FTC Agrees Not to Enforce Anti-Discrimination Orders Against Auto Dealers

The Federal Trade Commission (FTC) has entered into agreements with two auto dealerships—including the chain Passport—and the former general manager of a third, Coulter Motor Company, to cease enforcing or assisting enforcement of court-ordered requirements to maintain fair lending programs and avoid unlawful credit discrimination. The FTC's rationale, stated in a press release, is that its prior cases relied on 'statistical analyses designed to show disparate-impact liability,' a theory the agency says it will no longer pursue. Disparate-impact discrimination refers to neutral policies that disproportionately harm protected groups, even without explicit intent to discriminate. The original cases accused all three parties of charging Black and Latino borrowers more in discretionary markups and add-on fees compared to white borrowers on average. In the Passport case, the FTC alleged that a financial institution sent the dealership multiple letters flagging racial disparities in markup rates. The FTC and Arizona jointly accused Coulter and former GM Gregory DePaola of violating the federal Equal Credit Opportunity Act. Arizona AG Kris Mayes, a coplaintiff in the Coulter case, stated she was not informed of the new agreement and called it 'appalling,' saying the FTC had 'essentially greenlit discrimination against Arizonans.' The Northern District of Illinois, which presided over a related case, also said it was not given the opportunity to evaluate the new agreement.