FTC Abandons "Disparate Impact" As A Basis For Section 5 Claims

The Federal Trade Commission just issued a Policy Statement Regarding Disparate-Impact Claims and “Unfair Discrimination” Claims, saying that the Commission is adopting a policy “against pursuing disparate-impact claims in any context.” 

During the prior Administration, the Commission had taken the position that Section 5 of the FTC Act empowered the FTC to pursue consumer protection claims based on disparate impact and unfair discrimination. For example, in the Passport Automotive case, which was settled in 2022, the FTC charged an auto dealer with engaging in unfair practices by discriminating against Black and Latino consumers by charging them higher financing costs and fees. The FTC asserted similar claims in the Napleton Auto case, which was also settled in 2022.