The Trump administration moved this week to limit the use of “disparate impact” analysis in identifying discrimination, effectively attempting to rewrite settled Supreme Court precedent that allows prosecution of discriminatory practices.
The executive order directs federal agencies, including the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, to stop using statistical data to identify policies that disproportionately harm certain groups. Instead, government agencies will only address discrimination when intent can be explicitly proven.
“Disparate impact liability is a bedrock principle in ensuring fair and equal access to safe housing and affordable credit,” said Odette Williamson, senior attorney at the National Consumer Law Center and director of NCLC’s Racial Justice and Equal Opportunity Project. “Eliminating this standard in the federal agencies is a continuation of the Trump administration’s all-out assault on equity, civil rights, racial justice, and the rule of law.”
Disparate impact claims have allowed consumers to challenge discriminatory practices affecting people of color, people with disabilities, families with children and women. Without this standard, advocates say many forms of discrimination would go unaddressed even when identified.
During the subprime lending boom that preceded the 2008 recession, communities of color were disproportionately targeted for high-risk, high-interest loans. Dozens of lawsuits using disparate impact claims were filed to address these practices and provide relief to affected consumers.
“The administration’s claim that this order to end disparate impact liability promotes ‘meritocracy and a colorblind society’ is grossly out of touch with the reality for people of color, women, LGBTQ+, and people with disabilities,” Williamson said.
Consumer advocates are now calling on Congress to act to preserve disparate impact as an enforcement tool. They also urge states to protect residents from discriminatory lending and housing practices in response to what they describe as an attempt to weaken civil rights protections.