Consumer Issues and Regulations

What is the maximum civil fine for an individual or entity that violates the Fraud and False Statements Act?

$50,000 per act

What is the purpose of the Fair Credit Reporting Act?

To regulate the way credit information is collected and used

FCRA requires that applicants receive a notice at this point in time

at time of Application

With regard to an investigative consumer report, consumers must be informed that they have the right to request additional information about the report; such information must be provided to consumers within ____ day(s) if requested.

Five

Which of the following is generally not insured by state insurance guaranty associations?

Policies from fraternal benefit societies

The following information may not be included in consumer reports unless the consumer credit report is requested for life insurance policies with a face amount of $150,000 or more:

1) Bankruptcies dating back more than 10 years 2) Civil suits and judgments dating back more than seven years or civil cases in which the statue of limitations has expired, whichever period is longer 3) Tax liens dating back more than seven years 4) Adverse information dating back more than seven years 5) Reports of a consumer's arrests, indictments or convictions

The information on a person's credit report is cleared after how many years?

7

A person who is guilty of a fraudulent act may be subject to the following penalties:

A person who is guilty of a fraudulent act may be subject to the following penalties:

All of the following policies and contracts are typically covered by state insurance guaranty associations, EXCEPT:

A universal life insurance policy issued by a fraternal benefit society

All of the following may not be included in a consumer report, unless the consumer credit report is requested for a life insurance policy with a face amount of $150,000 or more, EXCEPT:

Adverse information dating back more than three years

The purpose of the Gramm-Leach-Bliley Act is to:

Allow financial entities to merge and accommodate greater competition

Bob has a second mortgage with XYZ bank, and Shirley has one checking and two savings accounts with ABC bank. Shirley decides to cash one of her paychecks at XYZ bank because she doesn't have time to stop at her bank. Which of the following is true under the Gramm-Leach-Bliley Act?

Bob is a customer of XYZ bank and Shirley is a consumer of XYZ bank.

What governmental agency operates the Fair Credit Reporting Act?

Federal Trade Commission

The two types of reports insurance underwriters will utilize to obtain credit information about an applicant.

Consumer reports and investigative consumer reports

The Fair Credit Reporting Act states that generally, consumer reports cannot contain the following information, EXCEPT:

Information on an individual's character

An insurer requests an investigative consumer report on an applicant. All of the following are true, EXCEPT:

The credit report includes information about the applicant's account balances.

Applicant

The person applying for the policy who fills out the application

When an insurer requests an investigative consumer report on an applicant, which of the following is true?

The report includes information regarding the applicant's general reputation and personal characteristics.

Underwriters

They select, classify and rate risks

Investigative consumer reports cannot be performed unless the consumer has been notified in writing of the report within ______ day(s) of when the report was initially requested.

Three

Agents must inform applicants that a credit report may be performed:

Upon application

With respect to life and health insurance guaranty associations, what are agents prohibited from doing?

Using the existence of the life and health guaranty association as an inducement to selling an insurance contract

What must a person obtain in order to reenter the insurance industry as an agent, after having been convicted of a criminal felony that involves a breach of trust, dishonest, or has violated the Fraud and False Statements Act?

Waiver

An agent is guilty of committing fraud. What must the person obtain in order to transact insurance?

Waiver of consent from the state insurance department

Jones applies for a life insurance policy. The insurer will need to view Jones' credit report to determine his credit-worthiness, and if he is a good risk to insure. When must the insurance company inform Jones of his rights under the Fair Credit Reporting Act?

When Jones completes the application

Pretext interviews

an interviewer assumes a false identity or refuses to disclose his true identity and interviews a person without disclosing the true purpose of the interview; a third source of information, but usually prohibited by law

Consumer reporting agencies

compile and maintain credit information about consumers nationwide, and issue credit reports to third parties who have a valid business need for the information.

Fair Credit Reporting Act (FCRA)

passed in 1970 with the purpose of regulating the way credit information is collected and used

Consumer Reports

written, oral, or other communication of information by a consumer reporting agency about a consumer's credit worthiness, character, general reputation, personal characteristics or mode of living which are used to determine a consumer's, or other authorized purposes.