NAB Banking Regulations and Consumer Protection 1 — Questions and Answers
Question 1: What is the Truth in Lending Act (TILA)?
- A federal law requiring lenders to disclose credit terms clearly to consumers before they commit (Correct answer)
- A law about telling the truth in court
- A banking secrecy law
- A law about savings accounts only
Correct answer: A federal law requiring lenders to disclose credit terms clearly to consumers before they commit
TILA requires lenders to provide clear disclosure of credit terms including APR, total costs, and payment schedules so consumers can make informed decisions.
Question 2: What rights does the Fair Credit Reporting Act give consumers?
- The right to access their credit reports, dispute errors, and know when reports are used against them (Correct answer)
- No rights regarding credit reports
- Only the right to view reports once
- Only the right to dispute after paying a fee
Correct answer: The right to access their credit reports, dispute errors, and know when reports are used against them
The FCRA gives consumers the right to free annual credit reports, to dispute inaccurate information, and to be notified when credit report data is used in adverse decisions.
Question 3: What is Regulation E in banking?
- Federal rules protecting consumers in electronic fund transfers including ATM, debit card, and online transactions (Correct answer)
- A rule about email communications
- A regulation about employee banking
- A law about international transfers only
Correct answer: Federal rules protecting consumers in electronic fund transfers including ATM, debit card, and online transactions
Regulation E establishes rights and responsibilities for electronic fund transfers, including error resolution procedures and limits on consumer liability for unauthorized transfers.
Question 4: What is the Bank Secrecy Act?
- A law requiring banks to help detect and prevent money laundering by reporting certain transactions (Correct answer)
- A law about keeping customer information secret
- A rule about bank vault security
- A regulation about safety deposit boxes
Correct answer: A law requiring banks to help detect and prevent money laundering by reporting certain transactions
The BSA requires financial institutions to maintain records and file reports on certain transactions, helping law enforcement detect and prevent money laundering and financial crimes.
Question 5: What protection does the Equal Credit Opportunity Act provide?
- It prohibits credit discrimination based on race, religion, national origin, sex, marital status, or age (Correct answer)
- It guarantees everyone gets credit
- It sets maximum interest rates
- It only applies to mortgage lending
Correct answer: It prohibits credit discrimination based on race, religion, national origin, sex, marital status, or age
ECOA ensures that all creditworthy applicants receive fair consideration regardless of personal characteristics unrelated to creditworthiness.
Question 6: What is a Suspicious Activity Report (SAR)?
- A report banks must file when they detect potentially illegal activity in customer accounts (Correct answer)
- A customer complaint form
- A credit report from a bureau
- A type of bank statement
Correct answer: A report banks must file when they detect potentially illegal activity in customer accounts
SARs are confidential reports filed by financial institutions to alert authorities about transactions that may involve fraud, money laundering, or terrorist financing.
NAB Banking Regulations and Consumer Protection 1
What is the Truth in Lending Act (TILA)?