FTC signs deals not to enforce its own fair-lending orders against three auto-lending defendants

The Federal Trade Commission has signed agreements with two auto dealers and the former general manager of a third, promising not to enforce, or help anyone else enforce, their court-ordered obligations to maintain fair lending programs and refrain from unlawful credit discrimination ^[1]. That covers three defendants ^[19] whose federal obligations around discretionary markup are now unattended, and the objections on record come from an Arizona attorney general who was a coplaintiff ^[3] and a federal district court that says it never got to look at the deal ^[2].

The underlying conduct was priced, not rhetorical. The FTC had accused all three of charging people of color more, on average, in discretionary markups and add-on fees than white borrowers ^[5]. In the case involving the dealership chain Passport, the agency alleged that a financial institution sent the chain multiple letters flagging disparities in the markup rates it charged Black borrowers ^[6]. Attorneys for Passport declined to comment on the new agreement ^[7]. The FTC and Arizona had accused Coulter Motor Company and Gregory DePaola, a former general manager at the Phoenix-area dealer, of charging Latino customers more in interest and for add-on products in violation of the federal Equal Credit Opportunity Act, among other charges ^[8]. DePaola signed one of the new agreements and did not respond to a request for comment; Coulter and an attorney who represented both in the 2024 settlement also did not respond ^[9].

The stated reason for the retreat is theory, not facts. The FTC is dropping the obligations because the defendants did not explicitly instruct salespeople to treat Black and Latino borrowers differently ^[4]. In a press release, the agency said its earlier accusations were "based on statistical analyses designed to show disparate-impact liability" and that it will not pursue those claims anymore ^[11]. Disparate impact covers a neutral-looking practice that disproportionately harms a protected group without that intent; disparate treatment covers intentional discrimination ^[12]. Aaron Rieke, chief legal engineer at the legal startup Privlex and a former FTC attorney adviser, told Wired the impact theory is already hard, requiring a specific policy, proof it caused a disparity, and proof the policy serves no legitimate purpose ^[13].

The procedure is the part operators should read twice. The commission voted the agreements out in early August, but they took effect the prior November, roughly nine months earlier ^[16][20]. Signing and voting them out effectively deletes two sections from each order and could make reversal by a future administration difficult ^[17]. One deleted section bars discrimination against credit applicants based on race, color, religion, national origin, sex, marital status, age, or reliance on public assistance ^[18]. The Northern District of Illinois, which presided over one of the cases, says it was never given the chance to evaluate one of the new agreements ^[2].

Arizona attorney general Kris Mayes called the move outrageous ^[3] and said she finds it "appalling that the FTC would backtrack on the settlement and treat its state partners this way, not to mention essentially greenlight discrimination against Arizonans" ^[10]. The direction was set last year, when the Trump administration ordered the FTC and other agencies to review past orders and take "appropriate action" under an executive order titled "Restoring Equality of Opportunity and Meritocracy," having said disparate-impact liability "undermines our national values" ^[15]. Logan Koepke of the nonprofit Upturn argues the analysis matters more now, since AI and automated systems increasingly decide things like loan eligibility ^[14]. The Wired report was written by a former FTC employee who says they did not work on these matters ^[21].

Watch whether Arizona acts on its own authority in the Coulter matter ^[3][8], whether the Illinois court responds to being bypassed ^[2], and how many other outstanding orders with the same two sections get the same treatment under the executive order review ^[15][18].