FTC abandons court-mandated fair-lending rules for three auto dealers

The Federal Trade Commission finalized agreements that release two auto dealers and former Phoenix-area manager Gregory DePaola from court-ordered fair-lending requirements, including prohibitions on discriminatory credit practices and mandatory employee training. The Northern District of Illinois said it never examined one of the deals, while Arizona Attorney General Kris Mayes called the move “outrageous” and pledged state-level enforcement.

The FTC justified the shift by stating its prior accusations were based on statistical disparate-impact models, which it now refuses to enforce. Former FTC adviser Aaron Rieke warned that abandoning disparate-impact theory weakens civil-rights safeguards, especially as AI-driven lending expands. The agreements, voted on in early August but effective since November, effectively erase two sections of the original orders without court approval, raising concerns about future reversibility. Arizona and Illinois officials said they were not notified and will monitor compliance independently.