During the dog days of August, the Federal Trade Commission (FTC) brought two complaints against auto companies involving alleged deceptive and discriminatory price advertising.

The first complaint was filed and settled in federal court in the District of Arizona in partnership with the Arizona’s attorney general. It alleged Coulter Motor Company advertised prices that were thousands of dollars lower than the actual prices charged to consumers due to surprise charges and fees. Many of these charges and fees were add-ons that consumers allegedly never authorized. The FTC and Arizona also charged Coulter with discriminating against Latino consumers by arranging higher interest rate markups and more expensive add-ons than it did for non-Latino consumers, in violation of both the unfairness prong of Section 5 of the FTC Act and the Equal Credit Opportunity Act (ECOA).

In a joint statement, Chairwoman Lina Kahn and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya argued that the FTC may bring disparate impact claims under Section 5 ECOA, as well as similar state laws. A disparate impact claim typically alleges that a neutral practice may nonetheless have a disproportionately adverse effect on minorities that are otherwise unjustified by a legitimate rationale, irrespective of motivation.

In the second case, the FTC filed an administrative complaint against Asbury Automotive Group that will be heard by one of the agency’s internal administrative law judges. The complaint similarly alleges that consumers were charged for add-ons without their consent or knowledge and that Black and Latino consumers faced discrimination because they faced higher costs than non-Black and non-Latino consumers.

Partially dissenting in Coulter Motor, Commissioner Andrew Ferguson expressed reservations that the ECOA could be used to bring disparate impact claims, and that his vote should not be construed as his opinion on whether the majority correctly interpreted the scope of the ECOA. Ferguson also disagreed with the agency’s decision to bring discrimination claims under Section 5 of the FTC Act, arguing that Congress never intended the agency to have such authority. In a dissenting and concurring statement, Commissioner Melissa Holyoak wrote that “[i]t is no coincidence that the Commission has asserted its novel ‘unfair discrimination’ authority only outside the scrutiny of courts and in the context of consent orders.”

In the Asbury case, Ferguson noted in a partial dissent that unlike the Coulter Motor complaint, the FTC did not charge Asbury with violating Section 5 of the FTC Act. According to Ferguson, the difference stems from the fact that while Coulter Motor settled with the FTC, Asbury intends to defend and litigate against the agency. Procedurally, this means that the “novel” discrimination theory brought under Section 5 will not be subject to judicial review.

Ferguson criticized this strategic use of venue selection and the FTC practice of bringing novel and expansive claims against companies that have agreed to settle and then argue that those un-litigated claims create favorable precedent for the agency to use in future cases. Ferguson decried this pattern of relying on unadjudicated complaints, noting that “[a] settlement extracted from an innocent party reveals much about the Commission’s power, but nothing about the law.”