FTC Will No Longer Pursue Disparate-Impact and “Unfair Discrimination” Claims

On August 7, 2026, the Federal Trade Commission issued a policy statement announcing it will no longer pursue claims based on disparate-impact or “unfair discrimination” theories, under any statute it enforces.  The statement follows President Trump’s executive order on “Restoring Equality of Opportunity and Meritocracy.”  Here is what the statement says and what it means for the mortgage industry.

What the Policy Statement Says

The FTC grounds its new policy on two points:

• The Commission lacks statutory authority to bring disparate-impact claims under Section 5 of the FTC Act or under the Equal Credit Opportunity Act.

• Disparate-impact liability, in the Commission’s view, conflicts with the Constitution and imposes unnecessary costs on businesses and consumers.

Going forward, the FTC says it will treat Section 5 solely as a consumer protection provision and will not use it to bring antidiscrimination claims of any kind, disparate-impact or otherwise.

The ECOA Analysis

The FTC adopts the position, recently taken by the Department of Justice’s (DOJ) Office of Legal Counsel and by the CFPB in its own rulemaking, that ECOA creates liability only for intentional discrimination:

• ECOA’s text uses causal language tying “discriminate” to specific protected characteristics, which the FTC reads as requiring intent.

• The statute lacks the “results-oriented” language courts have relied on to find disparate-impact liability under other civil rights laws.

This position aligns the FTC with the CFPB and DOJ on how ECOA is being read by two of the agencies most active in credit discrimination enforcement.

What It Means for Mortgage Lenders

The statement changes how the FTC itself will enforce, but it does not change ECOA’s text, and it does not bind the courts, other federal regulators, state attorneys general, or private plaintiffs, all of whom remain free to pursue disparate-impact theories where the law allows.  A few points worth keeping in mind:

• Fair lending exposure under ECOA does not disappear; it narrows only with respect to FTC enforcement priorities.

• As readers know, the U.S. Supreme Court has recognized disparate-impact as a viable theory under the Fair Housing Act.

• State fair lending and consumer protection laws may still raise disparate-impact issues and are unaffected by this statement.

• Underwriting and pricing policies that produce disparities along protected-class lines can still draw scrutiny from other regulators or plaintiffs, even absent a finding of intent.

• Lenders should continue documenting the business rationale for policies that could show disparate effects, since that rationale remains relevant even where disparate-impact theories are less likely to be pursued.

Questions about this policy statement or related fair lending compliance?  Contact troy@garrishorn.com.