The Federal Trade Commission announced on Friday that it will no longer pursue disparate-impact claims under any statute it enforces, formally closing a chapter of enforcement theory that had loomed over auto lending, credit, and adjacent consumer finance markets for the past several years.
In a policy statement, the Commission said it lacks statutory authority to bring disparate-impact claims under either Section 5 of the FTC Act or the Equal Credit Opportunity Act, and that such claims conflict with President Trump’s April 2025 executive order, “Restoring Equality of Opportunity and Meritocracy.”
“The Commission never had authority to impose disparate-impact liability,” Chairman Andrew Ferguson said in announcing the change. “Today, we announce that the Commission will never do so again.”
The statement targets two theories. First, it repudiates the “unfair discrimination” claims a prior Commission majority advanced under Section 5 in the Passport Automotive and Coulter Motor Company settlements, arguing Section 5 is a consumer protection statute that identifies no protected classes, no prohibited practices, and no defenses. Second, it concludes ECOA prohibits only intentional discrimination, aligning the FTC with a June Office of Legal Counsel opinion and the CFPB’s April amendments to Regulation B, which deleted the “effects test” language from the rule.
Alongside the policy statement, the FTC modified compliance obligations imposed in prior consent orders against Napleton, Passport Auto Group, and an individual associated with Coulter Motor Company, unwinding requirements rooted in the now-disavowed statistical analyses.
For the collections industry, the practical takeaway is a narrowed federal fair-lending exposure at the FTC, though the statement does not preempt state law. State attorneys general and state-level ECOA analogues remain a live source of disparate-impact risk, and furnishers and creditors operating in multiple jurisdictions should not read the announcement as a green light to retire fair-lending analytics entirely.
