CARS Industry Regulations & Compliance 3 — Questions and Answers
Question 1: The Consumer Financial Protection Bureau (CFPB) has authority to supervise asset recovery companies that qualify as:
- Any company employing more than 5 skip tracers
- Larger participants in the debt collection market (Correct answer)
- Companies operating in more than one U.S. state
- Firms that repossess more than 500 vehicles per year
Correct answer: Larger participants in the debt collection market
The CFPB defines 'larger participants' in the debt collection market and subjects them to supervisory examination for compliance.
Question 2: Under UCC Article 9, a secured creditor's right to repossess collateral upon default is known as:
- Judicial foreclosure
- Self-help repossession (Correct answer)
- Deficiency judgment
- Strict foreclosure
Correct answer: Self-help repossession
UCC Article 9 grants secured creditors the right of self-help repossession, allowing them to take collateral without a court order if it can be done without breaching the peace.
Question 3: A recovery agent operating in a state that requires mandatory pre-repossession notice to the debtor must send this notice:
- At least 72 hours before attempting repossession (Correct answer)
- Simultaneously with the repossession attempt
- Only after the first failed repossession attempt
- Before filing for a deficiency judgment
Correct answer: At least 72 hours before attempting repossession
States requiring pre-repossession notice typically mandate that notice be provided at least 72 hours before the repossession attempt.
Question 4: Which federal law restricts the use of consumer reports (such as credit reports) in skip tracing activities?
- Fair Debt Collection Practices Act
- Fair Credit Reporting Act (Correct answer)
- Telephone Consumer Protection Act
- Electronic Communications Privacy Act
Correct answer: Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) governs permissible purposes for accessing consumer reports, including those used in skip tracing for debt collection.
Question 5: After repossessing a vehicle, a lienholder is generally required by state law to send the debtor a post-repossession notice that includes:
- The agent's license number and photo ID
- The right to redeem the collateral and the sale date (Correct answer)
- A confession of judgment waiving deficiency claims
- A mandatory offer to refinance the outstanding balance
Correct answer: The right to redeem the collateral and the sale date
Most states require creditors to notify debtors of their right to redeem the collateral and provide the date of the planned sale.
Question 6: An asset recovery company that uses a GPS tracking device placed on a vehicle by the lienholder to locate collateral must ensure compliance with:
- FCC broadcasting regulations
- State privacy and electronic surveillance laws (Correct answer)
- EPA environmental monitoring rules
- OSHA workplace safety standards
Correct answer: State privacy and electronic surveillance laws
Using GPS tracking devices to locate collateral may implicate state privacy laws and electronic surveillance statutes that vary by jurisdiction.
Question 7: Under the FDCPA, a debt collector is prohibited from communicating with a consumer regarding a debt at which times?
- During business hours on weekdays
- Before 8 a.m. or after 9 p.m. local time (Correct answer)
- On weekends and federal holidays only
- During school hours if the debtor is a student
Correct answer: Before 8 a.m. or after 9 p.m. local time
The FDCPA prohibits debt collectors from contacting consumers before 8 a.m. or after 9 p.m. in the consumer's local time zone.
CARS Industry Regulations & Compliance 3
The Consumer Financial Protection Bureau (CFPB) has authority to supervise asset recovery companies that qualify as: