AFC Consumer Protection Laws and Identity Theft

Question 1

Under the Fair Credit Reporting Act (FCRA), how long can a Chapter 7 bankruptcy remain on a consumer's credit report?

Accepted Answer

10 years

Answer

Chapter 7 bankruptcies may remain on a credit report for up to 10 years from the filing date under the FCRA. Chapter 13 bankruptcies, where consumers repay a portion of debt, are removed after 7 years. Most other negative items (late payments, collections) are also limited to 7 years.

Question 2

A client is being harassed by a debt collector calling before 8 a.m. and after 9 p.m. Which federal law protects the client from this practice?

Accepted Answer

Fair Debt Collection Practices Act (FDCPA)

Answer

The FDCPA prohibits third-party debt collectors from contacting consumers before 8 a.m. or after 9 p.m. in the consumer's time zone. It also bans harassment, false statements, and unfair practices. The FCRA governs credit reports, and TILA governs loan disclosures.

Question 3

A client discovers fraudulent accounts on their credit report. As their AFC counselor, what is the FIRST step you would recommend?

Accepted Answer

Place a fraud alert or credit freeze with the credit bureaus

Answer

The first step in identity theft recovery is placing a fraud alert (free, lasts 1 year) or a security freeze (free under federal law since 2018) with all three major bureaus. This prevents new fraudulent accounts from being opened. Filing an FTC identity theft report and disputing inaccurate items follow this initial protective step.

Question 4

Under the Truth in Lending Act (TILA), what information must lenders disclose to borrowers before a loan is finalized?

Accepted Answer

Annual percentage rate (APR), finance charges, and total payment amount

Answer

TILA (Regulation Z) requires lenders to disclose the APR, total finance charges, payment schedule, and total amount repaid, enabling consumers to compare credit products accurately. It does not require disclosure of internal lender information or the borrower's own credit data.

Question 5

A client's credit card issuer has violated their rights under the FCRA by reporting inaccurate information. What right does the client have under this law?

Accepted Answer

The right to dispute inaccurate information and have it investigated within 30 days

Answer

Under the FCRA, consumers can dispute inaccurate or incomplete information with the credit bureau, which must investigate and respond within 30 days (45 days if the dispute was triggered by a free annual credit report). If the information is inaccurate, it must be corrected or deleted.

AFC - Accredited Financial Counselor Practice Test

AFC - Accredited Financial Counselor Practice Test

AFC Consumer Protection Laws and Identity Theft