FTC Agrees to Ignore Court Orders on Credit Discrimination
The Federal Trade Commission has entered into agreements to stop pursuing disparate-impact liability claims against three auto dealers, a move that aligns with Trump administration directives but has drawn sharp criticism from state attorneys general and federal courts.
The US Federal Trade Commission has signed agreements with two auto dealers and the former general manager of a third to cease enforcing specific provisions of existing federal court orders. These provisions required the defendants to maintain fair lending programs and refrain from unlawful credit discrimination. The FTC will no longer enforce or assist in enforcing these obligations, effectively ignoring parts of the court orders without notifying the presiding judges or co-plaintiff state attorneys general.
The agency signed agreements with Passport, a dealership chain; Coulter Motor Company; and Gregory DePaola, the former general manager of Coulter. The FTC stated it would no longer pursue disparate-impact liability claims, arguing that the defendants did not explicitly instruct salespeople to treat Black and Latino borrowers differently. Previously, the FTC accused all three entities of charging people of colour more in discretionary markups and add-on fees on average compared to white borrowers.
The Northern District of Illinois confirmed it was never asked to evaluate or approve the new agreement regarding Passport. Arizona Attorney General Kris Mayes stated the FTC did not notify her office about the agreement with DePaola, despite the state being a co-plaintiff. Mayes called the move outrageous, noting that the FTC and her office had partnered on the case to ensure Arizonans could purchase cars without being misled or charged more because of their ethnicity.
The agreements were voted on by the FTC commission in early August but went into effect in November, over six months prior. The FTC is deleting two sections from the court orders: one prohibiting discrimination based on race, colour, religion, national origin, sex, marital status, age, or public assistance reliance; and another requiring employee training, written guidelines, and termination of discriminatory staff. The Arizona Attorney General’s office plans to continue enforcing the order independently.
This action aligns with a Trump administration executive order titled “Restoring Equality of Opportunity and Meritocracy,” which directed agencies to review past orders and eliminate disparate-impact liability theories. The administration has argued that such liability theories undermine national values. Legal experts note that disparate-impact analysis is increasingly important as automated decision-making systems become more prevalent in loan eligibility assessments.
