What represents evidence of disparate impact?

The choice that represents evidence of disparate impact is a policy negatively impacting individuals on a prohibited basis. Disparate impact occurs when a policy or practice, even if neutral on its face, disproportionately affects members of a protected class—such as race, gender, or age—more than other groups. This means that the effects of the policy can lead to less favorable outcomes for specific demographic groups, although the policy itself may not be intentionally discriminatory.

In the context of mortgage lending and financial practices, if a lender implements a policy that creates barriers or disadvantages for individuals based on a prohibited characteristic, it indicates that the policy has a disparate impact. Identifying such policies is critical for ensuring compliance with fair lending laws and practices, safeguarding against unintentional discrimination in loan approvals, interest rates, and other lending criteria.

Other options, while relevant in different contexts, do not illustrate evidence of disparate impact. For example, an equal loan approval rate for all demographics would indicate that there is no disparate impact, as it suggests that all groups are treated equally regardless of their demographic characteristics. Ideals of financial literacy focus on the knowledge or abilities of applicants but do not directly measure the effects of policies on different demographic groups. Variations in interest rates among different borrower groups may suggest