CCM Regulatory Compliance & Governance 2 — Questions and Answers
Question 1: Under the Fair Debt Collection Practices Act (FDCPA), which of the following communications is PROHIBITED when contacting a debtor?
- Sending a written notice of the debt amount
- Calling a debtor at their workplace if the employer permits it
- Contacting a debtor before 8 a.m. or after 9 p.m. local time (Correct answer)
- Requesting payment via check or money order
Correct answer: Contacting a debtor before 8 a.m. or after 9 p.m. local time
The FDCPA prohibits debt collectors from contacting consumers at inconvenient times, specifically before 8 a.m. or after 9 p.m. local time.
Question 2: Which regulatory body is primarily responsible for enforcing the Fair Credit Reporting Act (FCRA) for most businesses?
- Federal Reserve Board
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Office of the Comptroller of the Currency (OCC)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The Consumer Financial Protection Bureau (CFPB) is the primary federal agency responsible for enforcing the FCRA for most entities.
Question 3: A credit manager discovers that an employee accessed customer credit files for personal reasons without authorization. Under the FCRA, what is the most appropriate immediate action?
- Issue an internal warning to the employee
- Report the breach to the CFPB within 30 days
- Terminate the employee and notify affected consumers (Correct answer)
- Update the company's privacy policy
Correct answer: Terminate the employee and notify affected consumers
Unauthorized access to consumer credit information violates the FCRA, requiring termination of the offending employee and notification to affected consumers.
Question 4: Which of the following best describes the 'permissible purpose' requirement under the Fair Credit Reporting Act?
- Any business may access a consumer's credit report for any legitimate business reason
- Credit reports may only be accessed for specific purposes defined by law, such as credit evaluation or employment screening (Correct answer)
- Permissible purpose only applies to consumer reporting agencies, not end users
- Businesses must obtain verbal consent from consumers before accessing their credit reports
Correct answer: Credit reports may only be accessed for specific purposes defined by law, such as credit evaluation or employment screening
The FCRA restricts access to consumer credit reports to specific permissible purposes enumerated in the statute, such as credit transactions, employment, or insurance underwriting.
Question 5: The Gramm-Leach-Bliley Act (GLBA) Safeguards Rule primarily requires financial institutions to:
- Disclose all credit risk policies to regulators annually
- Implement a comprehensive information security program to protect customer data (Correct answer)
- Limit data sharing with third parties to zero without explicit consent
- Report all data breaches to the FTC within 24 hours
Correct answer: Implement a comprehensive information security program to protect customer data
The GLBA Safeguards Rule requires financial institutions to develop, implement, and maintain a comprehensive information security program to protect customer financial information.
Question 6: Under SOX Section 302, which corporate officers are required to personally certify the accuracy of financial reports?
- Chief Compliance Officer and Chief Risk Officer
- CEO and CFO (Correct answer)
- Board of Directors members
- Internal Audit Director and External Auditor
Correct answer: CEO and CFO
SOX Section 302 requires the CEO and CFO to personally certify the accuracy and completeness of financial disclosures in quarterly and annual reports.
Question 7: A company extends trade credit to a new customer and later discovers the customer is on the OFAC SDN (Specially Designated Nationals) list. What should the credit manager do?
- Continue the relationship but increase monitoring frequency
- Immediately freeze the account and report to OFAC (Correct answer)
- Refer the matter to the sales team to resolve
- Request updated financial statements before taking action
Correct answer: Immediately freeze the account and report to OFAC
Transacting with entities on the OFAC SDN list is prohibited; the company must immediately freeze the account and file a report with OFAC.
CCM Regulatory Compliance & Governance 2
Under the Fair Debt Collection Practices Act (FDCPA), which of the following communications is PROHIBITED when contacting a debtor?