AFIP FINAL PAPER QUESTIONS AND COMPLETE
SOLUTIONS
Warranty disclosure requirements - 1. What does the warranty cover/not cover?
2. What is the period of coverage?
3. What will you do to correct problems?
4. How can the customer get warranty service?
5. How will state law affect your customer's rights under the warranty?
✔✔The rules regarding the availability of warranties - ✔✔-Written warranties must be
available for customers to read before buying.
-The Pre-Sale Availability Rule requires that sellers make warranties readily available to
prospective buyers either by displaying them in close proximity to the warranted
products, or by furnishing them upon request prior to sale and posting prominent signs.
✔✔Prohibited acts under the MMWA - ✔✔-Including a tie-in sales provision in your
warranty
-Sellers of consumer products who make service contracts on their products are
prohibited under the Act from disclaiming or limiting implied warranties.
-Deceptive or misleading warranties
✔✔The difference between a service contract and a warranty - ✔✔Service contracts,
unlike warranties, are purchased separately from a product.
✔✔What the MMWA requires of service contracts - ✔✔-List conspicuously all terms and
conditions in simple and readily understood language.
-The company that makes the service contract is responsible for ensuring that the terms
and conditions are disclosed as required by law. This is not the responsibility of the
seller of the service contract, unless the seller and the maker are the same company.
✔✔Three ways to create an express warranty - ✔✔1. Any affirmation of fact or promise
made by the seller to the buyer which relates to the goods and becomes part of the
basis of the bargain creates an express warranty that the goods shall conform to the
affirmation or promise.
2. Any description of the goods which is made part of the basis of the bargain creates
an express warranty that the goods shall conform to the description.
3. Any sample or model which is made part of the basis of the bargain creates an
express warranty that the whole of the goods shall conform to the sample or model.
✔✔Purpose of the Gramm-Leach-Bliley Act - ✔✔Enacted to protect the confidential
personal and financial information disclosed by consumers in certain situations within
the United States economy
,✔✔The agency that enforces the Privacy Rule and the Safeguards Rule - ✔✔Privacy
Rule: 1. The FTC (against exempt dealers) & 2. The CFPB (against non-exempt
dealers)
Safeguards Rule: The FTC
✔✔The penalties for failing to comply with the Privacy Rule or the Safeguards Rule -
✔✔-The penalty for failing to comply with the Safeguards Rule is up to $16,000 per
violation.
-Enforcement action initiated by either the FTC or CFPB
-The FTC can initiate enforcement action against any dealership for failure to comply
with the Safeguards Rules.
✔✔The parties and situations that are covered by the Rules - ✔✔-Traditional car
dealers.
-All dealers who are "financial institutions" under the GLB.
-Natural persons who obtain financing products for family, personal or household
purposes.
-When an individual applies for credit, regardless of whether credit is extended.
✔✔Privacy Rule requirements - ✔✔1. You must provide certain notices: notify
customers about its privacy policies & practices
2. Your right to use Customer Information is limited
3. You also must allow the consumer to impose more restrictions
✔✔Nonpublic Personal Information (NPI) - ✔✔Any "personally identifiable financial
information" that a financial institution collects about an individual in connection with
providing a financial product or service, unless that information is otherwise publicly
available.
✔✔Definition of "consumer" under the Privacy Rule - ✔✔Someone who obtains or has
obtained a financial product or service from a financial institution that is to be used
primarily for personal, family, or household purposes, or that person's legal
representative. The term "consumer" does not apply to commercial clients, like sole
proprietorships.
✔✔What it means for a consumer to "opt out"? - ✔✔Once told that his/her NPI might be
sold to a third party that isn't directly related to the immediate transaction, the customer
must be given the option to decline having his or her information sold (called "opting
out")
✔✔The conditions under which a privacy notice must be issued - ✔✔-An initial privacy
notice is required only if the dealer intends to share this information with a non-affiliated
third party.
,-You must deliver your privacy notices to each consumer or customer in writing, or, if
the consumer or customer agrees, electronically.
-Notices given orally or posted in your office(s) don't comply with the rule.
✔✔The entity responsible for issuing notices during the repayment period of the
installment sale or consumer lease agreement: - ✔✔The financial institution that is
assigned the contract; or the entity in which the consumer relationship exists.
✔✔The information that must be included in the privacy notice - ✔✔-The categories of
NPI that you collect
-The categories of NPI that you disclose
-The categories of affiliates & non-affiliated third parties to whom you disclose NPI
-The categories of NPI about your former customers that you disclose & the categories
of affiliates and non-affiliated third parties to whom you disclose NPI
-A separate statement of the categories of information you disclose and the categories
of third parties with whom you have contracted
-An explanation of the consumer's right to opt-out of certain disclosures of NPI to non-
affiliated third parties
-A Fair Credit Reporting Act disclosure
-A statement regarding your information safeguards policies and practices
✔✔The rules regarding when it is permissible to share NPI with a nonaffiliated third
party - ✔✔-The notices must be delivered whether the NPI is shared with unrelated
entities or not.
-The financial institution to which the loan is assigned is required to provide annual
notices regarding its policy pertaining to the sharing of NPI until the funding agreement
has been retired.
✔✔How to obtain safe harbor protection - ✔✔Dealers using the FTC's final model notice
will enjoy a "safe harbor" as long as they don't make any changes or include any
variations in the model form.
✔✔The purpose of the Safeguards Rule - ✔✔1. To insure the security and
confidentiality of Customer Information
2. To protect against any anticipated threats or hazards to the security and/or integrity of
Customer Information
3. To protect against any unauthorized access to or use of Customer Information that
could result in substantial harm or inconvenience to any customer.
✔✔What constitutes "customer information" under the Safeguards Rule? - ✔✔Any
record containing non-public personal information about a customer of the dealership,
whether in paper, electronic, or other form, that is handled or maintained by or on behalf
of the dealership or its affiliates.
, ✔✔What does the Safeguard Rule require of dealerships? - ✔✔1. You must designate
an employee or employees to coordinate your information security program.
2. You must identify reasonably foreseeable internal and external risks to the security,
confidentiality, and integrity of Customer Information that could result in its unauthorized
disclosure, misuse, alteration or destruction.
3. You must develop and implement Customer Information safeguards to control the
risks you identify through the risk assessment.
4. You must oversee service providers who take possession of Customer Information.
5. You must evaluate and adjust your information security program.
✔✔When and how should customers be notified if unauthorized access to sensitive
information occurs? - ✔✔The Final Guidance on Response Programs requires
customer notification if it's determined that misuse of the information has occurred or
that it's reasonably possible it will occur.
✔✔What does the Disposal Rule require? - ✔✔Requires entities that possess consumer
information to properly dispose of such information by taking reasonable measures to
protect against unauthorized access to, or use of, this information.
✔✔(True/False) In short, the use of any or a portion of the customer information
provided while completing a credit application should be considered nonpublic personal
information. - ✔✔True
✔✔What types of transactions are subject to the Gramm-Leach-Bliley Act? - ✔✔-
Consumer Leases
-Installment Sale Agreements on vehicles for personal, household or family use
✔✔Under the _______ Rule, 1) a customer must receive certain notices, 2) a
dealership's right to use customer information is limited, and 3) a dealership must allow
the customer to impose more restrictions (such as opting out). - ✔✔Privacy
✔✔The Safeguards Rule applies to customer information in _______ form. - ✔✔Paper
& Electronic
✔✔(True/False) According to AFIP's suggested best practices, an initial privacy notice
should be issued to any individual whose nonpublic personal information will be used to
solicit a willing funding source. - ✔✔True
✔✔(True/False) The Gramm-Leach-Bliley Act addresses the use and protection of
consumers' nonpublic personal information. - ✔✔True
✔✔Best practices dictate that creditors protect NPI from who? - ✔✔Customers &
Consumers
SOLUTIONS
Warranty disclosure requirements - 1. What does the warranty cover/not cover?
2. What is the period of coverage?
3. What will you do to correct problems?
4. How can the customer get warranty service?
5. How will state law affect your customer's rights under the warranty?
✔✔The rules regarding the availability of warranties - ✔✔-Written warranties must be
available for customers to read before buying.
-The Pre-Sale Availability Rule requires that sellers make warranties readily available to
prospective buyers either by displaying them in close proximity to the warranted
products, or by furnishing them upon request prior to sale and posting prominent signs.
✔✔Prohibited acts under the MMWA - ✔✔-Including a tie-in sales provision in your
warranty
-Sellers of consumer products who make service contracts on their products are
prohibited under the Act from disclaiming or limiting implied warranties.
-Deceptive or misleading warranties
✔✔The difference between a service contract and a warranty - ✔✔Service contracts,
unlike warranties, are purchased separately from a product.
✔✔What the MMWA requires of service contracts - ✔✔-List conspicuously all terms and
conditions in simple and readily understood language.
-The company that makes the service contract is responsible for ensuring that the terms
and conditions are disclosed as required by law. This is not the responsibility of the
seller of the service contract, unless the seller and the maker are the same company.
✔✔Three ways to create an express warranty - ✔✔1. Any affirmation of fact or promise
made by the seller to the buyer which relates to the goods and becomes part of the
basis of the bargain creates an express warranty that the goods shall conform to the
affirmation or promise.
2. Any description of the goods which is made part of the basis of the bargain creates
an express warranty that the goods shall conform to the description.
3. Any sample or model which is made part of the basis of the bargain creates an
express warranty that the whole of the goods shall conform to the sample or model.
✔✔Purpose of the Gramm-Leach-Bliley Act - ✔✔Enacted to protect the confidential
personal and financial information disclosed by consumers in certain situations within
the United States economy
,✔✔The agency that enforces the Privacy Rule and the Safeguards Rule - ✔✔Privacy
Rule: 1. The FTC (against exempt dealers) & 2. The CFPB (against non-exempt
dealers)
Safeguards Rule: The FTC
✔✔The penalties for failing to comply with the Privacy Rule or the Safeguards Rule -
✔✔-The penalty for failing to comply with the Safeguards Rule is up to $16,000 per
violation.
-Enforcement action initiated by either the FTC or CFPB
-The FTC can initiate enforcement action against any dealership for failure to comply
with the Safeguards Rules.
✔✔The parties and situations that are covered by the Rules - ✔✔-Traditional car
dealers.
-All dealers who are "financial institutions" under the GLB.
-Natural persons who obtain financing products for family, personal or household
purposes.
-When an individual applies for credit, regardless of whether credit is extended.
✔✔Privacy Rule requirements - ✔✔1. You must provide certain notices: notify
customers about its privacy policies & practices
2. Your right to use Customer Information is limited
3. You also must allow the consumer to impose more restrictions
✔✔Nonpublic Personal Information (NPI) - ✔✔Any "personally identifiable financial
information" that a financial institution collects about an individual in connection with
providing a financial product or service, unless that information is otherwise publicly
available.
✔✔Definition of "consumer" under the Privacy Rule - ✔✔Someone who obtains or has
obtained a financial product or service from a financial institution that is to be used
primarily for personal, family, or household purposes, or that person's legal
representative. The term "consumer" does not apply to commercial clients, like sole
proprietorships.
✔✔What it means for a consumer to "opt out"? - ✔✔Once told that his/her NPI might be
sold to a third party that isn't directly related to the immediate transaction, the customer
must be given the option to decline having his or her information sold (called "opting
out")
✔✔The conditions under which a privacy notice must be issued - ✔✔-An initial privacy
notice is required only if the dealer intends to share this information with a non-affiliated
third party.
,-You must deliver your privacy notices to each consumer or customer in writing, or, if
the consumer or customer agrees, electronically.
-Notices given orally or posted in your office(s) don't comply with the rule.
✔✔The entity responsible for issuing notices during the repayment period of the
installment sale or consumer lease agreement: - ✔✔The financial institution that is
assigned the contract; or the entity in which the consumer relationship exists.
✔✔The information that must be included in the privacy notice - ✔✔-The categories of
NPI that you collect
-The categories of NPI that you disclose
-The categories of affiliates & non-affiliated third parties to whom you disclose NPI
-The categories of NPI about your former customers that you disclose & the categories
of affiliates and non-affiliated third parties to whom you disclose NPI
-A separate statement of the categories of information you disclose and the categories
of third parties with whom you have contracted
-An explanation of the consumer's right to opt-out of certain disclosures of NPI to non-
affiliated third parties
-A Fair Credit Reporting Act disclosure
-A statement regarding your information safeguards policies and practices
✔✔The rules regarding when it is permissible to share NPI with a nonaffiliated third
party - ✔✔-The notices must be delivered whether the NPI is shared with unrelated
entities or not.
-The financial institution to which the loan is assigned is required to provide annual
notices regarding its policy pertaining to the sharing of NPI until the funding agreement
has been retired.
✔✔How to obtain safe harbor protection - ✔✔Dealers using the FTC's final model notice
will enjoy a "safe harbor" as long as they don't make any changes or include any
variations in the model form.
✔✔The purpose of the Safeguards Rule - ✔✔1. To insure the security and
confidentiality of Customer Information
2. To protect against any anticipated threats or hazards to the security and/or integrity of
Customer Information
3. To protect against any unauthorized access to or use of Customer Information that
could result in substantial harm or inconvenience to any customer.
✔✔What constitutes "customer information" under the Safeguards Rule? - ✔✔Any
record containing non-public personal information about a customer of the dealership,
whether in paper, electronic, or other form, that is handled or maintained by or on behalf
of the dealership or its affiliates.
, ✔✔What does the Safeguard Rule require of dealerships? - ✔✔1. You must designate
an employee or employees to coordinate your information security program.
2. You must identify reasonably foreseeable internal and external risks to the security,
confidentiality, and integrity of Customer Information that could result in its unauthorized
disclosure, misuse, alteration or destruction.
3. You must develop and implement Customer Information safeguards to control the
risks you identify through the risk assessment.
4. You must oversee service providers who take possession of Customer Information.
5. You must evaluate and adjust your information security program.
✔✔When and how should customers be notified if unauthorized access to sensitive
information occurs? - ✔✔The Final Guidance on Response Programs requires
customer notification if it's determined that misuse of the information has occurred or
that it's reasonably possible it will occur.
✔✔What does the Disposal Rule require? - ✔✔Requires entities that possess consumer
information to properly dispose of such information by taking reasonable measures to
protect against unauthorized access to, or use of, this information.
✔✔(True/False) In short, the use of any or a portion of the customer information
provided while completing a credit application should be considered nonpublic personal
information. - ✔✔True
✔✔What types of transactions are subject to the Gramm-Leach-Bliley Act? - ✔✔-
Consumer Leases
-Installment Sale Agreements on vehicles for personal, household or family use
✔✔Under the _______ Rule, 1) a customer must receive certain notices, 2) a
dealership's right to use customer information is limited, and 3) a dealership must allow
the customer to impose more restrictions (such as opting out). - ✔✔Privacy
✔✔The Safeguards Rule applies to customer information in _______ form. - ✔✔Paper
& Electronic
✔✔(True/False) According to AFIP's suggested best practices, an initial privacy notice
should be issued to any individual whose nonpublic personal information will be used to
solicit a willing funding source. - ✔✔True
✔✔(True/False) The Gramm-Leach-Bliley Act addresses the use and protection of
consumers' nonpublic personal information. - ✔✔True
✔✔Best practices dictate that creditors protect NPI from who? - ✔✔Customers &
Consumers
