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FTC Abandons Disparate Impact Liability and Modifies Compliance Obligations

Federal Trade CommissionAugust 7, 2026Federal Trade Commission

Summary

The FTC issued a policy statement abandoning disparate-impact liability, stating it will no longer bring claims based on this theory. It also modified compliance obligations for several companies based on past decisions.

Remedy

The FTC modified compliance-related obligations for Napleton Inc., Passport Auto Group, and an individual associated with Coulter Motor Company LLC.

Compliance Program

Contract Impact

In-house legal teams should review their vendor and customer contracts for any provisions that might be interpreted as imposing disparate-impact liability. They should ensure that any compliance obligations related to discrimination are based on disparate treatment rather than disparate impact. Additionally, they should review any agreements that require statistical analysis of outcomes by demographic group, as these may need to be revised in light of the FTC's new policy.

Contract Search Terms

disparate impactdiscriminationEqual Credit Opportunity ActFTC Act Section 5compliance obligationsstatistical analysisrace-based decisions

Laws Cited

Equal Credit Opportunity ActFTC Act Section 5

Violation Types

Entity Details

Entity

Federal Trade Commission

Industry

Other

Official Sources

Source Evidence

Entity Name
"The Federal Trade Commission today announced a policy statement"
Laws Cited
"Equal Credit and Opportunity Act"
Laws Cited
"Section 5 of the FTC Act"
Violation Types
"disparate-impact or “unfair discrimination” theories"
Remedy Summary
"entered into agreements to modify certain compliance-related obligations for Napleton Inc., Passport Auto Group and an individual previously associated with Coulter Motor Company LLC."

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