FTC Strikes Deals to Ignore Unlawful Credit Discrimination
The agency signed agreements to not enforce parts of three federal court orders against auto dealers accused of discrimination—and didn’t notify judges or at least one of its coplaintiffs.
The Federal Trade Commission (FTC) has recently canceled agreements that required three defendants to cease unlawful credit discrimination practices against Black and Latino borrowers. The FTC previously accused the defendants of charging people of color higher interest rates and adding more fees compared to white borrowers. Attorney General Kris Mayes of Arizona, who was a coplaintiff in one of the affected cases, called the move "outrageous."
The FTC says it dropped the obligations because the defendants did not explicitly tell its salespeople to treat borrowers of different races differently. Disparate-impact discrimination, which the FTC will no longer enforce, occurs when seemingly neutral policies disproportionately harm a protected group, even if unintentional. Critics argue that this change is concerning as AI and automated decision-making systems are increasingly used in credit decisions, making disparate-impact analysis more critical.
Despite the FTC's decision, the Arizona Attorney General's office plans to continue enforcing the order itself, while the Northern District of Illinois court has no comment on the agreement.
Written by urgent.news from Wired's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
