On August 7, the FTC announced a policy statement explaining that the agency will no longer pursue claims based on disparate-impact or “unfair discrimination” theories. The FTC said it previously pursued disparate-impact claims under Section 5 of the FTC Act, styled as “unfair discrimination” claims, as well as under ECOA. The agency asserted that it lacks statutory authority to bring disparate-impact claims because Section 5 does not create any antidiscrimination cause of action and ECOA prohibits intentional discrimination but does not authorize disparate-impact claims. The FTC noted that this policy change comports with an April 2025 executive order directing agencies to deprioritize enforcement of statutes and regulations to the extent they include disparate-impact liability (previously covered by InfoBytes here). The policy statement noted that the FTC would continue to pursue discrimination claims in “appropriate contexts,” including disparate-treatment claims under ECOA, while treating Section 5 as a consumer protection statute.

The FTC also noted that it had reviewed its past decisions that were based on statistical analyses designed to show disparate-impact liability and entered agreements modifying certain compliance-related obligations for the entities subject to those decisions.