consumer

Question 1

What case illustrates a situation where a consumer (the tenant) clicked a button to accept an online contract, but was not aware of the fee associated?

Answer 1

The Conny case

Question 2

Regulation M requires lessors to disclose the estimated end-of-term value of leased vehicles accurately to prevent consumer disputes.

Answer 2

True

Question 3

Which federal law mandates disclosures regarding vehicle information: including assembly location, price, and safety data, on all new vehicles for sale?

Answer 3

Automobile Information Disclosure Act (Monroney Act)

Question 4

Explain the concept of loan packing in automobile financing

Answer 4

Loan packing in automobile financing refers to the practice of including extra, often unnecessary, products or services such as extended warranties or insurance in a car loan without the consumer’s full understanding or permission. This results in an increased total loan amount and higher finance charges, benefiting both the dealership and the lender. Regulatory efforts, such as those under the Truth in Lending Act, want to ensure transparency by requiring disclosure of loan terms and costs. However, excuses may allow dealerships and lenders to manipulate these regulations, potentially misleading consumers about the true costs involved. Increasing disclosure requirements and enforcement mechanisms is crucial to protect consumers from deceptive practices associated with loan packing.

Question 5

Payday loans are always regulated by federal law, regardless of state laws.
True

Answer 5

False

Question 6

Usury laws in some states cap the interest rates that can be charged on payday loans.

Answer 6

True

Question 7

What is the typical demographic of payday loan borrowers?

Answer 7

Single, low-income mothers

Question 8

Which federal law requires payday lenders to disclose the annual percentage rate (APR) and total cost of the loan?

Answer 8

Truth in Lending Act

Question 9

Define payday loans. What are the main criticisms? Give two examples.

Answer 9

Payday loans are often criticized for their high costs and the potential to trap borrowers in a cycle of debt. These kinds of loans typically have extremely high interest rates and fees, making them a controversial form of credit. Examples:
● High interest rates and fees, Cycle of debt

Question 10

Private student loans typically offer the same repayment options and protections as federal student loans.

Answer 10

False

Question 11

Under the Higher Education Act, federal student loans are exempt from the Truth in Lending Act (TILA).

Answer 11

True

Question 13

Which federal agency regulates federal student loans servicers?

Answer 13

Dept of Ed

Question 14

What is the primary difference between subsidized and unsubsidized loans?

Answer 14

The federal government pays the interest on subsidized loans while the student is in school, while unsubsidized loans accrue interest during that time.

Question 15

Define student loans. What is the key differences between federal and private student loans? Give two examples.

Answer 15

Federal student loans are issued by the government and come with fixed interest rates and various borrower protections, such as income-driven repayment plans and deferment options. Private student loans are offered by private lenders, they often have variable interest rates, and typically lack the same level of borrower protections.Federal student loans offer income-driven repayment plans, which adjust monthly payments based on the borrower’s income. This can make repayment more manageable for borrowers with lower incomes.
● Private student loans often require a credit check and may have higher interest rates for borrowers with poor credit. This can result in high monthly payments and overall loan costs compared to federal student loans.

Question 16

Checks are used more than cash, credit cards, and debit cards.

Answer 16

False

Question 17

Credit fraud is more popular than debit fraud.

Answer 17

True

Question 18

Which is not an example of consumer protection functions?

Answer 18

a. Electronic Funds Transfer
b. Truth in Savings Act
c. Federal Deposit Insurance Act
d. *Glass Steagall Act

Question 19

What does the 21st Century Act allow?

Answer 19

*a substitute check in place of original
b. Inability for electronic transactions
c. Mobile banking for consumers
d. Any check to be deposited without risk evaluation

Question 20

Define Automatic Clearing House transactions. What type of businesses use them. Give two examples of ACH.

Answer 20

An ACH transaction is an electronic money transfer made between banks and credit unions across a network. Larger businesses usually use ACH transactions. Two examples would be Payroll and monthly utility bills.

Question 21

An electronic contract and electronic signature satisfy the statute of frauds.

Answer 21

True

Question 22

Online transaction disclosures are easier to display digitally.

Answer 22

False

Question 23

What is first sale?

Answer 23

a. *Right to resell a copyrighted product legally purchased.
b. The first product that is sold by retailer
c. Selling products the first day of the month
d. Inability to sell products online

Question 24

Who is in the Apple Purchase Litig. made the in-app purchases?

Answer 24

a. An Elder
b. Apple Employee
c. *A minor
d. None of the options mentioned

Question 25

Define clickwrap. Explain when it is valid. Give two examples of clickwrap.

Answer 25

Clickwrap is when terms of an agreement are presented with the option to agree or not proceed. Clickwrap is valid when terms of said agreement show on the same screen with the option to accept and proceed.

Example 1: A purchase that outlines the monthly amount to be charged along with cancellation policies set with the option to proceed or not.

Example 2: A free subscription that outlines when the first payment will begin as well as terms of the subscription set with the option to proceed or not.

Question 26

In the most concrete sense, a judgment is merely a piece of paper.

Answer 26

True

Question 27

Consumer law is concerned with regulating how businesses attract consumers to deals and the laws regulating those deals?

Answer 27

True

Question 28

Most transactions are negative, leading to frequent legal disputes between consumers and businesses?

Answer 28

False

Question 29

Without enforcement, consumer protections are of little value to people?

Answer 29

True

Question 30

The process for using a judgment to locate and levy on a debtor’s property is generally called

Answer 30

*A. Execution
B. Garnishment
C. Secured debt
D. Unsecured debt

Question 31

In the context of repossession, what typically constitutes a default that gives rise to the creditor’s remedies as defined in a loan contract?

Answer 31

a. *The failure to protect the collateral.
b. *The failure to make one or more payments.
c. The consumer’s failure to communicate with the lender.

Question 32

Discuss the differences between the Holder in Due Course and the FTC Rule?

Answer 32

The holder must take the instrument for value, in good faith, and without notice of any issues such as it being overdue, dishonored, or in default. Additionally, the holder must lack knowledge of any defenses or claims against the instrument at the time it is acquired. The FTC Rule requires that consumer credit contracts include a specific notice. This notice states that any holder of the contract is subject to all claims and defenses that the consumer could assert against the original seller of the goods or services. This rule effectively overrides the protections usually granted to holders in due course in consumer credit transactions, allowing consumers to assert claims and defenses against assignees of the credit contract.

Question 33

In the case of Deutsche Bank National Trust Co. v. Carmichael, what was the primary legal issue that the court needed to resolve?

Answer 33

a. Whether Carmichael owed the debt claimed by Deutsche Bank.
b. *The validity of the assignment of the mortgage and Deutsche Bank’s standing to enforce the mortgage.
c. The interest rate applied to Carmichael’s mortgage loan.
d. Whether Deutsche Bank followed proper foreclosure procedures.

Question 34

Which of the following is NOT a ground for a borrower to assert a defense against a holder in due course under the U.C.C. §3-305?

Answer 34

a. Infancy of the obligor.
b. Duress, lack of legal capacity, or illegality of the transaction.
c. *The obligor’s dissatisfaction with the quality of goods or services purchased.
d. Fraud that induced the obligor to sign the instrument without knowledge of its terms.

Question 35

What is the difference between Secured Debt and Unsecured Debt? Explain and provide examples.

Answer 35

Secure debts are those for which the creditor has the right to look to specific property to be paid in the event of a default. Examples of secured debts are mortgages, auto loans, and tax liens. Unsecured debts are those for which the creditor does not have collateral or a remedy in a specific property. Examples of unsecured debt are medical debts, credit card debts, and student loan debts. By dollar volume, secured debts are large on customers’ balance sheets; conversely, unsecured debts are predominant.

Question 36

T/F: The FTC Practices Rule limits creditors’ rights to take debtors’ property.

Answer 36

*True

Question 37

T/F: States are allowed to opt out of federal bankruptcy exemptions and create their own exemption laws.

Answer 37

True

Question 38

Which chapter of the Bankruptcy Code is most commonly used by individuals to reorganize their debts?

Answer 38

a. Chapter 7
b. Chapter 11
*c. Chapter 13
d. Chapter 15

Question 39

Under Chapter 13 Bankruptcy, for the debtor to retain property and catch up on payments, the debtor must:

Answer 39

a. Transfer the property to a family member
*b. Remain current on the ongoing obligations
c. Swear to never use credit again
d. Take a personal finance course

Question 40

Discuss the role and significance of property exemptions in bankruptcy proceedings, including how they vary between federal and state law, and their impact on both the debtor and creditors?

Answer 40

Property exemptions in bankruptcy proceedings allow debtors to retain certain essential assets, giving them a fresh start post-bankruptcy. These exemptions vary between federal and state law, with some states requiring their exemptions and others allowing debtors to choose between federal and state exemptions. The role of these exemptions is significant as they protect specific property from being used to pay off creditors, thus ensuring debtors are not left destitute. For creditors, property exemptions limit the assets available for distribution, potentially reducing the amount recovered.

Question 41

Define Wage Exemptions in relation to garnishments. Explain why some people are entitled to more wage exemptions than others. Give an Example of a wage exemption from the J.M. v. Hobbs Case.

Answer 41

Wage Exemptions limit the amount of a debtor’s paycheck or income that can be garnished to repay a debt. Some people enjoy more wage exemptions than others, depending on their state. Some states have no wage exemption laws, while others prohibit garnishments entirely. In J.M v. Hobbs, the plaintiff was awarded a civil judgment against the defendant. While incarcerated, the defendant received a pension from years spent as a state trooper. The plaintiff filed a motion for an order of execution requesting the court to garnish the defendant’s pension income to pay the awarded judgment. The court ruled that under the Nebraska State Patrol Retirement Act, such benefits are not subject to garnishment or any other process of law.

Question 42

T/F: According to Heintz v. Jenkins, the FDCPA “applies to attorneys who regularly engage in consumer-debt-collection activity, even when the activity consists of litigation.”

Answer 42

True

Question 43

The Federal Statute, the Fair Debt Collection Practices Act (FDCPA) is the foundational law.

Answer 43

True

Question 44

The basic approach of the FDCPA is to ban certain kinds of practices. The trio of prohibited practices are:

Answer 44

a. Unfair practices, debt collectors and harassment of abuse
b. *Harassment or abuse, false or misleading representations and unfair practices
c. False or misleading representations, unfair practices and enforcement actions
d. Harassment of abuse, false or misleading representations and UDAP

Question 45

Which of the following is NOT part of the trio of prohibited practices under FDCPA

Answer 45

A. Harassment or abuse
B. False or misleading representation
C. Unfair practices
*D. Prohibited Acts

Question 46

What are the primary protections offered to consumers under the Fair Debt Collection Practices Act (FDCPA), and the mechanisms to enforce these protections?

Answer 46

The Fair Debt Collection Practices Act (FDCPA) protects consumers by prohibiting harassment, false representations, and unfair practices by debt collectors. It restricts contact times, bans misleading statements, and disallows unauthorized fees. Consumers can dispute debts and request verification, halting collection efforts until verification. The FDCPA is enforced by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB)

Question 47

Define the term “Debt Collector”. Explain why the Fair Debt Collection Practices Act (FDCPA) only applies to Debt Collectors and not Creditors. Give an example of the “trio of prohibited practices”.

Answer 47

debt collector is defined as anyone who uses any instrumentality of interstate commerce or the mail in any business whose principal purpose is the collection of any debts or who regularly collects or attempts to collect, directly or indirectly. The FDCPA only applies to debt collectors, not creditors, because the act attempts to prohibit certain behaviors by certain people. Creditors do not behave the same way as debt collectors and, therefore, do not need a statute forbidding them to do something they do not do. The trio of prohibited practices under the FDCPA are (1) Harassment or Abuse, (2) False or Misleading Representations, and (3) Unfair Practices.

Question 48

T/F: Alternative Dispute Resolution (ADR) is a process for parties with a disagreement to come to a solution outside of litigation.

Answer 48

True

Question 49

The Federal Arbitration Act says that an arbitration agreement shall be

Answer 49

a. *valid, irrevocable and enforceable
b. Irrevocable, valid and negotiated
c. Valid, enforceable and mediated
d. Enforceable, contractual and irrevocable

Question 50

Arbitration in the consumer context usually means:

Answer 50

A neutral, trained mediator works to help disputants
*B. Pre-dispute mandatory arbitration imposed by contract
C. Negotiate differences
D. Individual discretion or preference

Question 51

Under the Dodd-Frank Act, define, explain, and provide an example of how legislation restricts the use of arbitration clauses in specific consumer contracts.

Answer 51

Congress enacted legislation that restricts the use of arbitration clauses in some consumer contracts. For example, Dodd-Frank empowers the SEC to limit or prohibit agreements requiring broker-dealer customers to arbitrate future disputes under federal securities laws. Another example is Dodd-Frank, which prohibits arbitration clauses in residential mortgages. Dodd-Frank also gives the Consumer Financial Protection Bureau (CFPB) authority to prohibit or impose conditions on mandatory arbitration that involves consumer financial products and services.

Question 52

What are the 3 most common forms of ADR? Explain their meanings?

Answer 52

• Negotiation refers to voluntary efforts to reach a compromise, usually without third-party intervention.
• Mediation usually means the use of a third-party to guide the parties in their discussions and sometimes to suggest a resolution, which the parties can accept or not. In consumer law, mediation is often offered as a precursor to full litigation.
• Arbitration in the consumer context nearly always means predispute mandatory arbitration imposed by contract. The consumer becomes bound to arbitrate at the time of the agreement, not at the time of the dispute.

Question 53

T/F: One of the major forces that have disrupted consumer law in the last decade is the creation of the Consumer Financial Protection Bureau

Answer 53

True

Question 54

Bitcoin is a private digital agency

Answer 54

True

Question 55

The digital trail of Bitcoin transactions is called

Answer 55

a. Crypto
b. Virtual key
c. *Blockchain
d. Ledger

Question 56

Which Act gives consumers the right to withhold payment to a card issuer based on a dispute with a Merchant?

Answer 56

A. Uniform Commercial Code Act
B. Electric Funds Transfer Act
*C. Truth in Lending Act
D. Uniform Money Services Act

Question 57

What are the two major forces that have disrupted consumer law in the last decade and explain why they have disrupted consumer law.

Answer 57

1. The creation of the Consumer Financial Protection Bureau - Its role as a regulator is evolving. Early on the CFPB focused on rulemaking that were required by the Dodd-Frank Act. In the coming years subsequent directors will provide new priorities and leadership and partner with other federal or state agencies.
2. Consumer aspect - Technology is the main driver, as platforms and applications increasingly blur the lines between commercial and consumer activity.

Question 58

Define, explain, and give examples of what peer-to-peer lending is:

Answer 58

Peer-to-peer lending is ancient. It has never disappeared from U.S. Society. Family and friends are valuable lenders, particularly for borrowers outside a bank’s comfort zone, such as students or undocumented individuals. Peer-to-peer lending uses technology and big data to create “peer” relationships outside real-world social networks. Instead of asking your rich Uncle Jimmy for a loan, you can ask your classmate’s rich Aunt Joan in a network of connections. In its truest form, peer-to-peer lending occurs across a platform connecting willing lenders with needy borrowers.