The Federal Trade Commission has dropped its claims of discrimination against three Texas car dealerships to comply with an executive order issued by President Donald Trump.
According to court documents, the FTC pulled back its 2024 claim that Asbury Automotive Group’s David McDavid Ford of Fort Worth, David McDavid Honda of Frisco and Irving had discriminated against Black and Latino consumers in charging more for add-ons.
Asbury denied the discriminatory allegations along with the FTC’s complaint that it charged customers hidden fees for unwanted add-ons and filed a suit against the agency.
While dropping the discriminatory complaint, the FTC is continuing its case on the hidden fees and unwanted add-ons.
Trump’s April Executive Order, which rejects the use of the “disparate impact” theory of liability by federal agencies, triggered the dropping of the discriminatory complaint.
The complaint relied on the longstanding legal doctrine used to identify discrimination under the Civil Rights Act of 1964. Disparate impact occurs when a seemingly neutral policy or practice disproportionately harms a protected group, even absent discriminatory intent.
While the Executive Order does not alter statutory civil rights protections, it directs federal agencies to “deprioritize” enforcement actions based on disparate impact, labeling the theory as an “unlawful” basis for regulatory action.
In its court filings, the FTC stated it was abandoning the claims “out of an abundance of caution” to comply with the directive.
“The move signals a significant shift in federal civil rights enforcement strategy and raises questions about the future of disparate impact as a regulatory tool for the foreseeable future,” said NIADA CEO Jeff Martin. “While NIADA supports this new regulatory and enforcement posture at the federal level, we remind dealers that failure to comply with fair lending laws and regulations carries significant risk and strongly encourage dealers and lenders to adhere to policies and practices that support equal access to credit for all.”
