FTC drops disparate-impact discrimination claims in policy statement

The Federal Trade Commission said Thursday it adopted a policy statement saying the agency will no longer pursue claims based on disparate-impact or “unfair discrimination” theories.

The agency said it will continue to pursue disparate-treatment claims under the Equal Credit and Opportunity Act and will treat Section 5 of the FTC Act as a consumer-protection statute.

In the policy statement, the FTC said disparate-impact theory treats outcome differences among demographic groups as evidence of unlawful discrimination even without proof of discrimination. The agency said it lacks statutory authority for that approach and said the analysis would require race-based review of outcomes.

FTC Chairman Andrew N. Ferguson said disparate-impact claims are “nearly impossible to square with our colorblind Constitution.” He also said the Commission never had authority to impose disparate-impact liability and will “never do so again.”

The FTC said the policy follows President Donald Trump’s executive order last year titled “Restoring Equality of Opportunity and Meritocracy,” which directed the federal government to eliminate disparate-impact liability to the maximum degree possible.

The agency also said it reviewed past decisions based on statistical analyses intended to show disparate-impact liability and entered agreements to modify certain compliance-related obligations for Napleton Inc., Passport Auto Group, and an individual previously associated with Coulter Motor Company LLC.

The Commission vote authorizing the policy statement and approving the agreements was 2-0.

Sources

• FTC press release: “FTC ditches disparate impact”
• FTC official page: “FTC ditches disparate impact”

Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.