UDAAP Flashcards
T or F
An institution may be in technical compliance with consumer protection rules and still have a UDAAP violation?
TRUE
What does UDAAP stand for?
Unfair, Deceptive, & Abusive Acts or Practices
Regulation AA applies to ___________.
consumer credit obligations made to a natural person for the acquisition of goods, services, or money for personal, family, or household purposes ^ does not include loans for purchase of real estate
What credit obligation provisions are prohibited under Reg AA
* confession of judgment
* waiver of exemption
* assignment of wages
* security interest in household goods
What late charge practices are prohibited by Reg AA?
pyramid charges: additional delinquency charge when the delinquency is attributable only to the nonpayment of prior late charges and the payment is otherwise a full payment within the due date or the grace period
What cosigner practices are prohibited by Reg AA?
* misrepresentation of the nature and extent of cosigner liability to any person
* accepting cosigner signature before the cosigner is informed of the nature of liability
Reg AA requires that disclosures be provided to cosigners ________________.
before they are obligated on the debt
(for open-end credit, must give disclosures before cosigner becomes obligated for fees or transactions)
Reg AA requires that disclosures be in writing and include:
* substantially similar language to the model notice
* be a separate document OR slightly larger type OR set off from contract language
* applicable modifications to allow for state law
A representation, omission, act, or practice (ROAP) may be deceptive if it is:
* likely to mislead
* would be deceptive from the perspective a reasonable consumer
* is material (likely to affect a consumer’s choice)
A representation, omission, act, or practice (ROAP) may be unfair if it:
* causes substantial consumer injury
* injury is not outweighed by benefits to the consumer or to the competition
* injury is one that consumers could not reasonably have avoided
One of the ways to manage UDAAP compliance risk is to verify that information provided to the consumer is _____________,
complete, accurate, and not likely to mislead
One of the ways to manage UDAAP compliance risk is to avoid the use of claims such as ‘guaranteed’ or ‘pre-approved’ if ____________.
there is a possibility that consumers will not receive the advertised terms
One of the ways to manage UDAAP compliance risk is to provide a clear, up-front disclosure of any contract provision that ___________.
permits a change in the provision of the terms of products or services offered
One of the ways to manage UDAAP compliance risk is to avoid engaging in promotions of a product or service that highlights a particular benefit if ______________.
the benefit will be negated by another aspect of the transaction
One of the ways to manage UDAAP compliance risk is to review telemarking scripts used to market products to consumers both for ___________ and _____________.
*accuracy
* to ensure they adequately describe the terms, benefits, and material limitations of the product or service being offered