Embracing Illegals

Companies are getting hooked on the buying power of 11 million undocumented immigrants.

Inez and Antonio Valenzuela are a marketer’s dream. Young, upwardly mobile, and ready to spend on their growing family, the Los Angeles couple in many ways reflects the 42 million Hispanics in the U.S. Age 30 and 29, respectively, with two daughters, Esmeralda, 8, and Maria Luisa, 2 months, the duo puts in long hours, working 4 p.m. to 2 a.m., six days a week, at their bustling streetside taco trailer. From a small sidewalk stand less than two years ago, they built the business into a hot destination for hungry commuters. The Valenzuelas (not their real name) bring in revenue well above the U.S. household average of $43,000, making them a solidly middle-class family that any U.S. consumer-products company would love to reach.

But Inez and Antonio aren’t your typical American consumers. They’re undocumented immigrants who live and work in the U.S. illegally. When the couple, along with Esmeralda, crossed the Mexican border five years ago, they had little money, no jobs, and lacked basic documents such as Social Security numbers. Guided by friends and family, the couple soon discovered how to navigate the increasingly above-ground world of illegal residency. At the local Mexican consulate, the Valenzuelas each signed up for an identification card known as a matrícula consular, for which more than half the applicants are undocumented immigrants, according to the Pew Hispanic center, a Washington think tank. Scores of financial institutions now accept it for bank accounts, credit cards, and car loans. Next, they applied to the Internal Revenue Service for individual tax identification numbers (ITINS), allowing them to pay taxes like any U.S. citizen — and thereby to eventually get a home mortgage.

Today, companies large and small eagerly cater to the Valenzuelas — regardless of their status. In 2003 they paid $11,000 for a used Ford Motor Co. van plus $70,000 more for a gleaming new 30-foot trailer that now serves as headquarters and kitchen for their restaurant. A local car dealer gave them a loan for the van based only on Antonio’s matrícula card and his Mexican driver’s license. Verizon Communications Inc. also accepted his matrícula when he signed up for cell-phone service. So did a Wells Fargo & Co. branch in the predominantly Hispanic neighborhood in northeast Los Angeles where they live. Having a bank account allows them to pay bills by check and build up their savings. Their goal: to trade up from a one-bedroom rental to their own home. Eventually, they also hope to expand their business by buying several more trailers. Matrícula holders like the Valenzuelas are “bringing us all the money that has been under the mattress,” says Wells Fargo branch manager Steven Contreraz.

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Other companies, such as Kraft Foods Inc., won’t discuss the status of their customers but explicitly target Hispanic newcomers — more than half of whom are estimated to enter the U.S. illegally, according to a new study by Pew. The consumer-products giant provides workbooks at local English-as-a-second-language classes that include instructions for using coupons for products such as Kraft’s Capri Sun drinks in U.S. grocery stores. It also hosts bilingual sweepstake events in Hispanic neighborhoods. “We need to fish where the fish are,” says Robert Simpson, Kraft’s director of multicultural marketing. He calls part of the Hispanic audience he’s trying to reach the “unacculturated,” meaning people unfamiliar with American culture and customs.

The corporate Establishment’s new hunger for the undocumenteds’ business could have far-reaching implications for America’s stance on immigration policy, which remains unresolved. Corporations are helping, essentially, to bring a huge chunk of the underground economy into the mainstream. By finding ways to treat illegals like any other consumers, companies are in effect legalizing — and legitimizing — millions of people who technically have no right to be in the U.S. It’s even happening in mirror image, with some Mexican companies setting up programs to follow customers who move to the U.S. All this knits the U.S. and Mexico closer together, further blurring the border and population distinctions.

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But corporations’ willingness to overlook the status of this lucrative demographic target could further inflame opposition to illegal immigration. Consider the case of New South Federal Savings Bank. In May, the Birmingham (Ala.) company launched a mortgage product called Casa Mia, aimed principally at local Hispanic immigrants, a disproportionately undocumented group whose ranks quadrupled in the state, to 96,000, between 1990 and 2004. The program offers 20-year fixed-rate mortgages to applicants with two years of residency, stable employment, and an ITIN. But within days of the announcement, New South received hostile phone calls and e-mails, some saying they were from Minutemen, the group patrolling the U.S.-Mexico border in Arizona and Texas. “I can think of no more traitorous act than you offering illegal immigrants, who are overunning this country, Casa Mia loans,” said an e-mail that a bank official showed BusinessWeek.

Bank officials were even more troubled by a letter from a Washington group called Friends of Immigration Law Enforcement (FILE), which opposes illegal immigration. It threatened to sue the bank under a federal law that prohibits the harboring of illegal aliens and racketeering. By providing mortgage loans that help illegals buy houses, says FILE Executive Director Craig Nelsen, New South is aiding their ability to remain illegally. In June, the bank delayed a broad rollout of Casa Mia pending a legal opinion on potential liability.

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