AFIP CERTIFICATION COMPREHENSIVE TEST QUESTIONS
AND SOLUTIONS
Willful violations of the FCRA can also expose dealerships to liability for: - a.
Punitive damages.
b. Court costs.
c. Attorney's fees.
✔✔(True/False) Violations of the FCRA can expose dealerships to civil penalties in
actions brought by federal or state authorities. - ✔✔True
✔✔Negligent violations of the FCRA can expose dealerships to liability for: - ✔✔a.
Actual damages suffered by consumers.
b. Court costs.
c. Attorney's fees.
✔✔(True/False) Your dealership's Adverse Action Notices should be reviewed by
competent counsel. - ✔✔True
✔✔As it relates to vehicle installment funding and consumer leases, the dealer (is or
isn't) the creditor at the point in time the agreement is consummated. - ✔✔is
✔✔(True/False) It is illegal for a dealer to provide information about only sub-prime auto
finance programs to minority applicants while providing information on a wider variety of
auto finance programs to similarly situated non-minority applicants. - ✔✔True
✔✔(True/False) According to Regulation B, a transfer of information will be judged to be
a completed application - even if information is missing - if it provides the funding source
with all the information required to make a credit decision relative to the amount of
money requested and the parameters of the deal. - ✔✔False
✔✔Which act implements Regulation B? - ✔✔ECOA
✔✔It is permissible for a creditor to inquire about a customer's _______. - ✔✔-
Permanent residence
-Immigration Status
✔✔If credit is denied, a creditor must issue an adverse action notice within _______
days of receipt of a completed application. - ✔✔30
✔✔(True/False) In situations involving multiple applicants, ECOA requires that the
adverse action notice be issued to the primary applicant, while FCRA requires that it be
given to all applicants. Since most notices contain notifications required by both the
,ECOA and FCRA, best practices suggest that funding sources issue notices to any
party submitting an application for credit. - ✔✔True
✔✔(True/False) A dealer is allowed to require a minority applicant to provide more
documentation to obtain credit than a similarly situated non-minority applicant. -
✔✔False
✔✔(True/False) If an F&I manager, as an integral part of his job, regularly participates
in a credit decision - for example, by determining the APR (as a function of the buy
rate), setting the payment terms (e.g., 24 or 36 months), establishing other terms (e.g.,
the amount paid down or the amount financed) - or regularly refers customers to direct
lenders, then he is deemed to be a "creditor." - ✔✔True
✔✔(True/False) In addition to federal discrimination rules, many states have similar
regulations with more extensive lists of prohibited practices. - ✔✔True
✔✔Categories of Credit History as Weighted in FICO Scores - ✔✔Payment History -
35%
Amounts Owed - 30%
Length of Credit History - 15%
New Credit - 10%
Types of Credit in Use - 10%
✔✔Gramm-Leach-Bliley Act - ✔✔Enacted to address the disposition and protection of
nonpublic personal information.
✔✔Financial Privacy Rule of November 2000 - ✔✔Mandated that consumers be
informed of how their nonpublic information will be used.
✔✔The Safeguards Rule - ✔✔Effective May 2003, required those who collect nonpublic
information - in both its electronic and paper formats - to protect it from theft or
compromise.
✔✔The Red Flags Rule - ✔✔Requires creditors to take steps to ensure that the
customer is who he or she purports to be.
✔✔How long is an active-duty alert active? - ✔✔One Year
✔✔The FCRA provides that no person who accepts credit or debit cards may print more
than the last _______ digits of the card number or the expiration date on any receipt
provided to the cardholder at the point of sale or transaction. - ✔✔5
,✔✔(True/False) If a funding source contacts an F&I manager to let him know about its
decision to extend credit to a specific consumer, this is considered a consumer report. -
✔✔True
✔✔Most dealerships will issue the simplified _______ to comply with the Risk-Based
Pricing Rule. - ✔✔Exception Notice
✔✔(True/False) In some cases, information about government-insured or -issued
student loans may remain on file for longer than seven years. - ✔✔True
✔✔(True/False) A dealer who is the original creditor in a three-party financing
transaction must provide either a RBP Notice or Exception Notice to consumers. -
✔✔True
✔✔How long does most negative information remain on your credit file? - ✔✔7 Years
✔✔(True/False) A dealer can avoid the requirement to establish an ITPP by processing
all requests for credit through a credit portal that weighs the information provided
against its own established set of red flags. - ✔✔False
✔✔If a customer has declared bankruptcy, how long will that information remain on the
customer's consumer report? - ✔✔10 years prior to the date of the consumer report
✔✔How long is an initial fraud alert active? - ✔✔90 Days
✔✔(True/False) The RBP Rule Exception Notice and the Adverse Action Notice share
the same timing requirements. - ✔✔False
✔✔How long is an extended fraud alert active? - ✔✔7 Years
✔✔(True/False) The Red Flag Rule went into effect January 1, 2008, with a mandatory
compliance deadline of November 1, 2008. However, because the FTC delayed its
enforcement of the Rule several times, compliance wasn't mandatory until November
2009. - ✔✔False
✔✔(True/False) Best practices dictate that the exception notice be signed by the
customer and retained in the customer's file. - ✔✔True
✔✔(True/False) As a general rule and best practice, a dealership should not attempt to
obtain a consumer report without the consumer's written authorization. - ✔✔True
, ✔✔How long must tax liens remain on file? - ✔✔A consumer-reporting agency may not
report paid tax liens that predate the issuance of the consumer report by more than
seven years
✔✔A dealer may be liable for civil damages through enforcement action brought by the
_______ for violations of the FCRA. - ✔✔FTC and State Attorney General
✔✔If a dealer sends a direct mailing to consumers that contains advertising for vehicles
offered for sale and an offer of credit to those who respond, it must include a notice
giving the recipients the ability to opt out of future offers for a _______-year period. -
✔✔5
✔✔Who is exempt from the Used Car Rule? - ✔✔Banks and financial institutions,
businesses that sell vehicles to their employees, and lessors who sell a leased vehicle
to a lessee, an employee of the lessee, or a buyer found by the lessee.
✔✔"Preservation of Consumers' Claims and Defenses" is now known as the ______. -
✔✔The Holder-in-Due-Course Rule
✔✔Penalties for violating the Credit Practices Rule - ✔✔Up to $16,000 for each
violation and can issue an order prohibiting further violations.
✔✔The potential penalty or penalties for non-compliance with the FOA is / are _______.
- ✔✔-The DOT may impose a penalty of up to $2,000 per violation. (The maximum
amount is $100,000)
-Action by the Attorney General
-Up to 3 years in prison
-He or she can collect three times the actual damages, or $1,500, whichever is greater,
if the violator acted with intent to defraud.
✔✔(True/False) According to the FOA, if there are two people on the title, both must
sign the odometer disclosure statement. - ✔✔False
✔✔(True/False) Most courts take the position that if there are any indicators that the
mileage is inaccurate, the dealer must take the appropriate steps to confirm that the
mileage on the vehicle is correct. - ✔✔True
✔✔(True/False) A transfer under the FOA excludes gifts. - ✔✔False
✔✔(True/False) When surrendering the vehicle, a lessor may require a lessee to
complete a Lessor- Lessee Odometer Disclosure on its behalf. - ✔✔True
✔✔The statute of limitations under the FOA is _______. - ✔✔2 Years
AND SOLUTIONS
Willful violations of the FCRA can also expose dealerships to liability for: - a.
Punitive damages.
b. Court costs.
c. Attorney's fees.
✔✔(True/False) Violations of the FCRA can expose dealerships to civil penalties in
actions brought by federal or state authorities. - ✔✔True
✔✔Negligent violations of the FCRA can expose dealerships to liability for: - ✔✔a.
Actual damages suffered by consumers.
b. Court costs.
c. Attorney's fees.
✔✔(True/False) Your dealership's Adverse Action Notices should be reviewed by
competent counsel. - ✔✔True
✔✔As it relates to vehicle installment funding and consumer leases, the dealer (is or
isn't) the creditor at the point in time the agreement is consummated. - ✔✔is
✔✔(True/False) It is illegal for a dealer to provide information about only sub-prime auto
finance programs to minority applicants while providing information on a wider variety of
auto finance programs to similarly situated non-minority applicants. - ✔✔True
✔✔(True/False) According to Regulation B, a transfer of information will be judged to be
a completed application - even if information is missing - if it provides the funding source
with all the information required to make a credit decision relative to the amount of
money requested and the parameters of the deal. - ✔✔False
✔✔Which act implements Regulation B? - ✔✔ECOA
✔✔It is permissible for a creditor to inquire about a customer's _______. - ✔✔-
Permanent residence
-Immigration Status
✔✔If credit is denied, a creditor must issue an adverse action notice within _______
days of receipt of a completed application. - ✔✔30
✔✔(True/False) In situations involving multiple applicants, ECOA requires that the
adverse action notice be issued to the primary applicant, while FCRA requires that it be
given to all applicants. Since most notices contain notifications required by both the
,ECOA and FCRA, best practices suggest that funding sources issue notices to any
party submitting an application for credit. - ✔✔True
✔✔(True/False) A dealer is allowed to require a minority applicant to provide more
documentation to obtain credit than a similarly situated non-minority applicant. -
✔✔False
✔✔(True/False) If an F&I manager, as an integral part of his job, regularly participates
in a credit decision - for example, by determining the APR (as a function of the buy
rate), setting the payment terms (e.g., 24 or 36 months), establishing other terms (e.g.,
the amount paid down or the amount financed) - or regularly refers customers to direct
lenders, then he is deemed to be a "creditor." - ✔✔True
✔✔(True/False) In addition to federal discrimination rules, many states have similar
regulations with more extensive lists of prohibited practices. - ✔✔True
✔✔Categories of Credit History as Weighted in FICO Scores - ✔✔Payment History -
35%
Amounts Owed - 30%
Length of Credit History - 15%
New Credit - 10%
Types of Credit in Use - 10%
✔✔Gramm-Leach-Bliley Act - ✔✔Enacted to address the disposition and protection of
nonpublic personal information.
✔✔Financial Privacy Rule of November 2000 - ✔✔Mandated that consumers be
informed of how their nonpublic information will be used.
✔✔The Safeguards Rule - ✔✔Effective May 2003, required those who collect nonpublic
information - in both its electronic and paper formats - to protect it from theft or
compromise.
✔✔The Red Flags Rule - ✔✔Requires creditors to take steps to ensure that the
customer is who he or she purports to be.
✔✔How long is an active-duty alert active? - ✔✔One Year
✔✔The FCRA provides that no person who accepts credit or debit cards may print more
than the last _______ digits of the card number or the expiration date on any receipt
provided to the cardholder at the point of sale or transaction. - ✔✔5
,✔✔(True/False) If a funding source contacts an F&I manager to let him know about its
decision to extend credit to a specific consumer, this is considered a consumer report. -
✔✔True
✔✔Most dealerships will issue the simplified _______ to comply with the Risk-Based
Pricing Rule. - ✔✔Exception Notice
✔✔(True/False) In some cases, information about government-insured or -issued
student loans may remain on file for longer than seven years. - ✔✔True
✔✔(True/False) A dealer who is the original creditor in a three-party financing
transaction must provide either a RBP Notice or Exception Notice to consumers. -
✔✔True
✔✔How long does most negative information remain on your credit file? - ✔✔7 Years
✔✔(True/False) A dealer can avoid the requirement to establish an ITPP by processing
all requests for credit through a credit portal that weighs the information provided
against its own established set of red flags. - ✔✔False
✔✔If a customer has declared bankruptcy, how long will that information remain on the
customer's consumer report? - ✔✔10 years prior to the date of the consumer report
✔✔How long is an initial fraud alert active? - ✔✔90 Days
✔✔(True/False) The RBP Rule Exception Notice and the Adverse Action Notice share
the same timing requirements. - ✔✔False
✔✔How long is an extended fraud alert active? - ✔✔7 Years
✔✔(True/False) The Red Flag Rule went into effect January 1, 2008, with a mandatory
compliance deadline of November 1, 2008. However, because the FTC delayed its
enforcement of the Rule several times, compliance wasn't mandatory until November
2009. - ✔✔False
✔✔(True/False) Best practices dictate that the exception notice be signed by the
customer and retained in the customer's file. - ✔✔True
✔✔(True/False) As a general rule and best practice, a dealership should not attempt to
obtain a consumer report without the consumer's written authorization. - ✔✔True
, ✔✔How long must tax liens remain on file? - ✔✔A consumer-reporting agency may not
report paid tax liens that predate the issuance of the consumer report by more than
seven years
✔✔A dealer may be liable for civil damages through enforcement action brought by the
_______ for violations of the FCRA. - ✔✔FTC and State Attorney General
✔✔If a dealer sends a direct mailing to consumers that contains advertising for vehicles
offered for sale and an offer of credit to those who respond, it must include a notice
giving the recipients the ability to opt out of future offers for a _______-year period. -
✔✔5
✔✔Who is exempt from the Used Car Rule? - ✔✔Banks and financial institutions,
businesses that sell vehicles to their employees, and lessors who sell a leased vehicle
to a lessee, an employee of the lessee, or a buyer found by the lessee.
✔✔"Preservation of Consumers' Claims and Defenses" is now known as the ______. -
✔✔The Holder-in-Due-Course Rule
✔✔Penalties for violating the Credit Practices Rule - ✔✔Up to $16,000 for each
violation and can issue an order prohibiting further violations.
✔✔The potential penalty or penalties for non-compliance with the FOA is / are _______.
- ✔✔-The DOT may impose a penalty of up to $2,000 per violation. (The maximum
amount is $100,000)
-Action by the Attorney General
-Up to 3 years in prison
-He or she can collect three times the actual damages, or $1,500, whichever is greater,
if the violator acted with intent to defraud.
✔✔(True/False) According to the FOA, if there are two people on the title, both must
sign the odometer disclosure statement. - ✔✔False
✔✔(True/False) Most courts take the position that if there are any indicators that the
mileage is inaccurate, the dealer must take the appropriate steps to confirm that the
mileage on the vehicle is correct. - ✔✔True
✔✔(True/False) A transfer under the FOA excludes gifts. - ✔✔False
✔✔(True/False) When surrendering the vehicle, a lessor may require a lessee to
complete a Lessor- Lessee Odometer Disclosure on its behalf. - ✔✔True
✔✔The statute of limitations under the FOA is _______. - ✔✔2 Years
