Question 1

What is not a correct statement concerning the Fair Debt Collection Practices Act?
A) It prohibits improper practices in the collection of consumer debts.
B) It applies to original creditors who are collecting from original debtors.
C) The validity of the debt is not a defense.
D) Violators are liable to debtors for damages.

Accepted Answer

The Fair Debt Collection Practices Act applies only to third-party debt collectors, not original creditors collecting from their own debtors.

Question 2

An unsolicited distribution of credit cards to persons who have not applied for them is:
A) always allowed.
B) voidable.
C) illegal.
D) only allowed if the recipient is at least 21 years old.

Accepted Answer

An unsolicited distribution of credit cards to persons who have not applied for them is illegal under the Truth in Lending Act. This practice is also known as "slamming" and can lead to identity theft and other fraudulent activities.

Question 3

A finance company may not reject an loan applicant on any of the grounds listed below, except:
A) the applicant is married.
B) the applicant is sixty-five or older.
C) the applicant is divorced.
D) the applicant is on a fixed income.

Accepted Answer

Rejecting a loan applicant because they are on a fixed income could be considered a legitimate concern regarding their ability to repay the loan, unlike the other options which are discriminatory based on marital status or age.

Question 4

The __________ lending market makes loans to consumers who have bankruptcies, no credit history, low-to-moderate incomes, or a poor credit history.
A) subprime
B) subterranean
C) suboptimal
D) optimus prime

Accepted Answer

The term "subprime" is commonly used to refer to lending markets that offer loans to individuals with less-than-perfect credit or financial histories. This includes consumers who have filed for bankruptcy, have a poor credit history, or have low-to-moderate incomes. The other answer choices do not accurately describe this type of lending market.

Question 5

Peter applied for a loan at three banks. Peter's application was denied at the first two banks but finally was approved by the third institution. Peter believes that the first two banks denied his application because of his minority status. No explanation ever was provided by the banks denying Peter's request for funds. After obtaining the loan, Peter soon found himself unable to make the prescribed payments. Peter went into default, causing the bank to turn his case over to a collection agency. The collection agency called him "night and day" and were very abusive in their collection practices. Peter became quite distraught and unable to function at his job. As a result, Peter was soon fired. Peter asks for your advice regarding his legal rights. What is your response?

Accepted Answer

The answer of Peter applied for a loan at three...

Question 6

Anyone promoting the sale of a real estate development that is divided into fifty (50) or more parcels of less than five (5) acres each must file a(n) __________ statement with the secretary of Housing and Urban Development.
A) building plan
B) development
C) environmental impact
D) real property

Accepted Answer

The correct answer is "development" because the context refers to the requirement for promoters of large real estate developments to file specific documentation with the Department of Housing and Urban Development, which typically involves a development statement outlining the project details.

Question 7

Sue Thompson received a home "cold-canvas" sales call at her home from a representative of the Enlightened Encyclopedia Company. The salesperson, after a rather aggressive presentation, convinced Sue to order a $1,200 Deluxe Encyclopedia set for her two children. Sue was impressed with the quality of the books, but shortly after signing the contract, she realized that she could not really afford to make the required monthly payments. What rights, if any, does Sue have in this situation?

Accepted Answer

The answer of Sue Thompson received a home "cold-canvas" sales...

Question 8

If you allow another person to use your credit card but the person uses the card for a purpose other than the one you specified:
A) an unauthorized usage has occurred.
B) an authorized usage has occurred.
C) you will not be responsible for more than $50 of the amount charged.
D) you are not liable for any of the amount charged.

Accepted Answer

When you allow another person to use your credit card, any use by that person is considered authorized, even if they use it for a different purpose than you specified.

Question 9

It is lawful to refuse to extend credit to a consumer based on the consumer's:
A) race.
B) marital status.
C) credit history.
D) age.

Accepted Answer

Refusing to extend credit based on race, marital status, or age is unlawful and violates the Equal Credit Opportunity Act (ECOA). However, it is lawful to refuse credit based on the consumer's credit history, which reflects their creditworthiness and ability to repay the debt. Lenders use this information to make informed decisions about whether to extend credit and at what terms.

Question 10

The owner of a lost credit card is:
A) liable for all purchases made by its finder if the card was lost through negligence.
B) not liable for any purchases if the card was lost despite the exercise of reasonable care by the cardholder.
C) liable for all purchases if the card originally had been sent to the cardholder without any prior request and never was used by such holder.
D) not liable for more than $50 for the unauthorized use of the card.

Accepted Answer

According to the Fair Credit Billing Act, a cardholder is not liable for more than $50 for unauthorized use of their lost or stolen credit card. However, if the cardholder reports the loss before any unauthorized charges are made, they are not responsible for any charges.

Question 11

Samuel signed a contract to purchase furniture on credit. The contract clearly set forth in bold print all charges included in the cost of the credit, including the interest rate and annual percentage rate. The seller informed Samuel that the seller regularly sold these contracts to a finance company that paid it immediate cash and then collected from the debtors. The seller further advised that the finance company did not want "the headache" of determining the validity of consumer complaints and that therefore the contract provided that the consumer waived all defenses concerning the furniture against the finance company. The contract expressly provided that the seller would remain responsible for any non-conformities in the furniture or breaches of contract on its part. The furniture was defective, but the finance company is demanding that Samuel make the payments to it required by the contract and resolve its disputes with the seller of the furniture. Samuel consults you regarding his rights. What is your response?

Accepted Answer

The answer of Samuel signed a contract to purchase furniture...

Question 12

Pursuant to the CARD Act of 2009, all credit card companies must have bills in consumers' hands not less than __________ before the bill is due.
A) seven (7) days
B) fourteen (14) days
C) twenty-one (21) days
D) thirty (30) days

Accepted Answer

The CARD Act of 2009 requires credit card companies to provide bills to consumers at least 21 days before the payment is due. This gives consumers enough time to review their statements, make any necessary payments, and avoid late fees or other penalties. The other choices (7, 14, and 30 days) are not the required timeframe specified by the act.

Question 13

The Fair Credit Reporting Act applies to:
A) consumer credit.
B) commercial credit.
C) business credit.
D) international sales contracts.

Accepted Answer

The Fair Credit Reporting Act is a federal law that applies to consumer credit. Its purpose is to promote the accuracy, fairness, and privacy of information in credit reporting files maintained by consumer reporting agencies. It applies to credit reports generated for individuals, including those related to credit cards, mortgages, and car loans. It does not apply to commercial credit or business credit. It also does not apply to international sales contracts, as it is specific to credit reporting in the United States.

Quiz 32: Consumer Protection

What is not a correct statement concerning the Fair Debt Collection Practices Act?

An unsolicited distribution of credit cards to persons who have not applied for them is:

A finance company may not reject an loan applicant on any of the grounds listed below, except:

The __________ lending market makes loans to consumers who have bankruptcies, no credit history, low-to-moderate incomes, or a poor credit history.

Anyone promoting the sale of a real estate development that is divided into fifty (50) or more parcels of less than five (5) acres each must file a(n) __________ statement with the secretary of Housing and Urban Development.

If you allow another person to use your credit card but the person uses the card for a purpose other than the one you specified:

It is lawful to refuse to extend credit to a consumer based on the consumer's:

The owner of a lost credit card is:

Pursuant to the CARD Act of 2009, all credit card companies must have bills in consumers' hands not less than __________ before the bill is due.

The Fair Credit Reporting Act applies to: