Unfair, Deceptive, or Abusive Acts or Practices
(UDAAP) questions with verified answers
Of the three types of acts or practices—unfair, deceptive, and abusive—the most
commonly cited in enforcement actions is..... Ans✓✓ -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? Ans✓✓ --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. Ans✓✓ -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 Ans✓✓ -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 Ans✓✓ -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: Ans✓✓ --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 ..? Ans✓✓ -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. Ans✓✓ -True
Can an act or practice be both unfair and deceptive? Ans✓✓ -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
(UDAAP) questions with verified answers
Of the three types of acts or practices—unfair, deceptive, and abusive—the most
commonly cited in enforcement actions is..... Ans✓✓ -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? Ans✓✓ --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. Ans✓✓ -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 Ans✓✓ -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 Ans✓✓ -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: Ans✓✓ --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 ..? Ans✓✓ -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. Ans✓✓ -True
Can an act or practice be both unfair and deceptive? Ans✓✓ -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
