Regulatory Compliance & Standards 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 & Standards flashcards as text
Under CFPB oversight, which practice in GAP product marketing is considered an Unfair, Deceptive, or Abusive Act or Practice (UDAAP) violation?
Answer: Failing to disclose the maximum benefit cap in plain language
UDAAP violations include obscuring material terms such as maximum benefit caps, which consumers need to make an informed purchasing decision.
Which federal regulation requires creditors to include the cost of optional GAP insurance in the finance charge disclosure when the purchase is mandatory for credit approval?
Answer: Truth in Lending Act (TILA) / Regulation Z
Regulation Z (implementing TILA) requires that any product whose purchase is a condition of credit must be included in the finance charge and APR calculation.
A state insurance commissioner requires GAP providers to file rates and forms before selling the product. This requirement is an example of which regulatory framework?
Answer: Prior approval regulation
Prior approval regulation requires that rates and forms receive regulatory approval before they may be used, giving regulators direct gatekeeping authority.
When a consumer cancels a GAP waiver product mid-term, the standard regulatory requirement regarding unearned premium is:
Answer: A pro-rata or short-rate refund must be issued to the consumer or applied to the loan
Most state regulations and FTC guidance require that unearned premiums be refunded on a pro-rata or short-rate basis when a GAP product is cancelled.
Which entity has primary authority to regulate GAP products sold as insurance policies through franchised auto dealerships?
Answer: The state department of insurance in the state where the vehicle is sold
GAP insurance products are regulated at the state level by each state's department of insurance, which governs product forms, rates, and licensing.
A GAP waiver administered through a credit union is most likely regulated under which framework rather than state insurance law?
Answer: National Credit Union Administration (NCUA) rules and applicable state credit union laws
Credit union-offered GAP waivers fall under NCUA supervision and applicable state credit union statutes, distinguishing them from insurance-based GAP products.
Under the FTC's Used Car Rule, dealers must disclose certain warranty information on the Buyers Guide. How does this interact with GAP compliance?
Answer: Dealers must ensure GAP disclosures are separate from and do not contradict the Buyers Guide warranty disclosures
GAP disclosures must stand on their own and not create consumer confusion when presented alongside the FTC-mandated Buyers Guide warranty information.