What is the first step in the "effects test" for disparate treatment or impact?

The first step in the "effects test" for disparate treatment or impact is indeed focused on proving that loan criteria have a disproportionate adverse impact on a protected group. This is crucial in determining whether discrimination has occurred in lending practices because it establishes the groundwork for assessing the fairness and equality of those practices.

By identifying that a particular lending criterion disproportionately affects individuals based on race, gender, or another protected characteristic, one can then investigate if that impact is justified or if it reflects systemic bias within the lending systems. This process helps ensure that lending practices comply with regulations that aim to promote equality and prevent discrimination.

The subsequent steps in the effects test would typically involve examining the necessity of the criteria in question and whether there are less discriminatory alternatives that could be applied. Therefore, acknowledging the disproportionate adverse impact is the foundational first step in analyzing whether discriminatory practices may exist within lending criteria.