Ch 8 - Financial Privacy

Question 1

Under the FCRA, prescreening is a form of:

a. Non-consumer-initiated transaction
b. Remote transaction
c. Consumer initiated transaction
d. None of the above

Answer 1

a. Non-consumer-initiated transaction

Question 2

Under FCRA, a CRA is:

a. Any organization that compiles or evaluates personal information for the purpose of furnishing consumer reports to third parties
b. Any person who evaluates personal information for the purpose of furnishing consumer credit
c. Any person or entity that compiles or evaluates personal information for the purpose of furnishing consumer reports to third parties for a fee
d. None of the above

Answer 2

c. Any person or entity that compiles or evaluates personal information for the purpose of furnishing consumer reports to third parties for a fee

Question 3

Records that may be compiled by CRAs include:

a. Criminal records
b. Driving histories
c. Background histories for preemployment screening
d. All of the above

Answer 3

d. All of the above

Question 4

Which of the following is not a requirement for users of consumer reports under the FCRA?

a. Third-party data for substantive decision-making must be appropriate, accurate, current, and complete
b. Consumer reports may be used only for credit purposes
c. Consumers must receive notice when third-party data is used to make adverse decisions about them
d. All of the above

Answer 4

b. Consumer reports may be used only for credit purposes

Question 5

A consumer report is any communication used as a factor in establishing a consumer’s eligibility for credit, insurance, employment, or other business purpose, and produced by a CRA concerning a person’s:

a. Creditworthiness, credit standing, or credit capacity
b. Character or general reputation
c. Personal characteristics or mode of living
d. All of the above

Answer 5

d. All of the above

Question 6

Which of the following is not a requirement for users of consumer reports under the FCRA?

a. Consumer reports may be used only for permissible purposes
b. Consumers must have access to their consumer reports and an opportunity to dispute them or correct any errors
c. Notice to a consumer when third-party data is used to make adverse decisions about them is optional
d. All of the above

Answer 6

c. Notice to a consumer when third-party data is used to make adverse decisions about them is optional

Question 7

In most cases, outdated negative information under FCRA, is:

a. 7 years or older for most information, and 10 years or older for bankruptcies
b. 7 years or older for bankruptcies, and 5 years or older for other information
c. 5 years or older for bankruptcies, and 7 years or older for other information
d. None of the above

Answer 7

a. 7 years or older for most information, and 10 years or older for bankruptcies

Question 8

Which of the following is not a requirement for users of consumer reports under FCRA?

a. Provide consumer reports only to entities that have a permissible purpose under the FCRA
b. Provide consumer assistance as outlined in DOJ rules
c. Maintain records regarding entities that received consumer reports
d. All of the above

Answer 8

b. Provide consumer assistance as outlined in DOJ rules

Question 9

Which of the following is a requirement for users of consumer reports under FCRA?

a. Provide consumers with access to the information contained in their consumer reports
b. Take reasonable steps to ensure accuracy and completeness of information in the consumer report
c. Refrain from reporting negative information that is outdated
d. All of the above

Answer 9

d. All of the above

Question 10

Enforcement of the FCRA occurs through which of the following?

a. Credit resolution, criminal litigation, and government actions
b. Credit resolution, individual litigation, and government actions
c. Dispute resolution, private litigation, and government actions
d. None of the above

Answer 10

c. Dispute resolution, private litigation, and government actions

Question 11

Which of the following is required to notify the FTC prior to filing suit?

a. CFPB
b. State Attorneys General
c. Individuals
d. All of the above

Answer 11

b. State Attorneys General

Question 12

Which of the following is a certification a user must provide prior to obtaining a consumer report from a CRA?

a. The user has a permissible purpose for which the report is being obtained
b. The report will be destroyed within 10 days of the request
c. The report will not be used for any other purpose
d. Only a and c

Answer 12

d. Only a and c

Question 13

Adverse action notices must include all but which of the following?

a. Name, address, and phone number of the CRA (toll-free if nationwide)
b. Statement the CRA did not make the adverse action and is unable to provide an explanation
c. Statement regarding the consumer’s right to obtain a free disclosure of the consumer’s file from the CRA if requested within 30 days
d. All of the above are required in an adverse action notice

Answer 13

c. Statement regarding the consumer’s right to obtain a free disclosure of the consumer’s file from the CRA if requested within 30 days

Question 14

Adverse action notices must include all but which of the following?

a. Statement the CRA did not make the adverse action but may provide limited details about the reason for the action
b. Statement of consumer’s right to dispute directly with the CRA the accuracy or completeness of any information provided by the CRA
c. Statement regarding the consumer’s right to obtain a free disclosure of the consumer’s file from the CRA if requested within 60 days
d. All of the above are required in an adverse action notice

Answer 14

a. Statement the CRA did not make the adverse action but may provide limited details about the reason for the action

Question 15

Which of the following applies to adverse actions taken based on information of the type covered by FCRA, obtained from third parties that are not consumer reporting agencies?

a. Clear and accurate disclosure of the consumer’s right to be informed of the nature of the information that was relied upon, if the consumer requests it within 30 days
b. Clear and accurate disclosure of the consumer’s right to be informed of the nature of the information that was relied upon, if the consumer requests it within 60 days
c. Clear and accurate disclosure of the consumer’s right to be informed of the nature of the information that was relied upon, if the consumer requests it within 10 days
d. None of the above

Answer 15

b. Clear and accurate disclosure of the consumer’s right to be informed of the nature of the information that was relied upon, if the consumer requests it within 60 days

Question 16

Which of the following is a power retained by the states under FACTA (which generally preempts state laws)?

a. Credit scores and state insurance laws in California and Colorado
b. Frequency of free credit reports in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont
c. Some powers to enact laws address identity theft throughout the states
d. All of the above

Answer 16

d. All of the above

Question 17

How many days does a user of consumer reports have to respond to a consumer request for the information that was relied upon from an affiliate in taking adverse action?

a. 30 days from the date of the request
b. 10 days from the date of the request
c. 30 days from the date the letter was stamped
d. None of the above

Answer 17

a. 30 days from the date of the request

Question 18

How many days does a user of consumer reports have to respond to a consumer request for the information that was relied upon from a non-CRA third party in taking adverse action?

a. 30 days from the date of the request
b. 10 days from the date of the request
c. Within a reasonable time period
d. None of the above

Answer 18

c. Within a reasonable time period

Question 19

Which of the following is a condition that exempts employee investigative reports from being treated as consumer reports?

a. The employer or its agent complies with the procedures set forth in the FCRA
b. No credit information is used
c. A summary describing the nature and scope of the inquiry is provide to the employee if an adverse action is taken based on the results of the report
d. All of the above

Answer 19

d. All of the above

Question 20

Prior to taking adverse action, an employer must:

a. Ask the consumer if they would like to receive a copy of the consumer report on which the employer relied
b. Provide a copy of the consumer report to the consumer, along with a summary of the consumer’s rights received from the CRA
c. Offer to send the consumer a copy of the summary of consumer’s rights received from the CRA
d. None of the above

Answer 20

b. Provide a copy of the consumer report to the consumer, along with a summary of the consumer’s rights received from the CRA

Question 21

Which of the following is a disclosure requirement when a user of consumer reports obtains an investigative consumer report?

a. Must inform the consumer an investigative consumer report may be obtained
b. Must be in writing and mailed or otherwise delivered to the consumer some time before but not later than 3 days after the date on which the report was first requested
c. Nature and scope of investigation must be made in a written statement mailed or delivered to the consumer no later than 5 days after the date on which the request was received from the consumer or the report was first requested, whichever was later
d. All of the above

Answer 21

d. All of the above

Question 22

Under FCRA, which of the following is required by users of consumer reports when using credit scores in making loans secured by residential real property?

a. Must provide credit scores to applicants
b. Must provide information about how to determine their credit score
c. Must provide credit scores and other information about credit scores to applicants
d. None of the above

Answer 22

c. Must provide credit scores and other information about credit scores to applicants

Question 23

Under FCRA, which of the following must be provided if a consumer report is used by an organization in connection with an application for credit or a grant, extension or provision of credit to a consumer on terms less favorable than most favorable terms available to a substantial proportion of consumers?

a. Risk-based pricing notice
b. Risk-based credit report
c. Link to nationwide CRAs for obtaining their credit score
d. None of the above

Answer 23

a. Risk-based pricing notice

Question 24

Which of the following is not included in the required written disclosures for using prescreened lists?

a. Information contained in a consumer report was used in connection with the offer
b. Consumer received the offer because they satisfied the criteria used to screen the offer
c. Consumer may not prohibit the use of their information in their credit file for future prescreened offers
d. Credit or insurance may not be extended if, after the consumer responds, it is determined the consumer does not meet any applicable criteria or collateral requirements

Answer 24

c. Consumer may not prohibit the use of their information in their credit file for future prescreened offers

Question 25

What must an organization do before using a prescreened list from a consumer reporting agency?

a. Before the offer is made, establish criteria to be relied on to make the offer and grant credit or insurance
b. Maintain established criteria on file for three years beginning on the date on which the offer is made to the consumer
c. Include the required disclosures in a clear and conspicuous statement included with each written solicitation
d. All of the above

Answer 25

d. All of the above

Question 26

Which of the following currently has rule-making and enforcement authority over all of FCRA and FACTA?

a. CFPB
b. FRS
c. FTC
d. None of the above

Answer 26

a. CFPB

Question 27

The definition of a financial institution under FCRA includes all bank, savings and loan associations, credit unions, and:

a. All commercial investment companies
b. All other entities that hold a transaction account belonging to a consumer
c. All other entities that perform legal or health services
d. None of the above

Answer 27

b. All other entities that hold a transaction account belonging to a consumer

Question 28

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act granted rule making authority under FCRA to the CFPB, with the exception of which of the following?

a. Section 615(e) red flag guidelines and regulation
b. Section 628 disposal of records
c. Section 5 UDAP
d. Only a and b

Answer 28

d. Only a and b

Question 29

Under FCRA, which of the following is not included in the definition of a financial institution?

a. Savings and loan association
b. Mortgage lender
c. Medical clinic that allows customers to pay off bills in monthly installments
d. All of the above are not considered financial institutions under FCRA

Answer 29

c. Medical clinic that allows customers to pay off bills in monthly installments

Question 30

Under FCRA, which of the following is not included in the definition of a financial institution?

a. Entities that extend credit only for expenses incidental to service
b. Banks and credit unions
c. Savings and loan associations
d. Mortgage lenders

Answer 30

a. Entities that extend credit only for expenses incidental to service

Question 31

The Red Flags Rule applies to businesses that:

a. Obtain or use consumer reports in connection with a credit transaction
b. Furnish information to CRAs in connection with a credit transaction
c. Advance funds to or on behalf of an individual, except for expenses incidental to a service provided by the creditor to that person
d. All of the above

Answer 31

d. All of the above

Question 32

Example of red flags for ID Theft include all but which of the following?

a. Alerts, warnings, or notifications from a CRA
b. Normal use of a covered account
c. Suspicious identification documents
d. Suspicious personal identifying data

Answer 32

b. Normal use of a covered account

Question 33

Which of the following was the primary focus of the 1999 U.S. Bankcorp/MemberWorks case?

a. Consumer access to personal data
b. Increase in identity theft
c. Data-sharing relationships between banks and third-party marketers, and consumer choice
d. All of the above

Answer 33

c. Data-sharing relationships between banks and third-party marketers, and consumer choice

Question 34

Under GLBA, financial institutions are required to:

a. Store personal financial information in a secure manner
b. Provide notice of their policies regarding the sharing of personal financial information
c. Provide consumers with the choice to opt out of sharing personal information under certain conditions
d. All of the above

Answer 34

d. All of the above

Question 35

Which of the following best describes a financial institution defined by GLBA?

a. A business that holds consumer transaction accounts
b. A business significantly engaged in financial activities
c. A business significantly engaged in lending activities
d. Only a and b

Answer 35

b. A business significantly engaged in financial activities

Question 36

Under GLBA, nonpublic personal information may include personally identifiable information:

a. Provided by a consumer to a financial institution
b. Resulting from a transaction or service performed for the consumer
c. Otherwise obtained by the financial institution
d. All of the above

Answer 36

d. All of the above

Question 37

Under GLBA, which of the following is excluded from the definition of nonpublic personal information?

a. Information a customer provided to a bank
b. Information resulting from a customer’s transaction
c. Publicly available information
d. All of the above

Answer 37

c. Publicly available information

Question 38

Under GLBA, which of the following is excluded from the definition of nonpublic personal information?

a. Information from a consumer list that is derived without using personally identifiable information
b. Information resulting from a customer’s transaction
c. Information obtained by a financial institution
d. All of the above

Answer 38

a. Information from a consumer list that is derived without using personally identifiable information

Question 39

Under the GLBA Safeguards Rule, administrative, technical and physical safeguards implemented by an organization should be reasonably designed to:

a. Ensure the security and confidentiality of customer information
b. Protect against anticipated threats or hazards to the security or integrity of the information
c. Protect against unauthorized access to or use of the information that could result in substantial harm or inconvenience to the consumer
d. All of the above

Answer 39

d. All of the above

Question 40

Which of the following is not a security program element required by the Safeguards Rule?

a. Designated employee for writing procedures
b. Risk identification and assessment
c. Implementation and periodic monitoring of a safeguard program
d. Third party providers that implement safeguards

Answer 40

a. Designated employee for writing procedures

Question 41

Under the California Financial Privacy Act (SB-1):

a. Written opt-in consent is required for a financial institution to share personal information with nonaffiliated third parties
b. Opt-in provisions must be presented on a form titled “Important Privacy Choices for Consumers”
c. Consumers are granted the ability to opt out of information sharing between their financial institutions and affiliates not in the same line of business
d. All of the above

Answer 41

d. All of the above

Question 42

Under the California Financial Privacy Act (SB-1), a financial institution does not need to obtain consumer consent to share information with:

a. Nonaffiliated third-parties
b. Affiliated parties in different lines of business
c. Affiliated parties in the same line of business
d. Nonaffiliated parties for joint marketing

Answer 42

c. Affiliated parties in the same line of business

Question 43

Which of the following is not included in the enforcement authority given to the CFPB?

a. Conduct investigations
b. Sentence offenders for criminal actions
c. Issue subpoenas and hold hearings
d. Commence civil actions against offenders

Answer 43

b. Sentence offenders for criminal actions

Question 44

Under the Bank Secrecy Act of 1970, financial institutions are required to collect which of the following for purchases of bank checks, drafts, cashier’s checks, money orders or traveler’s checks of $3,000 or more in currency?

a. Name and address, tax ID number
b. Date of purchase, dollar amount
c. Type of instrument, serial numbers
d. All of the above

Answer 44

d. All of the above

Question 45

Which of the following wire transfers are exempt from BSA reporting requirements?

a. Funds transfers governed by the EFTA
b. Funds transfers made via Western Union
c. Funds transfers made through ACH, ATM , or a POS system
d. Only a and c

Answer 45

d. Only a and c