COLUMN-Trump nixed a key civil rights enforcement tool. This FTC case shows what that looks like.

By Jenna Greene

May 15 (Reuters) - Wondering what civil rights enforcement — or lack thereof — might look like for the next four years? The U.S. Federal Trade Commission offers a glimpse.

In a little-noticed court filing, the agency last week moved to amend its administrative complaint against a large automotive dealership group, dropping allegations that car salespeople in Texas charged Black and Latino buyers hundreds of dollars more than white customers for the same add-on products such as extended warranties or special paint coatings.

In abandoning the claims, the agency in court papers said it was acting out of “an abundance of caution” to comply with an executive order issued by President Donald Trump halting federal enforcement of cases involving disparate impact liability.

A longstanding tool for combatting discrimination, disparate impact actions target policies that may appear neutral but disproportionately hurt a protected group.

As my Reuters colleague Daniel Wiessner explained, such claims often arise in the employment context, where, for example, women and older or disabled workers have challenged employers’ physical fitness tests. Employers can counter that a policy with a disparate impact is legal when it’s necessary to operate a business.

Here, the FTC’s case against three dealerships owned by Asbury Automotive Group ABG.N, a publicly traded company that reported $17 billion in revenue last year, pleaded a disparate-impact theory of liability under the Equal Credit Opportunity Act.

The company did not respond to a request for comment, nor did its outside counsel from Foley & Lardner. It has counter-sued the FTC in federal court in Fort Worth, Texas, challenging the constitutionality of the agency’s in-house administrative forum. The case remains pending.

According to the FTC's lawsuit filed in August, one Asbury dealership charged Black consumers on average $298 more than white customers for the same add-ons, while Latino consumers paid an average of $214 more.

Charging higher prices to consumers based on their race runs afoul of the equal credit law, which prohibits creditors from discriminating against credit applicants based on factors including race, color and national origin, the FTC argued at the time.

In backpedaling now, the FTC, which did not respond to requests for comment, said in court papers that it was acting “in light of Executive Order No. 14281.”

Titled “Restoring Equality of Opportunity and Meritocracy,” Trump’s order directs federal agencies to deprioritize enforcement of all statutes and regulations that include disparate-impact liability, which he said “undermines our national values” and runs contrary to equal protection under the law.

It strikes me that charging different prices based on the color of one's skin would also run contrary to equal protection, but apparently that’s no longer an allegation the FTC wants to litigate.

Asbury in court papers vigorously denied the FTC’s claims, which include still-pending allegations that the dealerships hit customers of all races with hidden fees for unwanted add-ons, calling the accusations “scurrilous and false.”

Asbury also said in the filing that the FTC refused to provide details about customers, vehicles or transactions to support the (now-abandoned) race discrimination claims. The company, which owns 152 dealerships across 14 states, said its own review of sales data did not show the alleged racial disparity.

The FTC's investigation of Asbury began in 2022, according to disclosures filed by the company with the U.S. Securities and Exchange Commission and brought the enforcement action in August 2024.

“The FTC unanimously charged Asbury with overcharging Black and Latino consumers,” Samuel Levine, the former director of the FTC’s Bureau of Consumer Protection who is now a senior fellow at the Berkeley Center for Consumer Law and Economic Justice, said via email. All five then-commissioners voted in favor of the action.

Reversing course “sends a dangerous message that companies can discriminate with impunity," Levine told me.

Now-FTC chairman Andrew Ferguson issued a concurring statement at the time to explain why he supported the complaint. Ferguson said he had “some reservations” about whether the Equal Credit Opportunity Act satisfies the statutory requirements for disparate-impact liability in instances where discrimination may be unintentional. But he also noted that the FTC and courts have previously interpreted the credit law as doing so.

The three Democratic commissioners went further, writing that “Every district and appellate court to face the issue—and there have been many—has accepted that disparate impact is a cognizable basis” for liability.

The case law hasn’t changed. What’s different is who occupies the White House.

Still, Amalea Smirniotopoulos, senior policy counsel and co-manager of Legal Defense Fund’s equal protection initiative, said companies shouldn’t take the FTC’s retreat as a free pass to discriminate. The Trump administration, she said via email, “cannot change federal civil rights laws or the duty they impose not to discriminate."