Motor Vehicle Division Dealer Operations and Compliance 5

Question 1

What is 'yo-yo financing' in the context of dealer compliance?

Accepted Answer

A dealer allows a customer to take delivery, then calls back to say financing fell through and demands different terms

Answer

Yo-yo financing occurs when a dealer lets the customer drive off, then contacts them days later claiming the loan was not approved and requiring the customer to return and accept worse terms.

Question 2

Which entity typically investigates consumer complaints against a licensed motor vehicle dealer at the state level?

Accepted Answer

The state Motor Vehicle Division or Department of Motor Vehicles

Answer

State MVD or DMV licensing divisions receive and investigate complaints about licensed dealers and can impose administrative sanctions.

Question 3

A dealer 'packs' a payment by including an undisclosed add-on product in the monthly payment without telling the customer. This violates:

Accepted Answer

Truth in Lending Act disclosure requirements and state consumer protection laws

Answer

Payment packing misrepresents the true cost of credit and violates TILA as well as state unfair and deceptive acts and practices (UDAP) statutes.

Question 4

A dealer must obtain a separate 'wholesale dealer' license primarily to:

Accepted Answer

Buy and sell vehicles exclusively to other dealers without retail selling to the public

Answer

A wholesale dealer license permits buying and selling vehicles only between licensed dealers, not to retail consumers.

Question 5

Under the Red Flags Rule (FTC), what must a dealer's identity theft prevention program address?

Accepted Answer

Detecting, preventing, and mitigating identity theft in connection with covered accounts such as credit applications

Answer

The Red Flags Rule requires dealers who extend credit to have a written program to detect and respond to warning signs of identity theft in credit-related transactions.

Motor Vehicle Division Practice Test

Motor Vehicle Division Practice Test

Motor Vehicle Division Dealer Operations and Compliance 5