UDAAP Final Quiz

1. Consumer complaints play a key role in the detection of unfair, deceptive, or abusive practices.

True

False

Consumer complaints have been an essential source of information for examinations, enforcement, and rule-making for regulators.
Indicate weaknesses in elements of the institution’s compliance management system, such as training, internal controls, or monitoring.

Explanation

Consumer complaints have been an essential source of information for examinations, enforcement, and rule-making for regulators.
Indicate weaknesses in elements of the institution’s compliance management system, such as training, internal controls, or monitoring.

2. To be considered deceptive, an act or practice must have all of the following: -Representation, practice or omission that is likely to mislead -Reasonable consumer perspective considered -A material representation

True

False

A representation, omission, act or practice is deceptive when:
(1)The representation, omission, act, or practice misleads or is likely to mislead the consumer
(2) The consumer’s interpretation of the representation, omission, act, or practice is reasonable under the circumstances
(3) The misleading representation, omission, act, or practice is material

Explanation

A representation, omission, act or practice is deceptive when:
(1)The representation, omission, act, or practice misleads or is likely to mislead the consumer
(2) The consumer’s interpretation of the representation, omission, act, or practice is reasonable under the circumstances
(3) The misleading representation, omission, act, or practice is material

3. UDAAP is part of which of the following legislations:

Obama Care 2011

RESPA

Dodd-Frank Act

Americans with Disability Act

Not part of federal legislation but required by CFPB

Under the Dodd-Frank Act, it is unlawful for any provider of consumer financial products or services or a service provider to engage in any unfair, deceptive or abusive act or practice.The Act also provides CFPB with rule-making authority and, with respect to entities within its jurisdiction, enforcement authority to prevent unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service In addition, CFPB has supervisory authority for detecting and assessing risks to consumers and to markets for consumer financial products and services.

Explanation

Under the Dodd-Frank Act, it is unlawful for any provider of consumer financial products or services or a service provider to engage in any unfair, deceptive or abusive act or practice.The Act also provides CFPB with rule-making authority and, with respect to entities within its jurisdiction, enforcement authority to prevent unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service In addition, CFPB has supervisory authority for detecting and assessing risks to consumers and to markets for consumer financial products and services.

4. Which of the following questions is not part of the "four Ps" that can assist in the evaluation of whether a representation, omission, act, or practice is likely to mislead:

Is the statement PROMINENT enough for the consumer to notice?

Is the PLACEMENT of the information in a location where consumers can be expected to look or hear?

Is the information in close PROXIMINTY to the claim it qualifies?

Is the notice PRETTY?

A representation, omission, act or practice only needs to be LIKELY TO MISLEAD to be a UDAAP. All of the above help evaluate whether a UDAAP is present except 'pretty'.

Explanation

A representation, omission, act or practice only needs to be LIKELY TO MISLEAD to be a UDAAP. All of the above help evaluate whether a UDAAP is present except 'pretty'.

5. NAM conducts periodic evaluations or audits to check whether employees or third parties follow NAM's training and procedures and has a disciplinary policy in place to deal with any deficiencies.

True

False

The given statement suggests that NAM conducts periodic evaluations or audits to ensure that employees and third parties comply with the company's training and procedures. Additionally, it states that NAM has a disciplinary policy in place to address any shortcomings. Therefore, the statement is true as it implies that NAM takes measures to monitor and enforce adherence to their training and procedures.

Explanation

The given statement suggests that NAM conducts periodic evaluations or audits to ensure that employees and third parties comply with the company's training and procedures. Additionally, it states that NAM has a disciplinary policy in place to address any shortcomings. Therefore, the statement is true as it implies that NAM takes measures to monitor and enforce adherence to their training and procedures.

6. Although abusive acts also may be unfair or deceptive, the legal standards for abusive, unfair, and deceptive each are separate.

True

False

The statement is true because while abusive acts can also be unfair or deceptive, the legal standards for each of these terms are distinct and separate. This means that an act can be considered abusive without necessarily being unfair or deceptive, and vice versa. It is important to recognize and address each of these types of behavior individually within the legal framework.

Explanation

The statement is true because while abusive acts can also be unfair or deceptive, the legal standards for each of these terms are distinct and separate. This means that an act can be considered abusive without necessarily being unfair or deceptive, and vice versa. It is important to recognize and address each of these types of behavior individually within the legal framework.

7. UDAAP stand for: Unfair, Discrimintory Actions, Acts or Practices

True

False

UDAAP Stands for: Unfair, Deceptive, or Abusive, Acts or Practices.

Explanation

UDAAP Stands for: Unfair, Deceptive, or Abusive, Acts or Practices.

8. Which of the following would NOT be used to consider if an act or practice is unfair?

It causes substantial injury

It is not outweighed by the benefits

It hurts someone's feelings

It is not reasonably avoidable

The standard for unfairness is that an act or practice is unfair when:

(1) It causes or is likely to cause substantial injury to consumers

(2) The injury is not reasonably avoidable by consumers

(3) The injury is not outweighed by countervailing benefits to consumers or to competition

Explanation

The standard for unfairness is that an act or practice is unfair when:

(1) It causes or is likely to cause substantial injury to consumers

(2) The injury is not reasonably avoidable by consumers

(3) The injury is not outweighed by countervailing benefits to consumers or to competition

9. Marketing and disclosure are being checked for compliance and for the following:

All representations are factually based

All materials describe clearly, prominently and accurately terms of product

All materials are eye-catching

Disclosure of fees, penalties, other charges

Through a review of marketing materials, customer agreements, and other disclosures, whether before the consumer chooses to obtain the product or service:

All representations are factually based.

All materials describe clearly, prominently, and accurately material terms of product.

Disclosure of fees, penalties, and other charges.

Explanation

Through a review of marketing materials, customer agreements, and other disclosures, whether before the consumer chooses to obtain the product or service:

All representations are factually based.

All materials describe clearly, prominently, and accurately material terms of product.

Disclosure of fees, penalties, and other charges.

10. Performance evaluation can include criteria for sales personnel based on sales volume, size, terms of sale, or account performance.

True

False

Performance evaluation criteria can not create unintended incentives to engage in unfair, deceptive, or abusive acts or practices, including criteria for sales personnel based on sales volume, size, terms of sale, or account performance.

Explanation

Performance evaluation criteria can not create unintended incentives to engage in unfair, deceptive, or abusive acts or practices, including criteria for sales personnel based on sales volume, size, terms of sale, or account performance.

Udaap Final Quiz