Regulatory Compliance and Ethics Flashcards
7 cards from real GAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance and Ethics flashcards as text
The Equal Credit Opportunity Act (ECOA) as applied to GAP sales prohibits dealers from:
Answer: Offering GAP only to customers with credit scores above 700
ECOA prohibits discrimination in credit-related transactions based on protected characteristics, and offering optional products selectively based on creditworthiness proxies that correlate with protected classes violates ECOA.
A customer files a complaint with the state insurance commissioner alleging they were never told GAP was optional. Which internal control best prevents this type of complaint?
Answer: Requiring a separate signed acknowledgment that GAP is optional
A signed voluntary-election disclosure creates an auditable record proving the customer understood GAP was optional, serving as a compliance safeguard against such complaints.
Under the FTC's Used Car Rule, which disclosure must be prominently posted on a used vehicle before sale?
Answer: The Buyers Guide disclosing warranty status
The FTC's Used Car Rule requires dealers to display a Buyers Guide on used vehicles disclosing warranty coverage, but it does not specifically mandate GAP disclosures.
Which practice violates ethical standards for handling a GAP claim?
Answer: Delaying claim processing to avoid paying out within a quarter
Intentionally delaying claim payments to manage financial results is unethical and may violate prompt-payment statutes and UDAAP standards.
A GAP professional notices that a colleague consistently presents GAP as 'required by the lender.' This statement is:
Answer: A deceptive trade practice that must be reported to compliance
Misrepresenting an optional product as lender-required is a deceptive act under UDAAP and most state consumer protection laws, and employees have an obligation to report such misconduct.
When a GAP waiver is financed into the loan, how does Regulation Z classify the GAP fee relative to the finance charge?
Answer: It is excluded from the finance charge if it is optional and disclosed
Regulation Z excludes optional, fully disclosed insurance and debt protection products from the finance charge calculation, provided the customer voluntarily elects them.
An administrator's GAP program form contains a clause that waives all consumer rights to dispute claim denials. Under most state regulations, this clause is:
Answer: Unenforceable as it violates consumer protection statutes
Clauses that purport to strip consumers of their statutory rights to dispute resolution are generally unenforceable under state insurance regulations and consumer protection laws.