FTC Will No Longer Bring Disparate-Impact or ‘Unfair Discrimination’ Enforcement Actions

The Federal Trade Commission said Friday it will no longer bring enforcement actions based on disparate-impact or “unfair discrimination” theories, a formal shift that narrows the agency’s anti-discrimination toolkit and aligns it with the Trump administration’s broader push to eliminate disparate-impact liability across federal agencies. The commission voted 2-0 to adopt the change and said in a press release that it “will not pursue claims based on disparate-impact or ‘unfair discrimination’ theories.”

The move matters because it removes one legal theory the FTC had used in past enforcement matters and because the agency said it has already entered agreements to revise some compliance-related obligations in earlier cases. In the same announcement, the FTC said it reviewed past decisions that relied on statistical analyses aimed at showing disparate-impact liability and entered agreements involving Napleton Inc., Passport Auto Group, and an individual previously associated with Coulter Motor Company LLC.

The agency announced the change Aug. 7 in a press release titled “FTC Ditches ‘Disparate Impact’” and released a 21-page policy statement, “Federal Trade Commission Policy Statement Regarding Disparate-Impact Claims and ‘Unfair Discrimination’ Claims.”

Disparate impact is a legal theory under which a facially neutral policy can be challenged because it produces disproportionately adverse outcomes for protected groups, even without proof of intentional discrimination. The FTC said its position is that it “lacks the statutory authority to bring disparate-impact claims” and that it will “no longer pursue disparate-impact claims in any context.”

The policy statement also says the FTC will not bring “unfair-discrimination” claims under Section 5 of the FTC Act, the law that bars unfair or deceptive acts or practices. At the same time, the commission said it will continue to bring disparate-treatment claims — cases alleging intentional discrimination — where it believes the law authorizes them, specifically citing the Equal Credit Opportunity Act, the federal law that prohibits credit discrimination.

“Disparate-impact claims are nearly impossible to square with our colorblind Constitution. 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,” FTC Chairman Andrew N. Ferguson said in the press release.

The FTC explicitly tied the policy change to Executive Order 14281, “Restoring Equality of Opportunity and Meritocracy,” signed by President Donald Trump on April 23, 2025. The order states: “It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals.”

Disparate-impact theory has long existed in U.S. civil rights law under some statutes, including Griggs v. Duke Power Co. in 1971 and, under the Fair Housing Act, Texas Department of Housing v. Inclusive Communities Project in 2015. The FTC’s move is narrower: The agency says its own statutes do not authorize that theory.

The action also fits into a wider administration rollback. The FTC’s announcement follows Trump’s 2025 executive order and comes after Justice Department Office of Legal Counsel opinions issued in June 2026 that argued disparate-impact liability raises constitutional and statutory problems in other contexts.

The FTC had previously used “unfair discrimination” or disparate-impact-style theories in several auto dealer cases, including matters involving Napleton, Passport and Coulter. Those theories were largely tested in settlements rather than fully litigated court rulings.

In Friday’s announcement, the agency said it had entered agreements to modify certain compliance-related obligations in matters involving those parties. The FTC did not provide the text of those modifications, and the announcement does not describe the amendments in detail.