The Federal Trade Commission (FTC) has long maintained that discrimination not only contravenes various federal and state laws, but also violates Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” A recent joint complaint brought by the FTC and the State of Wisconsin against a local car dealer confirms this stance and shines a light on some intriguing questions about how the FTC plans to demonstrate unlawful discrimination under Section 5.
According to a legal analysis by BakerHostetler, this joint complaint is a clear sign that the FTC is not bluffing when it comes to cracking down on discrimination. Specifically, how the FTC chooses to interpret and enforce Section 5 could have significant implications for businesses, particularly those in the automotive industry, who must navigate these waters carefully to ensure compliance with the law.
The complaint against the Wisconsin-based car dealer was filed due to alleged discriminatory practices in their auto lending operations. The FTC alleged that the dealer’s practices resulted in African American customers paying higher fees and interest rates than similarly situated non-Hispanic white customers, without any legitimate business justification for the price disparities. If found guilty of such discrimination, the dealership could face severe penalties.
If this issue continues to develop in the same vein, it’s possible that we could see an increase in similar lawsuits filed by the FTC and individual states moving forward. This would place further emphasis on the need for stringent non-discriminatory business practices across all industries, not just automotive. All sectors must be on their toes – keeping a keen eye on the FTC’s enforcement practices in regards to Section 5.