FTC Strikes Deals to Ignore Unlawful Credit Discrimination

Key Points:

• The Federal Trade Commission (FTC) has agreed not to enforce court-ordered obligations requiring certain auto dealers and a former general manager to maintain fair lending programs, effectively backing away from previous accusations of racial credit discrimination.
• The FTC's decision, which was not submitted for court approval and surprised state partners like Arizona Attorney General Kris Mayes, removes key provisions prohibiting discrimination and mandating employee training on fair lending practices.
• The FTC justified its move by rejecting disparate-impact liability claims, a legal theory addressing policies that unintentionally harm protected groups, despite concerns from civil rights advocates about the importance of such analysis in the context of AI-driven decision-making.
• The agreements, effective since November but voted on by the commission only in August, have raised legal and procedural questions as they alter federal court orders without judicial review or consent from co-plaintiffs.
• This action aligns with Trump administration directives to limit disparate-impact enforcement, continuing a pattern of attempts to rescind consumer protection settlements related to racial discrimination, which courts have previously resisted to preserve judicial finality.