Chapter 24: Worksheet - Credit Protection

A credit-reporting agency that fails to comply with the Fair Credit Reporting Act is liable for actual damages, plus additional damages not to exceed ______ and attorney's fees.

$1,000

Under the Fair Debt Collection Practices Act, a Collection Agency May Not Do Any of the Following:

1. Contact the debtor at the debtor's place of employment if the debtor's employer objects. 2. Contact the debtor at inconvenient or unusual times (for example, at three o'clock in the morning) or at any time, if the debtor is being represented by an attorney. 3. Contact third parties other than the debtor's parents, spouse, or financial adviser about payment of a debt unless a court authorizes such action. 4. Harass or intimidate the debtor (by using abusive language or threatening violence, for example) or make false or misleading statements (such as posing as a police officer). 5. Communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt, except to advise the debtor of further action to be taken by the collection agency.

the five transactions subject to Regulation Z.

1. installments loan 2. retail and installment sales 3. car loans 4. home improvement loans 5. real estate loans for less than $25,000

Regulation Z applies to any transaction involving an installment sales contract that calls for payment to be made in more than _______ installments.

4

TILA's Credit Card Rules:

Amendments to the TILA's credit-card rules that became effective in 2010 added the following protections: 1. A company may not retroactively increase the interest rates on existing card balances unless the account is sixty days delinquent. 2. A company must provide forty-five days' advance notice to consumers before changing its credit-card terms. 3. Monthly bills must be sent to cardholders twenty-one days before the due date. 4. The interest rate charged on a customer's credit-card balance may not be increased except in specific situations, such as when a promotional rate ends. 5. A company may not charge fees to a customer for being over his or her credit-card limit except in specified situations. 6. When the customer has balances at different interest rates, payments in excess of the minimum amount due must be applied first to the balance with the highest rate (for instance, a higher interest rate is commonly charged for cash advances). 7. A company may not compute finance charges based on the previous billing cycle (a practice known as double-cycle billing, which hurts consumers because they are charged interest for the previous cycle even though they have paid the bill in full).

Which act was passed in an effort to combat identity theft? a. The Fair and Accurate Credit Transactions Act. b. The Fair Credit Reporting Act. c. The Federal Trade Commission Act.

a. The Fair and Accurate Credit Transactions Act.

When a consumer is denied credit or insurance on the basis of his or her credit report, the consumer does not have to be notified of that fact. a. True b. False

b. False

Dom's Grill, Inc., borrows $10,000 to finance a new range and the payments will be made monthly over a two-year period. The bank: a. under the Fair Credit Reporting Act must disclose all of its credit terms, as well as those of two competing lenders. b. under the Truth-in-Lending Act must disclose to the president of Dom's Grill all of the credit terms and conditions of the loan. c. need not make any special disclosures.

c. need not make any special disclosures. (Hint: Does the TILA apply to all persons, including artificial persons?)

Which agency is dedicated to overseeing the practices of banks, mortgage lenders, and credit-card companies? a. The Federal Trade Commission. b. The Securities and Exchange Commission. c. The Fair Credit Reporting Bureau. d. The Consumer Financial Protection Bureau.

d. The Consumer Financial Protection Bureau.

Regulation Z governs: a. complaints brought under the Federal Food, Drug, and Cosmetic Act. b. deceptive advertising. c. pyramid schemes and sales. d. credit provisions associated with installment sales contracts.

d. credit provisions associated with installment sales contracts.

The Equal Credit Opportunity Act (ECOA) prohibits lenders from denying credit solely on the basis of all of the following EXCEPT:

disability

Ramona discovers that a credit reporting agency shows her having not paid a loan that she paid off last year. She writes to the credit-reporting agency and requests an investigation. The agency must:

investigate and delete any errors in Ramona's report

The penalty that will be imposed on a creditor who does not exactly follow the provisions of the Truth-in-Lending Act (TILA) is....

rescission of the credit contract

The Fair Debt Collection Practices Act requires a collection agency to include a(n) _____ whenever it initially contacts a debtor for payment of a debt or within five days of that initial contact.

validation notice

Harold owes Soundstage Services for services rendered two years ago for which he hasn't paid. Soundstage's owner calls Harold at home once a week at four in the morning claiming that he is working for a collection agency and asks when payment will be made. The owner of Soundstage is in:

violations of the Fair Debt Collections Practices Act