Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Already Graded A

Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Already Graded A Of the three types of acts or practices—unfair, deceptive, and abusive—the most commonly cited in enforcement actions is..... Deceptive because an interpretation of abusive acts or practices is not well-established, and the criteria for establishing deception is less burdensome than the criteria for unfairness What are the standards for deceptive practices? -The representation, omission, or practice is likely to mislead the customer -The customer's interpretation of the representation, omission, or practice is reasonable under the circumstances -The misleading representation, omission, or practice must be material A deceptive practice must be material in that the practice must be likely to affect a customer's choice to buy or use the product. True Which three statements are accurate for the purpose of concluding if an advertisement is deceptive? A) The advertisement must contain a representation or omission or involve a practice that is likely to mislead a consumer B) The bank's regulators must prove that the advertisement actually misled consumers C) The representation or omission must be material D) The advertisement must be likely to mislead the targeted audience A, C, and D are correct. B is incorrect because the legal standard is "likelihood" of misleading. It is not necessary to demonstrate if consumers were actually misled. The FTC Policy Statement on Deception clarifies that information about costs, benefits, and restrictions on the use or availability of a product or service is ____ material: a) Never b) Usually c) Always d) Often c-when the bank makes express claims with respect to a financial product or service, it will be presumed to be material An act or practice is unfair if it meets all of the three standards: -Causes or is likely to cause substantial consumer injury -Injury is not reasonably avoidable by consumers -Injury not outweighed by countervailing benefits to consumers or to competition Substantial injury may consist of ..? Either a small amount of harm to a large number of consumers, or significant harm to a small number of consumers. An unfair practice may include the lack of access to important information that may prevent consumers from comparing available alternatives, choosing the product that best fits their needs, or avoiding those that are inadequate or unsatisfactory. True Can an act or practice be both unfair and deceptive? Yes as long as the practice meets the definition of both terms. It is easier to prove deceptive practices, so those are cited more often Abusive acts and practices must: -Materially interfere with a consumer's ability to understand the terms or conditions of a financial product or service; or -Take unreasonable advantage of: --The consumer's lack of understanding of the material risks or costs of the product or service; or --The consumer's inability to protect his or her own interests when selecting or using a financial product or service; or --A consumer's reasonable reliance on the financial service provider to act in the interests of the consumer. To be abusive, an act or practice need only meet one of the criteria for abusive True Which two situations are considered abusive acts or practices? A) A practice that materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service B) A practice that represents an account as free when there could be a monthly service charge C) A practice that takes unreasonable advantage of the inability of consumers to protect their interests in selecting or using a consumer financial product or service D) A practice of representatives leading customers to believe they would receive money, in addition to bonus points, if they sign up for a particular credit card program even though they would not A & C B is incorrect because it is an example of unfair, not abusive, practices. D is incorrect because it is an example of deceptive, not abusive, practices. Confession of judgment A consumer waives the right to notice and an opportunity to be heard in event of a lawsuit. Waiver of exemption A consumer waives the benefit of any laws that protect the consumer ́s real or personal property from seizure or sale to satisfy a debt. Assignment of wages Prohibited