New FTC decision could ‘inject’ DEI into business practices nationwide, GOP commissioner says

The Federal Trade Commission (FTC) has issued a new ruling, with one Republican commissioner warning that it could incentivize diversity, equity, and inclusion (DEI) practices at companies that offer goods and services at different prices nationwide.

The FTC on Thursday settled a lawsuit alleging that an Arizona car dealership advertised misleading prices to lure consumers into its dealerships, when the actual prices were thousands of dollars higher than advertised.

The dealership was also accused of discriminatory lending practices and arranging loans for Latino consumers at higher prices than non-Latino white customers.

Republican FTC Commissioner Melissa Holyoak sided with the majority in assessing Equal Credit Opportunity Act (ECOA) violations in this case, but she said the majority also added “extraneous” violations of Section 5 of the FTC Act that could have a “detrimental” effect on the companies in the future.

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“[N]”No matter how well-intentioned, broad standards of liability based on disparate impact doctrines can backfire and create the risk of unlawful race-based practices, especially those that seek to regulate the entire American economy,” Holyoak said.

“The solution to our nation’s racial problems will not come from affirmative action or other policies based on concepts of fairness. Racism cannot simply be eliminated by different or stronger racism,” she added, citing the recent Supreme Court decision, Students for Fair Admissions v. Harvard University, which outlawed race-based considerations in higher education admissions policies.

“Without Congressional authorization, the Commission should not seek to expand the FTC’s disproportionate consumer protection authority into sweeping civil rights authority — a new liability standard that could have unintended harmful consequences,” Holyoak explained.

“These consequences could be particularly pernicious if the Commission imposes liability on individuals based on statistical differences; for example, individuals may have a strong incentive to protect themselves from liability by ‘injecting’.”[ing] “Racial sensitivity, practices and audits must be built into everyday business operations to avoid future unfair discrimination lawsuits,” she said.

In other words, the FTC’s decision could effectively force companies that engage in sales or price discrimination to base their business decisions on race and other DEI-related factors in order to avoid FTC enforcement.

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Seals hang at the headquarters of the Federal Housing Finance Association (FHFA) and the Federal Trade Commission (FTC) in Washington, DC, Monday, May 20, 2024. (Al Drago/Bloomberg via Getty Images)

The FTC is a federal agency that enforces consumer protection and competition laws across many sectors of the economy. The FTC’s mission is to protect the public from unfair business practices and competition through law enforcement, investigations, education, and advocacy.

The committee is made up of five members, currently two Republicans and three Democrats, and Lina Khan was appointed chair by President Biden.

Fox News Digital has reached out to Khan for comment on Holyoak’s remarks.

“Bringing here claims of ‘unfair discrimination’ based on statistical analysis and disproportionate impact is consistent with a broader vision of achieving economy-wide fairness-oriented regulation of conduct that has not historically been prohibited by Section 5 of the FTC Act,” Holyoak wrote.

Section 5 of the FTC Act is broad in scope and prohibits “unfair or deceptive acts or practices in or affecting commerce.” This prohibition applies to anyone engaged in commerce.

In a footnote, Holyoak added that “it is no coincidence that the Commission has asserted its new ‘unfair discrimination’ powers only in the context of consent decrees, outside of court oversight.”

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A person protests outside the Supreme Court after the court struck down affirmative action in college admissions, Thursday, June 29, 2023, in Washington. (AP Photo/Jose Luis Magana)

“The disproportionate impact doctrine has historically been used in the context of civil rights law to examine whether neutral policies had a disproportionate effect on members of classes of people that Congress designated as protected,” Holyoak explained.

“Having introduced the disproportionate impact doctrine into Title V, Chairman Chopra in 2020 advocated for using disproportionate impact analysis and the FTC’s unfair powers as ‘a gap-filler to combat discrimination throughout the economy,'” Holyoak noted.

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“Understanding the broader motivation for the approach in this case — an effort to expand unfairness well beyond traditional standards in order to ‘combat discrimination throughout the economy’ — makes clear the majority’s objective, which was to include an unnecessary and unfair count of discrimination,” Holyoak said.