s policy had a disparate impact on Black men because Black men were statistically more likely to have criminal records. South Shore moved for summary judgment, arguing that its consideration of an applicant’s criminal history was relevant to determining the applicant’s creditworthiness.