FTC Issues Disparate Impact Policy Statement

The Federal Trade Commission (FTC or the Commission) recently issued a policy statement providing that it will no longer pursue disparate-impact or “unfair discrimination” theories, citing statutory limitations and constitutional concerns.  The Commission Chairman stated in the announcement that liability without discriminatory intent is incompatible with a colorblind framework and forces businesses into race-based decision-making.

The Commission specifically stated it will continue prosecuting intentional disparate treatment claims under the Equal Credit Opportunity Act, but that it will now treat Section 5 of the FTC Act strictly as a consumer-protection statute.  As a result, the FTC has begun reviewing past decisions based on statistical analysis to show disparate impact, modifying the compliance obligations imposed on some companies under prior agreements.