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Industry Best Practices Flashcards

7 cards from real CAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Industry Best Practices flashcards as text

  1. A dealer submits a retail installment contract in which the buyer's stated income looks inflated compared with the job title. What should happen first?

    Answer: Verify income with documents such as pay stubs or bank statements

    Checking stated income against documents is a basic underwriting control against fraud and bad loans.

  2. Under the FTC Safeguards Rule, which of these is a required part of a finance company's information security program?

    Answer: Naming a qualified individual to oversee the program

    The amended Safeguards Rule requires a designated qualified individual to run and oversee the security program.

  3. A customer on active military duty asks for their auto loan rate to be lowered. Under the SCRA, what is the maximum rate allowed on obligations taken out before service began?

    Answer: 6%

    The SCRA caps interest at 6% on debts incurred before active duty.

  4. What is the best practice when a collector speaks with a borrower who says they are represented by an attorney about the debt?

    Answer: Talk to the attorney instead of the borrower

    Under the FDCPA, once a collector knows the consumer has an attorney, it generally has to communicate with that attorney.

  5. Which practice best helps a lender avoid disparate impact claims under ECOA?

    Answer: Regularly monitoring pricing and approval outcomes for differences across protected classes

    Fair lending monitoring catches outcome differences that hurt protected groups even when policies look neutral.

  6. When a lender declines an auto credit application partly because of information in a credit report, what must the borrower receive?

    Answer: An adverse action notice that names the credit reporting agency used

    FCRA and ECOA require an adverse action notice, including details about the consumer reporting agency.

  7. What is the main purpose of a Red Flags Rule identity theft prevention program at an auto finance company?

    Answer: To spot, detect and respond to warning signs of identity theft

    The Red Flags Rule requires creditors to have a written program to spot and respond to signs of identity theft.