FiCEP Consumer Protection Laws 2 — Questions and Answers
Question 1: Under the Fair Debt Collection Practices Act, which action by a debt collector is prohibited?
- Calling a debtor between 8 AM and 9 PM
- Contacting a debtor at their workplace after being told not to (Correct answer)
- Sending a written validation notice within five days
- Reporting the debt to a credit bureau
Correct answer: Contacting a debtor at their workplace after being told not to
The FDCPA prohibits debt collectors from contacting debtors at their workplace if the collector knows the employer disapproves.
The FDCPA restricts debt collection practices to prevent abuse. While calling between 8 AM and 9 PM is permitted, contacting a debtor at work after being told the employer prohibits such calls is a clear violation.
Question 2: What does the Truth in Lending Act primarily require lenders to disclose?
- The borrower's credit score
- The annual percentage rate and total cost of credit (Correct answer)
- The lender's profit margin
- The borrower's debt-to-income ratio
Correct answer: The annual percentage rate and total cost of credit
TILA requires lenders to clearly disclose the APR, finance charges, and total cost of credit.
The Truth in Lending Act mandates that lenders provide standardized disclosures including the APR, finance charges, amount financed, total of payments, and payment schedule so consumers can compare credit offers.
Question 3: How long does a consumer have to dispute a credit report error under the Fair Credit Reporting Act?
- 30 days
- 60 days
- There is no time limit for filing disputes (Correct answer)
- 90 days
Correct answer: There is no time limit for filing disputes
The FCRA does not impose a deadline on consumers for disputing inaccurate information on their credit reports.
Under the FCRA, consumers can dispute inaccurate information at any time. Once filed, the credit bureau must investigate within 30 days. Counselors should encourage clients to review reports annually and dispute errors promptly.
Question 4: Which federal law gives consumers the right to one free credit report annually from each major bureau?
- Equal Credit Opportunity Act
- Fair and Accurate Credit Transactions Act (Correct answer)
- Consumer Financial Protection Act
- Gramm-Leach-Bliley Act
Correct answer: Fair and Accurate Credit Transactions Act
FACTA amended the FCRA to give consumers the right to one free credit report per year from each of the three major bureaus.
FACTA of 2003 amended the Fair Credit Reporting Act to require Equifax, Experian, and TransUnion to provide consumers one free credit report annually through AnnualCreditReport.com.
Question 5: Under the Equal Credit Opportunity Act, which factor can a lender NOT use to deny credit?
- Applicant's income level
- Applicant's marital status (Correct answer)
- Applicant's employment history
- Applicant's existing debt obligations
Correct answer: Applicant's marital status
ECOA prohibits discrimination based on marital status, along with race, color, religion, national origin, sex, and age.
The Equal Credit Opportunity Act makes it illegal for creditors to discriminate based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. Legitimate financial factors like income and existing debt are appropriate.
Question 6: What remedy does the Fair Credit Billing Act provide for unauthorized credit card charges?
- The consumer must pay then seek reimbursement
- The consumer can dispute and liability is limited to $50 for unauthorized use (Correct answer)
- The consumer must close the account immediately
- The consumer has no recourse after 15 days
Correct answer: The consumer can dispute and liability is limited to $50 for unauthorized use
The Fair Credit Billing Act limits consumer liability for unauthorized credit card charges to $50.
The Fair Credit Billing Act limits liability to $50 per card. If reported lost before unauthorized charges occur, the consumer owes nothing. The consumer must dispute within 60 days of the statement date.
FiCEP Consumer Protection Laws 2
Under the Fair Debt Collection Practices Act, which action by a debt collector is prohibited?