Disparate-Impact and “Unfair Discrimination” Claims

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Federal Trade Commission Policy Statement Regarding
Disparate-Impact Claims and “Unfair Discrimination” Claims1
I. 	Introduction
President Trump has issued a historic executive order entitled “Restoring Equality of
Opportunity and Meritocracy.”2 The executive order concerns disparate-impact liability, a legal
theory “which holds that a near insurmountable presumption of unlawful discrimination exists
where there are any differences in outcomes in certain circumstances among different races, sexes,
or similar groups,” even in the absence of any discriminatory intent or facially discriminatory
policy.3 As the order explains, disparate-impact liability—and the movement that champions it—
are “pernicious” and must be rejected.4
The fundamental problem is that disparate-impact liability “all but requires individuals and
businesses to consider race and engage in racial balancing to avoid potentially crippling legal
liability.”5 It therefore “imperils the effectiveness of civil rights laws by mandating, rather than
proscribing, discrimination.”6 	Government-dictated racial discrimination violates the bedrock
American principle of equality under the law; it is “wholly inconsistent with the Constitution”;
and it harms the public by preventing businesses from making merit-based decisions (and forcing
them to focus instead on the “irrelevant immutable characteristics” of the individual involved).7
Ultimately, disparate-impact liability shares the legal, practical, and moral flaws of diversity,
equity, and inclusion (“DEI”): “It divides people into castes … and treats them as caste members
rather than as individuals.”8
The executive order adopts a policy of “eliminat[ing] the use of disparate-impact liability
in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil
1 This Policy Statement does not confer any rights on any person and does not operate to bind the FTC or the public.
In any enforcement action, the Commission must prove the challenged act or practice violates one or more existing
statutory or regulatory requirements. In addition, this Policy Statement does not preempt federal, state, or local laws.
Compliance with those laws, however, will not necessarily preclude Commission law enforcement action under the
FTC Act or other statutes. Pursuant to the Congressional Review Act (5 U.S.C. § 801 et seq.), the Office of Information
and Regulatory Affairs designated this Policy Statement as not a “major rule,” as defined by 5 U.S.C. § 804(2).
2 Exec. Order No. 14281, Restoring Equality of Opportunity and Meritocracy, § 1, 90 Fed. Reg. 17537 (Apr. 23, 2025)
(“Disparate Impact Order”).
3 Id.
4 Id.
5 Id.
6 Id.
7 Id.
8 Press Release, FTC, FTC Chairman Ferguson Announces that DEI is Over at the FTC (Jan. 22, 2025),
https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-chairman-ferguson-announces-dei-over-ftc.

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rights laws, and basic American ideals.”9 And it directs agencies, including the Federal Trade
Commission (“FTC” or “Commission”) to “deprioritize enforcement of all statutes and regulations
to the extent they include disparate-impact liability.”10
The FTC has previously pursued disparate-impact claims in two contexts: under Section 5
of the FTC Act (where they have been styled as “unfair discrimination” claims), and under the
Equal Credit Opportunity Act (“ECOA”). In both instances, the FTC acted ultra vires. Section 5
contains no antidiscrimination cause of action, let alone a disparate-impact one. And while ECOA
does prohibit intentional discrimination, it does not authorize disparate-impact claims.
Accordingly, in light of (1) the FTC’s lack of statutory authority to bring disparate-impact
claims and (2) the fundamental legal and policy defects of disparate-impact liability laid out in
President Trump’s executive order, the FTC will no longer pursue disparate-impact claims in any
context. In addition, because Section 5 does not create an antidiscrimination cause of action, the
Commission will not bring any such claims under Section 5.
II. 	Background
A. 	Disparate-impact liability
We begin with a brief overview of disparate-impact liability. While traditional disparate-
treatment claims require plaintiffs to “establish that the defendant had a discriminatory intent or
motive,” disparate-impact claims “challenge[] practices that have a disproportionately adverse
effect on minorities and are otherwise unjustified by a legitimate rationale.”11 	In other words,
disparate-impact liability can be imposed—and defendants can be found to have discriminated on
the basis of race or other protected characteristics—without any showing of discriminatory intent.
As noted above, President Trump’s executive order strongly condemns disparate-impact liability
and calls for it to be eliminated to the maximum possible extent. The order is grounded in a long
history of criticisms of disparate-impact liability and correctly identifies its profound legal,
conceptual, and practical flaws.
To begin, disparate-impact liability does not serve any beneficial societal purpose.
Intentional discrimination can be combatted through traditional disparate-treatment claims, and
the Commission remains firmly committed to bringing such claims where the law allows.12
9 Disparate Impact Order § 2.
10 Id. § 4.
11 Texas Dep’t of Hous. & Cmty. Affs. v. Inclusive Cmtys. Project, Inc., 576 U.S. 519, 524 (2015) (cleaned up).
12 Both current Commissioners recently confirmed this commitment to bring appropriate disparate-treatment claims.
Concurring Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak and
Commissioner Mark R. Meador In the Matter of Asbury Automotive Group, Inc. et al., Matter No. 2223135 at 4 (July
17, 2025) (“Asbury Statement”) (“The Commission is steadfastly committed to enforcing ECOA to prevent and punish
lenders who would treat consumers differently on the basis of their race, color, religion, national origin, sex or marital

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Importantly, disparate treatment does not mean the Commission cannot look behind the curtain to
determine if discriminatory intent is being masked by a supposedly neutral policy. As Justice Alito
has noted, disparate-treatment claims cannot be defeated simply “by conjuring up neutral excuses”
because “federal judges have decades of experience sniffing out pretext”13 and have developed
appropriate evidentiary rules for doing so.14 That is to say, disparate-impact liability comes into
play only when there is no evidence of intentional discrimination. As Justice Thomas observed,
“disparate-impact proponents doggedly assume that a given racial disparity at an institution is a
product of that institution rather than a reflection of disparities that exist outside of it.”15 But the
assumption is false. 	In reality, “racial imbalance can also result from any number of innocent
private decisions” and “[w]e should not automatically presume that any institution with a neutral
practice that happens to produce a racial disparity is guilty of discrimination until proved
innocent.”16
By 	contrast, 	the 	social 	harms 	of 	disparate-impact 	liability 	are 	legion.17 	Most
fundamentally, the theory requires government-mandated racial decisionmaking. 	The fear of
disparate-impact liability prevents regulated entities from making decisions based on the merits,
and sometimes paralyzes them from acting altogether.18 Indeed, there is only one reliable way to
protect oneself from disparate-impact claims: namely, to engage in affirmative racial balancing
(and other forms of balancing) to ensure proportionate outcomes along all protected dimensions.19
But such government-mandated racial decisionmaking runs headlong into the Equal Protection
Clause, as Justice Scalia famously recognized in his separate opinion in Ricci v. DeStefano.20
status, or age …. [T]he Commission will not hesitate to bring disparate-treatment claims under ECOA where the facts
support such claims.”).
13 Inclusive Cmtys. Project, 576 U.S. at 588 (Alito, J., dissenting).
14 See, e.g., Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977) (announcing test for determining
whether facially neutral policy is motivated by unlawful discriminatory purpose); cf. Pers. Admin’r of Massachusetts
v. Feeney, 442 U.S. 256 (1979) (similar).
15 Inclusive Cmtys. Project, 576 U.S. at 553 (Thomas, J., dissenting).
16 Id. at 553–54 (Thomas, J. dissenting) (cleaned up).
17 See Asbury Statement at 2–4 (describing some of these harms).
18 Inclusive Cmtys. Project, 576 U.S. at 544 (noting concern that “the specter of disparate-impact litigation” could
“cause[] private developers to no longer construct or renovate housing units for low-income individuals”); id. at 558
(Alito, J., dissenting) (noting that St. Paul had been sued for a “good-faith attempt to ensure minimally acceptable
housing for its poorest residents”); id. at 585 (noting that a state agency would be subject to suit regardless of how it
allocated housing credits between high and low income areas); id. at 557 (Thomas, J., dissenting) (explaining that “the
threat of disparate-impact suits … has hindered [the Houston Housing Authority’s (HHA)] efforts to provide affordable
housing” and that “[s]tate and federal housing agencies have refused to approve all but two of HHA’s eight proposed
development projects over the past two years out of fears of disparate-impact liability”).
19 Id. at 587 (Alito, J., dissenting) (noting that “parties fearful of disparate-impact claims may let race drive their
decisionmaking in hopes of avoiding litigation altogether”).
20 557 U.S. 557, 594 (2009) (Scalia, J. concurring).

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Justice Scalia explained that “Title VII’s disparate-impact provisions place a racial thumb
on the scales, often requiring employers to evaluate the racial outcomes of their policies, and to
make decisions based on (because of) those racial outcomes.”21 	But “that type of racial
decisionmaking is … discriminatory.”22 	And “if the Federal Government is prohibited from
discriminating on the basis of race, then surely it is also prohibited from enacting laws mandating
that third parties … discriminate on the basis of race.”23 Accordingly, the imposition of race-based
decisionmaking 	by 	disparate-impact 	laws 	“would 	… 	seemingly 	violate 	equal 	protection
principles,” and “the war between disparate impact and equal protection will be waged sooner or
later.”24
Compounding its perniciousness, the theory of disparate-impact liability is effectively
unbounded because almost any conceivable policy or practice affects different groups differently.
As one commentator succinctly put it, “[d]isparate impact is one of the most controversial concepts
in civil rights law and policy partly because just about everything has a disparate impact.”25 And
while some form of a business-necessity defense is generally available, in practice that defense
often provides little protection.26 	As a result, enforcement agencies are left with enormous
21 Id. (Scalia, J., concurring).
22 Id.
23 Id.; see Constitutionality of Disparate-Impact Liability Under Title VII, 50 O.L.C. __, slip op. at *9 (June 9, 2026)
(reasoning that “it is unconstitutional for the federal government to coerce employers to adopt employment policies
or make employment decisions motivated by race”).
24 557 U.S. at 595 (Scalia, J., concurring). Disparate impact also conflicts with the Equal Protection Clause in another
way. While the matter is not entirely resolved, it has at least been frequently suggested that disparate-impact claims
are not equally available to all groups (and in particular, that disparate-impact claims cannot be raised by whites with
respect to racial discrimination or by men with respect to sex discrimination). Gail L. Heriot, Title VII Disparate
Impact Liability Makes Almost Everything Presumptively Illegal, 14 N.Y.U. J.L. & Liberty 1, 138–42 (2020)
(collecting sources and noting that this would mean that disparate-impact laws would have to survive strict scrutiny).
As Justice Thomas explained, if “disparate-impact claims [are] limited to only some groups—if, for instance, white
basketball players cannot bring disparate-impact suits—then we as a court have constructed a scheme that parcels out
legal privileges to individuals on the basis of skin color.” Inclusive Cmtys. Project, 576 U.S. at 555 (Thomas, J.,
dissenting); see also, e.g., Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181,
206 (2023) (explaining that the Equal Protection Clause “applies without any regard to any differences of race, of
color, or of nationality” because “the guarantee of equal protection cannot mean one thing when applied to one
individual and something else when applied to a person of another color” (cleaned up)).
25 Alison Somin, Disparate Impact as a Non-Delegation Violation and Major Question, Harv. J.L. & Pub. Pol’y Per
Curiam, Summer 2024, at 1; see also, e.g., Heriot, supra note 24, at 6 (“[T]he supply of potential bases for disparate
impact liability is virtually limitless, since … everything or nearly everything has a disparate impact on some race,
color, religion, sex, or national origin group.”); id. at 37 (“I have in the past promised to pay $10,000 to the favorite
charity of anyone who can bring to my attention a job qualification that has made a difference in a real case and has
no disparate impact on any race, color, religion, sex, or national origin group. So far I have not had to pay.”).
26 Inclusive Cmtys. Project, 576 U.S. at 586 (Alito, J. dissenting) (noting that the impact of HUD regulations setting
out such a defense was, “not surprisingly … to confer enormous discretion on HUD—without actually solving the
problem”); Somin, supra note 25, at 7 (“As for the necessity defenses, disagreement remains on how strong they
are …. But whatever the best of those competing interpretations, the practical result has been that many employers
take the most risk-averse course and act as though business necessity gives them no real protection.”); id. at 8

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discretion27—discretion to decide the impact on what race, color, religion, sex or national origin
to prioritize—which sometimes, unsurprisingly, is abused for partisan or ideological ends.28
Disparate-impact liability creates two more problems. First, because disparate-impact
claims 	are 	rooted 	in 	statistical 	disparities, 	they 	encourage 	the 	use 	of 	dodgy 	statistical
methodologies, such as Bayesian Improved Surname Geocoding (BISG)—which has been
criticized for “high error rates for racial minorities.”29 BISG is a common form of evidence in
disparate-impact claims where racial data on the allegedly injured population is unavailable.30 In
the absence of racial data, disparate-impact plaintiffs (including the Commission) infer a person’s
race from their last name and their address—for example, inferring that a person is black because
they have a last name common among black Americans and live in a black neighborhood.31 This
“sordid” methodology introduces yet another inferential step into the process,32 requiring
enforcement agencies not only to infer racial discrimination from racial disparities, but also to infer
the very existence of the racial disparities in the first place from names and addresses.33
(“Agencies that enforce disparate-impact rules also have generally not seen necessity as much of a constraint.”);
Heriot, supra note 24, at 114 (“Despite its name, the 2012 [EEOC] Guidance provides little guidance to employers on
what constitutes ‘business necessity,’ apart from making it clear that the need to hire only employees who were likely
to be law abiding was not a clear case of business necessity.”).
27 Heriot, supra note 24, at 37 (“Since all job qualifications have a disparate impact on some group, all employer
decisions are subject to second-guessing by the EEOC (or by the courts in the case of a private lawsuit).”); Somin,
supra note 25, at 2 (“Because disparate-impact violations can result from so many innocuous decisions, agencies that
enforce disparate impact have virtually unfettered discretion to decide what disparate-impact violations to pursue.”).
28 Somin, supra note 25, at 6–7 (describing pattern of ideological disparate-impact enforcement by the EEOC).
29 	Letter 	from 	Senator 	Ted 	Cruz 	to 	Chairwoman 	Lina 	Khan 	(Aug. 	22, 	2024),
https://www.commerce.senate.gov/press/rep/release/cruz-seeks-info-on-ftc-s-use-of-racial-stereotypes-to-target-u-s-
companies-2024-8/ (noting criticisms of BISG, criticizing its use by the CFPB, and raising questions about its use by
the FTC); Statement of Commissioner Melissa Holyoak, Asbury Automotive Group – McDavid Group, Matter No.
2223135 (Aug. 16, 2024) (calling for careful use of statistical methods that have not been tested in court, and
encouraging “the Commission and Commission staff [to] be clear about the methodology the Commission uses to
assess liability”).
30 See, e.g., Marc Elliott et al., Using the Census Bureau’s Surname List to Improve Estimates of Race/Ethnicity and
Associated Disparities, 9 Health Serv. & Outcomes Research Methodology 69 (2009); Little v. Washington Metro.
Area Transit Auth., 249 F. Supp. 3d 394, 416 (D.D.C. 2017) (discussing an expert report using BISG to show that an
employment policy had “a statistically significant disparate impact on African-American candidates”).
31 See, e.g., Consumer Fin. Prot. Bureau, Using Publicly Available Information to Proxy for Unidentified Race and
Ethnicity, at 3 (2014), https://files.consumerfinance.gov/f/201409_cfpb_report_proxy-methodology.pdf (explaining
that BISG “combines geography- and surname-based information into a single proxy probability for race and
ethnicity”).
32 League of United Latin Am. Citizens v. Perry, 548 U.S. 399, 511 (2006) (Roberts, C.J., concurring in part, concurring
in the judgment in part, and dissenting in part) (“It is a sordid business, this divvying us up by race.”).
33 BISG is far from the only problematic method used to assess statistical disparities. Other suspect methodologies
include the “the 4/5 Rule,” Bazile v. City of Houston, 858 F. Supp. 2d 718, 763–74 (S.D. Tex. 2012), the “risk ratio”
method, Blunt v. Lower Merion Sch. Dist., 826 F. Supp. 2d 749, 756 (E.D. Pa. 2011), aff’d, 767 F.3d 247 (3d Cir.
2014), and “Fischer’s Exact” test, Jones v. Pepsi-Cola Metro. Bottling Co., 871 F. Supp. 305, 311 (E.D. Mich. 1994).

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Finally, the accusation that someone discriminates based on race—specifically, that that
person is a “racist”—has long been an effective cudgel to police people’s behavior. It is so effective
because we, as a people, do not abide harmful conduct inflicted on our fellow Americans because
of their race. 	This accusation, even (or especially) when the claim is unsubstantiated or false,
carries a threat to upend the accused’s life.34 Accordingly, the scarlet letter of “racist” ought not
to be applied in the absence of clear evidence of the discriminatory motive that society has chosen
to anathematize. 	And yet disparate-impact claims carry the weight of an accusation of racism
without requiring any such evidence. These claims have thus allowed the government to wield the
threat of being publicly perceived as racist against countless Americans who had no intent or desire
to discriminate.
In short, the Commission strongly agrees with President Trump’s executive order and its
rejection of disparate-impact liability.
B. “Unfair discrimination” claims under Section 5 of the FTC Act
For almost 90 years, Section 5 of the FTC Act has empowered the FTC to protect
consumers from “unfair or deceptive acts or practices.”35 	This is a flexible provision that has
allowed the FTC to address a range of harmful practices and adapt to new threats that arise with
the development of new technologies and industries. But it is not all-encompassing. Indeed, the
FTC has previously overstepped its authority by adopting increasingly broad and untethered
interpretations of the Section 5 unfairness language.36 The Commission’s overextension invited
pushback from Congress and the public, and Congress ultimately amended the statute in 1994 to
clarify that unfair acts and practices are limited to those that “cause or [are] likely to cause
substantial injury to consumers which is not reasonably avoidable by consumers themselves and
not outweighed by countervailing benefits to consumers or to competition.”37 Notably, “nowhere
in this long, rich history [did] the concept of antidiscrimination arise.”38
That is, until the last few years, when certain former Commissioners began to argue that
the Commission should use its Section 5 authority to become a universal civil-rights regulator.
One Commissioner offered a particularly clear statement of this position. 	He explained that
because it is difficult to “uncover direct evidence of racist intent”—as is required by traditional
34 See, e.g., Emma Camp, How an Ill-Informed Internet Mob Ruined a UVA Student’s Life, Reason (June 2023),
https://reason.com/2023/04/24/the-most-hated-person-on-campus/.
35 Wheeler-Lea Act, Pub. L. No. 75-447, § 3, 52 Stat. 111, 111–117 (1938) (codified as amended at 15 U.S.C.
§ 45(a)(1)).
36 See J. Howard Beales, The Federal Trade Commission’s Use of Unfairness Authority: Its Rise, Fall, and
Resurrection (May 30, 2003), https://www.ftc.gov/news-events/news/speeches/ftcs-use-unfairness-authority-its-rise-
fall-resurrection.
37 15 U.S.C. § 45(n).
38 Dissenting Statement of Commissioner Noah Joshua Phillips Regarding Federal Trade Commission vs. Passport
Automotive Group, Inc. et al., FTC File No. 2023199, at 2 (Oct. 14, 2022) (“Phillips Dissent”).

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disparate-treatment claims39—“disparate impact analysis is a critical tool to uncover hidden forms
of discrimination under sector-specific laws like the Fair Housing Act and the Equal Credit
Opportunity Act.”40 But sector-specific antidiscrimination laws are just that: sector-specific. They
do not give the government free rein to root out disparate impact wherever such effects might be
found. This same Commissioner then revealed the broader ambition behind this position, calling
for the FTC to treat “many discriminatory practices [as] unfair” across “almost the entire
economy.”41 This, he argued, would allow Section 5 to “serve as an important gap-filler to combat
discrimination across the economy.”42 In other words, he proposed transforming a narrow tool
grounded in discrete statutes into a sweeping, economy-wide mandate.
Other Commissioners soon put that theory into practice. In March 2022, the Commission
settled a case with an auto dealer, with two Commissioners arguing that the Commission should
have asserted a Section 5 “unfair discrimination” claim43—a count the four-member Commission
deadlocked on. By October 2022, the Commission had five members and, in another auto-dealer
settlement, a majority coalesced behind an unfair-discrimination theory for the first time.44 Two
Commissioners dissented from that count of the complaint because Section 5 does not permit such
claims.45 	Former Commissioner Phillips, in particular, persuasively explained why this “novel
interpretation of unfairness” could not be sustained.46 He also observed that the inclusion of the
unfair-discrimination count was entirely gratuitous because it did not address any conduct—nor
permit any relief—beyond what the more conventional counts in the complaint already covered.47
39 See, e.g., Inclusive Cmtys. Project, 576 U.S. at 524–25.
40 Introductory Remarks of Commissioner Rohit Chopra, National Fair Housing Alliance 2020 National Conference,
at 2 (Oct. 6, 2020) (“Chopra Speech”).
41 Id.
42 Id.; see also Statement of Commissioner Rohit Chopra, In the Matter of Liberty Chevrolet, Inc. d/b/a Bronx Honda,
File No. 1623238, at 1 (May 27, 2020) (“Given the difficulty of uncovering direct evidence of discriminatory intent,
disparate impact analysis is critical for detecting potentially unlawful discrimination. 	With the proliferation of
machine learning and predictive analytics, the FTC should make use of its unfairness authority to tackle discriminatory
algorithms and practices in the economy.”).
43 Press Release, FTC, FTC Takes Action Against Multistate Auto Dealer Napleton for Sneaking Illegal Junk Fees
onto Bills and Discriminating Against Black Consumers (Apr. 1, 2022), https://www.ftc.gov/news-events/news/press-
releases/2022/04/ftc-takes-action-against-multistate-auto-dealer-napleton-sneaking-illegal-junk-fees-bill; 	Statement
of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly Slaughter In the Matter of Napleton Automotive
Group, File No. 2023195, at 3–4 (Mar. 31, 2022).
44 Press Release, FTC, Federal Trade Commission Takes Action Against Passport Automotive Group for Illegally
Charging 	Junk 	Fees 	and 	Discriminating 	Against 	Black 	and 	Latino 	Customers 	(Oct. 	18, 	2022),
https://www.ftc.gov/news-events/news/press-releases/2022/10/federal-trade-commission-takes-action-against-
passport-automotive-group-illegally-charging-junk-fees.
45 Phillips Dissent; Concurring and Dissenting Statement of Commissioner Christine S. Wilson, FTC v. Passport
Automotive Group, Inc., et al., File No. 2023199, at 4 (Oct. 18, 2022).
46 Phillips Dissent at 2–6.
47 Id. at 2.

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In other words, the inclusion of the unfair-discrimination count “accomplishe[d] nothing” and
served no purpose—except to “announce to the world that the FTC had expanded its unfairness
jurisdiction to include antidiscrimination.”48
In August 2024, the Commission asserted a similar unfair-discrimination claim in Coulter
Motor Company, another settled auto-dealer complaint.49 This time, then-Commissioner Ferguson
and former Commissioner Holyoak dissented from the inclusion of that count, endorsing the
arguments previously made by former Commissioner Phillips as to why disparate-impact claims
were not cognizable under Section 5 and adding further arguments to the same effect.50 Former
Commissioner Holyoak also noted that the inclusion of the count was once again “superfluous”
because the count addressed “the same alleged conduct” as an ECOA count, and “provide[d] no
additional relief.”51 	Thus, the unfair-discrimination count did nothing to remedy unlawful
discrimination, and served only to further “a broader vision to achieve economy-wide, equity-
oriented regulation of conduct that historically was never proscribed by Section 5 of the FTC
Act.”52
Because parties to the Coulter matter also settled, no court has yet considered this novel
theory of Section 5 unfairness. 	And that Commission majority’s avoidance of judicial review
appears to have been deliberate. 	The very next day, the Commission filed a similar complaint
against another auto dealer, Asbury Automotive, which refused to settle and instead decided to
litigate the case.53 Although the factual allegations in the two cases were “substantively identical,”
the Commission did not include an unfair-discrimination claim in the Asbury complaint.54 As
then-Commissioner Ferguson explained: “The reader can do the math. The majority has advanced
48 Id. at 2–3.
49 Press Release, FTC, FTC, State of Arizona Take Action Against Coulter Motor Company for Deceptive Pricing and
Discriminatory Practices (Aug. 15, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/08/ftc-state-
arizona-take-action-against-coulter-motor-company-deceptive-pricing-discriminatory. 	In 	the 	interim, 	the
Commission had filed two more unadjudicated complaints asserting unfair-discrimination counts. Complaint, FTC v.
Rhinelander Auto Ctr., Inc., et al., No. 3:23-cv-737 (W.D. Wis. Oct. 24, 2023); Complaint, FTC v. Floatme Corp., et
al., No. 5:24-cv-00001 (W.D. Tex. Jan. 2, 2024). When those complaints were filed, the three Commissioners in the
Coulter majority were the sole members of the Commission. In other words, unfair-discrimination claims have only
been advanced on party-line votes. See Concurring Statement of Commissioner Andrew N. Ferguson, In re Asbury
Automotive Group, Inc., et al., Matter No. 2223135, at 2 (Aug. 16, 2024) (“Ferguson Concurrence”).
50 Concurring and Dissenting Statement of Commissioner Andrew N. Ferguson, Coulter Motor Company, LLC, Matter
No. 2223033, at 7–8 (Aug. 15, 2024) (“Ferguson Dissent”); Dissenting and Concurring Statement of Commissioner
Melissa Holyoak, Coulter Motor Company, LLC, Matter No. 2223033 (Aug. 15, 2024) (“Holyoak Dissent”).
51 Holyoak Dissent at 2.
52 Id.
53 Press Release, FTC, FTC Takes Action Against Auto Dealer Group Asbury Automotive for Discriminating Against
Black and Latino Consumers and Charging for Unwanted Add-Ons (Aug. 16, 2024), https://www.ftc.gov/news-
events/news/press-releases/2024/08/ftc-takes-action-against-auto-dealer-group-asbury-automotive-discriminating-
against-black-latino.
54 Ferguson Concurrence at 1.

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its novel theory in a case no court will decide but omitted it from a proceeding that could very well
go to court. The only inference to draw is that the majority does not want a court to look under
the hood of its new Section 5 theory.”55 This is no surprise: as discussed in more detail below, the
theory has no basis in the text or history of Section 5, and the only court to consider a similar
theory strongly rejected it.56
The provenance of the unfair-discrimination theory is recent, its implications are sweeping,
its precedential support is nonexistent, and its substance—as discussed in detail below—is
indefensible.
C. Disparate-impact claims under ECOA
ECOA prohibits creditors from discriminating against credit applicants on a variety of
grounds (such as race, religion, age, and marital status).57 	There is no question that ECOA
proscribes practices that intentionally discriminate on the basis of these protected characteristics
(i.e., disparate treatment). 	There has been disagreement, however, as to whether ECOA also
proscribes “disparate impact”—that is, policies that have disparate effects on different groups
(even in the absence of any intentional discrimination).
The Commission has brought disparate-impact claims under ECOA in the past,58 and some
courts have endorsed such claims.59 But as then-Commissioner Ferguson explained—and former
Commissioner Holyoak agreed—there are grave reasons to doubt that ECOA permits disparate-
impact claims.60 Most importantly, in Inclusive Communities Project, the Supreme Court has set
out a textual analysis that must be performed to assess whether an antidiscrimination statute creates
disparate-impact liability. ECOA’s text simply does not meet the test. And none of the judicial
authorities endorsing disparate impact under ECOA have grappled with the issue. These points
are discussed in greater detail below.
Recently, complaint counsel in a pending matter moved to amend the complaint to remove
an ECOA discrimination count. The Commission unanimously granted the motion, and each of
the Commissioners joined a statement explaining that (1) the Commission had “lack[ed] evidence
to support a disparate-treatment claim under ECOA” and thus (2) “could proceed only on a
disparate-impact theory in violation of Executive Order 14821.”61
55 Id. at 2.
56 See Chamber of Com. of U.S. v. CFPB, 691 F. Supp. 3d 730 (E.D. Tex. 2023).
57 15 U.S.C. § 1691 et seq.
58 See, e.g., Complaint, FTC v. N. Am. Auto. Servs., No. 1:22-cv-01690 (N.D. Ill. Mar. 31, 2022).
59 See Ferguson Dissent at 3–4 (collecting cases).
60 Id. at 1–7; Holyoak Dissent at 2 n.12.
61 Asbury Statement at 4.

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Still more recently, the Department of Justice’s Office of Legal Counsel (“OLC”) issued
an opinion concluding that “the best reading of ECOA is that it prohibits only intentional
discrimination and does not provide for disparate-impact liability.”62 	Similarly, the Consumer
Financial Protection Bureau (which also has enforcement jurisdiction under ECOA) issued a new
rule explaining its view that ECOA creates liability only for intentional discrimination.63
III. 	Analysis
A. The Commission Will No Longer Pursue Disparate-Impact Claims of Any Kind.
The Commission now adopts a policy against pursuing disparate-impact claims in any
context. 	We rest this policy on two independently sufficient reasons. 	First, the FTC lacks the
statutory authority to pursue disparate-impact claims. Second, such claims are inconsistent with
the Constitution and with equality of opportunity, they impose unnecessary burdens on businesses
and the public, and they are contrary to President Trump’s executive order.
1. 	The Commission Lacks Statutory Authority to Pursue Disparate-Impact Claims.
The Commission will no longer bring disparate-impact claims, first, for the simple reason
that Congress has not authorized the FTC to bring such claims. The only two potential candidates
for such statutory authorization are Section 5 and ECOA. Neither one does the trick.64
Section 5 of the FTC Act
As recognized in recent statements by former Commissioners Phillips and Holyoak, and
then-Commissioner Ferguson, it is pellucidly clear that Section 5 is not an antidiscrimination
statute (let alone a disparate-impact statute).65
Start with the language of the statute, which is dispositive. Section 5 prohibits “unfair …
acts or practices.”66 This is the language of consumer protection, not antidiscrimination.67 When
Congress wishes to ban discrimination, it says so explicitly, as it has done, for example, in the
Civil Rights Act of 1964, Equal Pay Act of 1963, the Americans with Disabilities Act, and the
62 Whether the Equal Credit Opportunity Act Creates Disparate-Impact Liability, 50 Op. O.L.C. __, slip op. at *20
(June 12, 2026) (“O.L.C. Opinion”).
63 See Final Rule, Equal Credit Opportunity Act (Regulation B), 91 Fed. Reg. 21620, 21637 (Apr. 22, 2026) (explaining
that “disparate-impact claims are not available ... under the best reading of ECOA”).
64 Even assuming arguendo that this question is debatable, it is at the very least doubtful whether the Commission has
such statutory authority, and any further efforts to exercise it could well be rebuffed by courts. Accordingly, the
Commission has concluded that its resources are better spent on pursuing claims that have stronger legal footing.
65 See Phillips Dissent; Holyoak Dissent; Ferguson Dissent.
66 15 U.S.C. § 45(a)(1).
67 See Chamber of Com., 691 F. Supp. 3d at 743 (noting that “we typically think of discrimination as a separate problem
from consumer protection” (cleaned up)).

11
Equal Credit Opportunity Act (which applies to the FTC and is as discussed below), all of which
use the terms “discriminate” or “discrimination.”68
But there’s more. As then-Commissioner Ferguson observed, Section 5 is distinct from
every antidiscrimination statute in that it “does not explicitly identify the practices prohibited, the
class of persons protected, or the circumstances under which Congress has concluded disparate
treatment may be justified.”69 Namely, Section 5 lacks any semblance of the most fundamental
guardrails that one would expect to find—and does find—in every antidiscrimination statute.
Take these points one at a time. First, other antidiscrimination statutes identify a particular
context in which discrimination is illegal—such as housing, employment, or credit.70 Section 5,
by contrast, is not limited to any particular sector (making one wonder why any of the later civil
rights statutes were even necessary).71 To be sure, some might view the protean nature of “unfair
discrimination” as a feature rather than a bug. Recall that one former Commissioner argued that
Section 5 could serve “an important gap-filler to combat discrimination across the economy.”72
But this argument makes little sense. 	A legislature would not enact a gap-filling statute many
decades before creating the legal framework—the antidiscrimination laws—in which any “gaps”
could appear. This argument is thus a policy aspiration unrelated to the text, structure, or history
of Section 5.
Second, Section 5 says nothing about which classes are protected. For example, Title VII
prohibits employment discrimination based on race, color, religion, sex or national origin; Title IX
prohibits discrimination on the basis of sex; the Age Discrimination in Employment Act (ADEA)
prohibits employment discrimination against individuals aged 40 and over.73 And this is no small
matter for an antidiscrimination statute; it is in fact one of the most important political choices
Congress makes when it writes these laws. For example, Title VII of the Civil Rights Act of 1964
prohibits discrimination by public and private employers on the basis of religion.74 When those
same employers use federal funds to operate their programs, however, Title VI of the same law
does not forbid religious discrimination in the operation of those programs.75 And when Congress
68 Phillips Dissent at 3 (citing Title VII of the Civil Rights Act of 1964, Pub. L. No. 88-325, the Equal Pay Act of 1963,
Pub. L. No. 88-38, and the Americans with Disabilities Act, 42 U.S.C. § 12101).
69 Ferguson Dissent at 7.
70 Phillips Dissent at 3 (citing the Fair Housing Act, 42 U.S.C. § 3601 et seq., the Americans with Disabilities Act, 42
U.S.C. § 12101, and ECOA, 15 U.S.C. § 1691 et seq.).
71 See Ferguson Dissent at 7–8 (raising this question).
72 Chopra Speech at 2.
73 Title VII of the Civil Rights Act of 1964, Pub. L. No. 88-325; Title IX of the Education Amendments Act of 1972,
20 U.S.C. § 1681 et seq.; Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.
74 42 U.S.C. § 2000e-2(a).
75 Id. § 2000d; Bhombal v. Irving Indep. Sch. Dist., 809 F. App’x 233, 237 (5th Cir. 2020) (“Title VI does not authorize
claims for religious discrimination.”).

12
has determined that an antidiscrimination law is too narrow, it has amended the law to expand its
scope, including by listing additional protected classes.76 Congress thus carefully and precisely
chooses which classes are covered for any particular type of antidiscrimination law. But Section
5—if the “unfair discrimination” theorists are to be believed—prohibits all “discrimination” writ
large, and the particulars of the classes of persons protected and the types of discrimination
prohibited can be worked out later. That will not do.
Third, Section 5 says nothing about what type of discriminatory acts or practices are
prohibited or when such acts or practices might be justified. 	On the former point, Section 5 of
course has nothing at all to say about whether “unfair discrimination” is limited to disparate
treatment or—as the Commission has previously insisted—it extends to disparate impact as well.77
And assuming it does encompass disparate impact, Section 5’s text does not contain a clear
framework for justifying the purportedly discriminatory practice. 	It does not, for example,
establish a burden-shifting framework that 	would require the FTC to show 	that 	a less
discriminatory alternative was available that could serve the defendant’s legitimate need.78
Instead, it could potentially be read to prohibit practices that cause a disparate impact simply
because their benefits purportedly do not outweigh their costs—even if the practice serves a
legitimate end and there is no less restrictive alternative.79
In short, it is apparent from Section 5’s language that the provision creates no “unfair
discrimination” 	cause 	of 	action. 	Indeed, 	Section 	5 	lacks 	every 	basic 	feature 	of 	an
antidiscrimination statute.
Moreover, contorting the statutory language to allow for antidiscrimination claims would
create a statute of astonishing and unprecedented breadth. Because it is not limited by sector, it
could sweep across virtually the entire economy; because it does not identify a set list of protected
classes, it could ultimately prohibit discrimination across any number of dimensions; and because
it does not describe what types of discrimination are prohibited, or specify how they must be
justified, it could be interpreted to impose breathtakingly broad disparate-impact protections.
76 See, e.g., Equal Credit Opportunity Act Amendments of 1976, Pub. L. No. 94-239, § 2, 90 Stat. 251, 251–52 (1976)
(adding “race, color, religion, national origin, ... [and] age” as protected characteristics under ECOA); David H.
Carpenter, Cong. Rsch. Serv., R48113, The Fair Housing Act (FHA): A Legal Overview, at 1 (June 27, 2024),
https://www.congress.gov/crs_external_products/R/PDF/R48113/R48113.1.pdf (explaining that Congress amended
the Fair Housing Act in 1974 “to add sex discrimination to the list of prohibited activities” and amended the Act again
in 1988 “to prohibit discrimination on the additional grounds of physical and mental disability, as well as familial
status”).
77 Note that, as Commissioner Phillips has explained, that conclusion was clearly misguided in light of the textual test
set out in Inclusive Communities Project. Phillips Dissent at 4.
78 Id. at 4–5 (discussing this framework in the context of the Fair Housing Act).
79 Id.; see also Inclusive Cmtys. Project, 576 U.S. at 533 (“[B]efore rejecting a business justification … a court must
determine that a plaintiff has shown that there is an available alternative practice that has less disparate impact and
serves the entity’s legitimate needs.” (cleaned up)).

13
The Commission majorities’ own understanding of unfair discrimination in Coulter and
Passport Automotive is a case in point. The majorities in those cases adopted an understanding of
disparate impact that was remarkably broad in at least two respects.
First, as former Commissioners Holyoak and Phillips recognized, the majorities had to
contend with a basic textual mismatch between Section 5 and disparate-impact liability.80 Section
5 requires an unfair act or practice. 	But a disparate-impact claim involves a policy which may
itself be entirely neutral, and therefore could not be easily characterized as unfair. The majorities
in Coulter and Passport Automotive evaded this problem by simply collapsing two distinct parts
of the analysis and treating the disparate impact—the different costs allegedly paid, on average,
by different groups—as also the unfair practice itself. 	In so doing, the majorities effectively
dodged their obligation—under both Section 5 and conventional disparate-impact analysis—to
identify an objectionable underlying practice. As the Supreme Court has explained, “a disparate-
impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a
defendant’s policy or policies causing that disparity.”81 But the Coulter and Passport Automotive
majorities were undeterred.
Second, and relatedly, those majorities sought to make it extremely difficult—perhaps
virtually impossible—to justify any practice that causes a disparate impact. Now cleaving closely
to a portion of the statutory text, they insisted that there were only three ways that the disparate
pricing could be justified.82 First, a defendant could argue that the group that paid the higher prices
on average did not suffer a substantial economic injury. 	This showing would presumably be
difficult to make any time a meaningful disparate impact was identified. 	Second, a defendant
could argue that the consumer could reasonably have avoided this injury. Presumably, this would
rarely if ever be the case because the consumer is unlikely even to be aware of the disparate impact
(let alone be in a position to change the seller’s behavior). Finally, a defendant could argue that
the benefits of the practice at issue outweighed the costs. But recall that the “practice” identified
by the Coulter and Passport Automotive majorities was simply the disparate impact itself. And it
is hard to imagine how disparate impact in and of itself—rather than the underlying policy that
causes it—could have an offsetting benefit.
To sum up, the theory of disparate-impact liability under Section 5 that the Commission
adopted in Passport Automotive and Coulter would allow the Commission to seek out and punish
80 Holyoak Dissent at 5 n.29; Phillips Dissent at 5.
81 Inclusive Cmtys. Project, 576 U.S. at 542.
82 Joint Statement of Chair Lina M. Khan, Commissioner Rebecca Kelly Slaughter, and Commissioner Alvaro M.
Bedoya, In the Matter of Passport Auto Group, Matter No. 2023199, at 1–2 (Oct. 18, 2002); Joint Statement of Chair
Lina M. Khan, Commissioner Rebecca Kelly Slaughter, and Commissioner Alvaro M. Bedoya, Coulter Motor
Company, LLC, Matter No. 2223033, at 3–4 (Aug. 15, 2024) (“Joint Statement”).

14
virtually any statistical disparity that it disliked.83 And because the defendant may not have access
to the sophisticated statistical tools the Commission used to identify the purported disparities in
Passport Automotive and Coulter, the defendant may not even be in a position to know whether it
is guilty of unlawful discrimination.84 This is an unsettling prospect as a practical matter, but it
also further undercuts the “unfair discrimination” interpretation of Section 5 as a textual matter.
For one thing, courts are deeply skeptical when an agency “claim[s] to discover in a long-
extant statute an unheralded power representing a transformative expansion in its regulatory
authority.”85 This situation fits that description to a T. As then-Commissioner Ferguson put it, the
unfair-discrimination theory of Section 5 “rests on the premise that Congress adopted the broadest
antidiscrimination law in American history in 1938, but that we failed to notice it had done so until
2022.”86
More broadly, “[e]xtraordinary grants of regulatory authority are rarely accomplished
through modest words, vague terms or subtle devices.”87 Courts “presume that Congress intends
to make major policy decisions itself, not leave those decisions to agencies.”88 Accordingly, a
“merely plausible textual basis” is not enough to sustain such an assertion of agency power; only
“clear congressional authorization” will suffice.89 	And this is especially true when an agency
asserts an authority that would “significantly alter the balance between federal and state power” or
“the power of the Government over private property.”90 Such an authority can only be granted by
Congress with “exceedingly clear language.”91
These principles are fully applicable here. 	In its decisions treating Section 5 as an anti-
discrimination statute, the Commission has asserted a truly extraordinary power: to fill in the gaps
83 But see Inclusive Cmtys. Project, 576 U.S. at 540 (noting that “serious constitutional questions … might arise … if
[disparate-impact] liability were imposed based solely on a showing of a statistical disparity”); id. at 451 (“An
important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing
authorities and private developers leeway to state and explain the valid interest served by their policies …. As the
Court explained in Ricci, an entity could be liable for disparate-impact discrimination only if the challenged practices
were not job related and consistent with business necessity.” (cleaned up)).
84 Holyoak Dissent at 8; see Inclusive Cmtys. Project, 576 U.S. at 533 (“These cases also teach that disparate-impact
liability must be limited so employers and other regulated entities are able to make the practical business choices and
profit-related decisions that sustain a vibrant and dynamic free-enterprise system.”).
85 West Virginia v. EPA, 597 U.S. 697, 738 (2022) (cleaned up).
86 Ferguson Dissent at 7; see also Holyoak Dissent at 6 (noting that proponents of the theory would have to “convince
a court that when Congress granted [the FTC] ‘unfair or deceptive acts or practices’ enforcement authority in 1938,
Congress authorized the Commission to act as a civil rights enforcer across the entire economy.”).
87 West Virginia, 597 U.S. at 723 (cleaned up).
88 Id. (cleaned up).
89 Id. (cleaned up).
90 Ala. Ass’n of Realtors v. HHS, 594 U.S. 758, 764 (2021) (quoting U.S. Forest Serv. v. Cowpasture River Pres.
Ass’n, 590 U.S. 604, 622 (2020)).
91 Id.

15
among—that 	is, 	obliterate 	the 	congressionally 	imposed 	limitations 	on—all 	existing
antidiscrimination statutes. And this extraordinary power would profoundly shift the federal-state
balance by displacing a great many decisions made by States “about what classes are protected or
not, what conduct is prohibited or allowed, and what defenses and remedies are available or not.”92
If Congress wished to give the FTC the power to pursue unfair-discrimination claims, it
would have said so explicitly as it has every other time it prohibited discrimination. 	But as
explained above, Section 5 does not grant the FTC such a power at all, let alone clearly. 	The
“unfair discrimination” reading of Section 5 must therefore be rejected.
Finally, this conclusion is reinforced by a district court decision that considered a virtually
identical theory advanced by the CFPB, which sought to bring disparate-impact claims based on
statutory unfairness language that was modeled after, and functionally identical to, the language
in Section 5 of the FTC Act.93 The district court firmly rejected CFPB’s position, for reasons that
apply straightforwardly to Section 5, and largely echo the points made above. In particular, the
Court observed that: (1) in light of the extraordinary assertion of agency power at issue, the
statutory language would have to be quite clear;94 (2) Congress “knew how to clearly add
nondiscrimination to the CFPB’s portfolio when it meant to do so,” for example by granting the
CFPB the power to enforce ECOA95 (which Congress has granted to the FTC as well)96; and (3)
the statutory language made no mention of discrimination, protected classes, or disparate-impact
standards (just as Section 5 does not).97 Ultimately, just like the CFPB, the FTC would “face[] a
high burden in arguing that Congress conferred a sweeping antidiscrimination authority without
defining protected classes or defenses, without using the words ‘discrimination’ or ‘disparate
impact,’ and while separately giving the agency authority to police ‘discrimination’ only in specific
areas.”98 Just like the CFPB, the FTC also could not meet that high burden. And for the reasons
put forth here, there is good reason to believe that other federal courts reviewing such a theory
would come out the same way.
One thing is clear, the “unfair discrimination” theory is foreclosed as a legal matter. And
the theory’s proponents know it. As noted above, the former Commissioners who advanced this
theory always made sure to avoid judicial review. But eventually courts will have their say. The
CFPB decision illustrates that they are not likely to look upon the theory favorably. And more
broadly, aggressive and unfounded assertions of agency power risk a political backlash that might
92 Chamber of Com., 691 F. Supp. 3d at 740–41.
93 Id. at 742; see 12 U.S.C. §§ 5531(c), 5536(a)(1)(B); Holyoak Dissent 4–6.
94 Chamber of Com., 691 F. Supp. 3d at 740–41.
95 Id. at 741–42; see 15 U.S.C. 1691; see also 12 U.S.C. § 5493(c)(2)(A).
96 15 U.S.C. § 1691c(c).
97 Chamber of Com., 691 F. Supp. 3d at 742.
98 Id. at 741.

16
compromise the Commission’s other important work on behalf of Americans.99 	As former
Commissioner Holyoak observed, “[t]he FTC has strayed before in its use of its unfairness
authority,” and “[t]hat exercise in legislation ended poorly.”100
To sum up, Section 5 does not authorize “unfair discrimination” claims of any stripe. It
therefore cannot support the assertion of any disparate-impact claims by the FTC.
Equal Credit Opportunity Act
We reach the same conclusion about disparate-impact claims under ECOA. To be sure,
unlike Section 5, ECOA actually is an antidiscrimination statute. But, as OLC recently concluded,
ECOA “create[s] liability only for intentional discrimination.”101
In Inclusive Communities Project, the Supreme Court articulated a textual test for
determining whether an antidiscrimination statute allows for disparate-impact liability. The Court
explained that “antidiscrimination laws … encompass disparate-impact claims when their text
refers to the consequences of actions and not just to the mindset of actors, and where that
interpretation is consistent with statutory purpose.”102 Accordingly, the Supreme Court held that
the Fair Housing Act imposed disparate-impact liability because it prohibited policies that would
“otherwise make unavailable” a dwelling on the basis of a protected status, which demonstrated
Congress’s intention to address “the consequence of [the policy] rather than the actor’s intent.”103
Similarly, the Court had previously relied on Title VII’s language proscribing practices that
“otherwise adversely affect [an individual’s] status as an employee, because of [the individual’s
protected status]” to conclude that Title VII supported disparate-impact claims.104
As OLC has explained, ECOA does not satisfy the Inclusive Communities Project test and
therefore does not give rise to disparate-impact liability. To begin, ECOA contains no language
indicating a focus on consequences of actions rather than a discriminatory mindset. 	“The
conclusion that ECOA does not create liability for disparate impacts is confirmed by the statute’s
complete lack of ‘results-oriented’ language.”105 Moreover, ECOA’s focus “on intent” also “rul[es]
99 Holyoak Dissent at 6–8.
100 Id. at 8 (citing Beales, supra note 36).
101 O.L.C. Opinion at *1 (“Under the plain meaning of ECOA’s text and the analysis required by current Supreme
Court precedent, ECOA creates liability only for intentional discrimination. 	Of course, disparate impacts may
sometimes suggest intentional discrimination. But even then, it is always the intentional discrimination—not the
disparate impact itself—that gives rise to ECOA liability.” (internal citations omitted)).
102 Inclusive Cmtys. Project, 576 U.S. at 533.
103 Id. at 533–34; see Ferguson Dissent at 2–3 (discussing Inclusive Cmtys. Project).
104 Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 985 (1988) (emphasis added) (quoting 42 U.S.C. § 2000e-2(a)(2)
(1982)); see Smith v. City of Jackson, 544 U.S. 228, 235 (2005) (plurality op.) (“While our opinion in Griggs [v. Duke
Power Co., 401 U.S. 424 (1971)] relied primarily on the purposes of [Title VII], … we have subsequently noted that
our holding represented the better reading of the statutory text as well.” (citing Watson, 487 U.S. at 991)).
105 O.L.C. Opinion at *9 (quoting Inclusive Cmtys. Project, 576 U.S. at 534).

17
out the possibility of disparate impact liability.”106 ECOA provides that “[i]t shall be unlawful for
any creditor to discriminate against any applicant, with respect to any aspect of a credit
transaction … on the basis of [membership in a protected class].”107 By using “causal language ...
to link the term ‘discriminate’ with various protected characteristics” specified by statute, Congress
confirmed that ECOA “requires the intent generally implicit in the concept of discrimination.”108
Reading “disparate-impact liability” into ECOA would erase the statute’s causation and intent
requirements.109 As even a commentator who supports disparate-impact liability under ECOA has
acknowledged, “Inclusive Communities’ textual analysis does not support ECOA disparate impact
claims.”110
Ultimately, ECOA fails the Inclusive Communities Project test because it lacks results-
oriented language. And while Inclusive Communities Project also “looked to three indicators of
statutory purpose—statutory structure, statutory history, and legislative history”111—none of those
factors move the needle here.
First, 	statutory 	structure—namely, 	ECOA’s 	enumerated 	exceptions 	to 	liability—
“provide[s] no support for the idea that ECOA creates disparate-impact liability.”112 Importantly,
ECOA lacks the safe harbors against disparate-impact liability that exist in other statutes where
the Supreme Court has found disparate-impact liability, indicating that Congress “did not
contemplate such liability” under ECOA.113 And each of the exemptions ECOA does provide “is
compatible 	with 	the 	understanding 	that 	the 	statute 	creates 	liability 	only 	for 	intentional
discrimination.”114
Second, statutory history “also gives no indication that ECOA is intended to hold creditors
liable 	for 	discrimination 	when 	they 	act 	without 	discriminatory 	intent.”115 	In 	Inclusive
Communities Project, the Court found that disparate-impact liability was supported by legislative
amendments that effectively ratified longstanding, settled interpretations of the statute at issue.116
“But when Congress amended ECOA in 2010, there was no settled interpretation of the statute for
106 Id. at *6.
107 15 U.S.C. § 1691(a).
108 O.L.C. Opinion at *7.
109 Id. at *7–8.
110 Winnie F. Taylor, The ECOA and Disparate Impact Theory: A Historical Perspective, 26 J.L. & Pol’y, 575, 627
(2018).
111 O.L.C. Opinion at *12.
112 Id.
113 Id.
114 Id. at *15.
115 Id.
116 576 U.S. at 535–36.

18
Congress to ratify,” and thus the amendment provides no support for imposing disparate-impact
liability.117
Finally, ECOA’s legislative history does not change the analysis. The Supreme Court has
repeatedly made clear that the lodestar of statutory interpretation is the statutory text.118 	The
primary inquiry under Inclusive Communities Project is therefore a textual one. At any rate, even
if one were inclined to consider legislative history at all, it is uninformative here. In particular,
while some legislative history from the 1976 amendments to ECOA could be read to suggest the
availability of disparate-impact liability,119 it is of dubious value. 	After all, the basic ECOA
prohibition of “discriminat[ion] against any applicant on the basis of [a set of protected
characteristics]” was adopted when Congress passed ECOA in 1974, and was reenacted without
change in the 1976 amendments.120 	Those amendments added several categories of prohibited
discrimination but did not change that key language.121 Legislative history from 1976 is of limited
value (at best) in assessing what a different Congress had done when it originally adopted the
relevant text in 1974, and such legislative gloss certainly cannot change the meaning of ECOA’s
preexisting mandate.122 This is why OLC concluded “the legislative record contains no evidence
of a congressional intent to impose disparate-impact liability.”123
Despite the lack of support in ECOA (or even in its legislative history), some district courts
have held that disparate-impact claims are cognizable under ECOA.124 But district court holdings
do not bind anyone outside of the specific parties, in the specific context of that case or
controversy.125 And no appellate court has gone so far.126 Moreover, it appears that “no court has
117 O.L.C. Opinion at *16.
118 E.g., Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006) (“We have stated time and again
that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.
When the statutory language is plain, the sole function of the courts—at least where the disposition required by the
text is not absurd—is to enforce it according to its terms.” (cleaned up)).
119 See S. Rep. No. 94-589, at 4–5 (1976).
120 Pub. L. No. 93-495, § 503, 88 Stat. 1521, 1521 (1974).
121 Pub. L. No. 94-239, § 2, 90 Stat. 251, 251–52 (1976); see Report Prepared by the Republican Staff of the Committee
on Financial Services, U.S. House of Representatives, Unsafe at Any Bureaucracy: CFPB Junk Science and Indirect
Auto 	Lending 	at 	9–10 	(Nov. 	24, 	2015), 	https://financialservices.house.gov/uploadedfiles/11-24-
15_cfpb_indirect_auto_staff_report.pdf (discussing the legislative history).
122 See, e.g., Jones v. United States, 526 U.S. 227, 238 (1999) (explaining “that subsequent legislative history is a
hazardous basis for inferring the intent of an earlier Congress” (cleaned up)); see also O.L.C. Opinion at *18.
123 O.L.C. Opinion at *17.
124 Ferguson Dissent at 5.
125 Id. at 5–6; see id. at 6 (explaining that “the Executive Branch has a constitutional duty to interpret laws Congress
has entrusted it with enforcing to determine when and how they should be enforced—subject always, of course, to
truly binding judicial decisions” but that “[d]istrict court opinions do not bind anyone, including the district judges
who wrote them”).
126 O.L.C. Opinion at *16 n.9.

19
considered whether ECOA permits disparate-impact claims under the framework prescribed by
Inclusive Communities.”127 Nonbinding lower court decisions that either pre-date or fail to apply
Inclusive Communities Project provide no basis to misread ECOA.
That the CFPB and Federal Reserve had previously promulgated regulations interpreting
ECOA’s legislative history to permit disparate-impact claims128 has no effect on the analysis either.
The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo129 renders agencies’
opinion on the matter of little value. In any event, the CFPB has now abandoned prior regulations
interpreting ECOA to authorize disparate-impact claims,130 and the Federal Reserve’s views are of
limited relevance, as its regulatory authority under ECOA was transferred in large part to the
CFPB.131
All told, “the best reading of ECOA is that it prohibits intentional discrimination and does
not provide for disparate-impact liability.”132
2. 	Disparate-Impact Liability Suffers from Fundamental Legal and Policy Defects,
as President Trump’s Executive Order Explains.
As noted above, President Trump’s executive order directs the FTC to “deprioritize
enforcement of all statutes and regulations to the extent they include disparate-impact liability.”133
Chairman Ferguson and Commissioner Meador have already made clear that they “embrace the
President’s Executive Order wholeheartedly and will take the necessary steps to implement this
policy.”134 The FTC is actually required by applicable law to forgo disparate-impact claims, as
already discussed, because the FTC lacks any statutory authority to pursue such claims. But, even
were that not the case, certainly no source of law requires the FTC to assert claims on the outer
bounds of its authority. 	Accordingly, as directed by the order, the FTC will no longer bring
127 Id.; see Ferguson Dissent at 5.
128 See 12 C.F.R. § 1002.6(a) (“The legislative history of [ECOA] indicates that the Congress intended an ‘effects test’
concept, as outlined in the employment field by the Supreme Court … to be applicable to a creditor’s determination
of creditworthiness.”); id. § 202.6(a) n.1 (same).
129 603 U.S. 369 (2024).
130 Final Rule, Equal Credit Opportunity Act (Regulation B), 91 Fed. Reg. 21620, 21629 (Apr. 22, 2026) (“As a result,
the Bureau is deleting language in § 1002.6(a) and its accompanying commentary indicating that disparate-impact
liability, which is referred to in the rule as the ‘effects test,’ may be applicable under ECOA, and adding language
stating that the Act does not recognize the ‘effects test.’ The Bureau is also deleting the language in comment 2(p)–4
referring to the ‘effects test.’”).
131 See 12 U.S.C. § 5581(b)(1) (transferring authority from the Federal Reserve Board to CFPB).
132 O.L.C. Opinion at *20.
133 Disparate Impact Order §§ 4, 9.
134 Asbury Statement at 4.

20
disparate-impact claims,135 and will instead focus on other enforcement priorities that do not
conflict with the policy of the United States.
Even aside from the dubious legality of disparate-impact liability and the executive order’s
direction, there are sound reasons to abandon that theory of liability. As explained in President
Trump’s executive order, disparate-impact liability is corrosive, unlawful, and un-American.
The Commission wholly agrees with President Trump that equality of opportunity,
colorblindness, and meritocracy are fundamental American ideals which are indispensable to
securing equal treatment under the law.136 	Disparate-impact liability, by contrast, virtually
compels regulated entities to engage in racial balancing (and other forms of balancing based on
protected characteristics). 	In doing so, it violates the equal protection guarantee of the
Constitution, runs contrary to the civil rights legislation, and harms businesses and the public by
preventing businesses from making merit-based decisions. For example, OLC recently explained
that Title VII disparate-impact liability as embodied in certain guidelines from the Equal
Employment Opportunity Commission is unconstitutional, and it identified three principles that
could “prevent a constitutional collision under current Supreme Court precedent”: (1) “the
business-necessity defense to liability must provide defendants significant ‘leeway to state and
explain the valid interests served by their policies,’” (2) “any disparate-impact claim must satisfy
a robust causality requirement,” and (3) “the plaintiff must offer a viable alternative to the
challenged practice that accomplishes the employer’s legitimate goals ‘just as well.’”137
The form of disparate-impact liability that has recently been pursued by the Commission
under the label of “unfair discrimination” utilizes none of those limiting principles. Indeed, the
applications of disparate-impact liability that the Commission previously contemplated were
particularly indefensible. As described above, reading disparate impact into Section 5 potentially
turns that provision into the broadest antidiscrimination law in history, with no limit on the number
of protected classes, no delineation of prohibited practices, and no meaningful parallel to the
business necessity defense (which, as noted, is itself inadequate).
The FTC declines to take part in this pernicious racial shell game any longer.
* 	* 	*
To sum up: The Commission lacks statutory authority to pursue disparate-impact claims
under any statute it enforces; such claims are pernicious and contrary to fundamental constitutional
values; and they are inconsistent with President Trump’s order to the federal government to
135 See Disparate Impact Order § 2; Asbury Statement at 4 (recognizing that pursuing a disparate-impact claim under
ECOA would violate the Executive Order).
136 Disparate Impact Order § 1; Asbury Statement at 2–4.
137 Constitutionality of Disparate-Impact Liability Under Title VII, 50 O.L.C. __, slip op. at *2, *14–18 (June 9, 2026)
(first quoting Inclusive Cmtys. Project, 576 U.S. at 541; then quoting Louisiana v. Callais, 146 S. Ct. 1131, 1159
(2026)).

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deprioritize such claims. In light of these mutually reinforcing considerations, the Commission
will no longer assert disparate-impact claims in any context.
B. The Commission Will No Longer Pursue Any Antidiscrimination Claims Under
Its Section 5 Unfairness Authority.
The Commission also adopts a policy against pursuing any antidiscrimination claims under
Section 5. As explained in detail above, Section 5 is not an antidiscrimination statute and does not
authorize the Commission to bring any antidiscrimination claims. A party challenging such a claim
in court would, and should, prevail. Going forward, the Commission will abide by this limitation
in its statutory authority. 	It will pursue discrimination claims in appropriate contexts—for
example, it will continue to assert disparate-treatment claims under ECOA—but it will treat
Section 5 as the consumer-protection statute it has always been.