The Federal Trade Commission became the latest Trump administration agency Friday to swear off pursuing discrimination cases grounded in "disparate impact" on particular groups, arguing that alleging discrimination without specific discriminatory intent exceeds the FTC's authority and effectively requires companies to make decisions based on race.
The Federal Trade Commission announced a policy statement clarifying that the Commission will not pursue claims based on disparate-impact or “unfair discrimination” theories.
Disparate-impact theory presumes that a difference in outcome among demographic groups must be the result of unlawful discrimination, even if no evidence of discrimination exists. As the policy statement explains, the Commission lacks the statutory authority to consider claims under this novel legal theory. Moreover, disparate-impact analysis under its authorities would require race-based analysis of outcomes, which is pernicious and contrary to fundamental constitutional values.
“Disparate-impact claims are nearly impossible to square with our colorblind Constitution,” said Chairman Andrew N. Ferguson. “They impose liability for discrimination without any evidence that anyone intended to discriminate, which pushes businesses to make race-based decisions in order to avoid liability. The Commission never had authority to impose disparate-impact liability. Today, we announce that the Commission will never do so again.”
“Disparate-impact claims are nearly impossible to square with our colorblind Constitution,” said Chairman Andrew N. Ferguson. “They impose liability for discrimination without any evidence that anyone intended to discriminate, which pushes businesses to make race-based decisions in order to avoid liability. The Commission never had authority to impose disparate-impact liability. Today, we announce that the Commission will never do so again.”
The FTC will continue to assert disparate-treatment claims under the Equal Credit and Opportunity Act, but it will treat Section 5 of the FTC Act as the consumer-protection statute it has always been.
Under the new policy, the Commission reviewed past decisions that were based on statistical analyses designed to show disparate-impact liability and entered into agreements to modify certain compliance-related obligations for Napleton Inc., Passport Auto Group and an individual previously associated with Coulter Motor Company LLC.