FiCEP Consumer Protection Laws 5 — Questions and Answers
Question 1: A consumer discovers a fraudulent account on their credit report. Under FCRA, within how many days must a credit bureau complete its investigation after receiving a dispute?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
The FCRA generally requires credit bureaus to complete investigations of consumer disputes within 30 days (extended to 45 days if the consumer provides additional information).
Question 2: Which consumer protection law specifically addresses abusive practices in payday lending and requires lenders to assess a borrower's ability to repay?
- TILA Payday Rule
- CFPB Small Dollar Rule (Correct answer)
- Military Lending Act
- Consumer Credit Protection Act
Correct answer: CFPB Small Dollar Rule
The CFPB's Small Dollar Lending Rule (Payday Rule) requires certain lenders to determine that borrowers have the ability to repay before extending short-term high-cost loans.
Question 3: Under the Real Estate Settlement Procedures Act (RESPA), what practice is explicitly prohibited?
- Charging an origination fee
- Paying kickbacks or referral fees between settlement service providers (Correct answer)
- Requiring title insurance on a purchase loan
- Offering lender credits in exchange for a higher interest rate
Correct answer: Paying kickbacks or referral fees between settlement service providers
RESPA Section 8 prohibits giving or receiving any fee, kickback, or thing of value in exchange for referrals of settlement services.
Question 4: The Military Lending Act (MLA) caps the Military Annual Percentage Rate (MAPR) on consumer credit extended to active-duty servicemembers at what level?
- 18%
- 21%
- 28%
- 36% (Correct answer)
Correct answer: 36%
The MLA caps the MAPR at 36% for most consumer credit products offered to active-duty servicemembers and their dependents.
Question 5: Which of the following best describes a 'holder in due course' issue addressed by the FTC Holder Rule?
- A bank acquires a debt and charges higher interest than the original creditor
- A consumer cannot assert defenses against a third-party creditor who purchased the debt (Correct answer)
- A lender fails to disclose the APR on a consumer loan
- A debt collector contacts a consumer after receiving a cease-and-desist letter
Correct answer: A consumer cannot assert defenses against a third-party creditor who purchased the debt
The FTC Holder Rule requires consumer credit contracts to include a notice preserving consumers' right to assert claims against subsequent holders of the contract.
Question 6: Under the Children's Online Privacy Protection Act (COPPA), parental consent is required before collecting personal information from children under what age?
- 13 (Correct answer)
- 16
- 18
- 21
Correct answer: 13
COPPA requires verifiable parental consent before collecting, using, or disclosing personal information from children under the age of 13.
Question 7: Under the FTC's Used Car Rule, dealers must display a Buyers Guide on all used vehicles. What must the Buyers Guide disclose?
- Vehicle accident history and prior owner count
- Whether the car is sold 'as is' or with a warranty, and major defect systems (Correct answer)
- The dealer's invoice price and profit margin
- State emissions test results and safety inspection status
Correct answer: Whether the car is sold 'as is' or with a warranty, and major defect systems
The FTC Used Car Rule Buyers Guide must disclose whether the vehicle is sold 'as is' or with a warranty, and if warranted, what systems are covered and the percentage of repair costs the dealer will pay.
FiCEP Consumer Protection Laws 5
A consumer discovers a fraudulent account on their credit report.
Under FCRA, within how many days must a credit bureau complete its investigation after receiving a dispute?