Ethics · 18% of the SAFE exammedium
Correct answer: Disparate impact, because a facially neutral policy produces discriminatory results
Disparate impact theory applies when a facially neutral policy or practice — such as an automated underwriting algorithm — produces a statistically significant discriminatory effect on a protected class, even without discriminatory intent. The Supreme Court affirmed disparate impact claims under the Fair Housing Act in Texas Department of Housing v. Inclusive Communities Project (2015). "Predatory lending, because the lender is targeting v..." (disparate treatment) requires evidence of intentional discrimination, which is not indicated here. "Redlining, because the denials are based on geograph..." (redlining) refers specifically to denying credit in geographic areas based on racial composition, which is related but not the primary theory when the discrimination is tied to borrower characteristics. "Disparate treatment, because the outcome harms a pro..." (predatory lending) involves targeting borrowers with unfavorable products, which is not described in this scenario.
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