Credit Law and Regulations Flashcards
6 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Credit Law and Regulations flashcards as text
Which law regulates fair and accurate credit reporting in the U.S.?
Answer: Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is the federal law that governs the collection, dissemination, and use of consumer credit information. It ensures the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. This act grants consumers rights, such as the ability to access their credit reports and dispute inaccurate information.
What is the purpose of the Equal Credit Opportunity Act (ECOA)?
Answer: Prevent discrimination in lending
The Equal Credit Opportunity Act (ECOA) is a federal law designed to prevent discrimination in credit transactions. It prohibits creditors from discriminating against applicants based on race, color, religion, national origin, sex, marital status, age, or because they receive public assistance. The ECOA ensures that all consumers have an equal chance to obtain credit.
Which act ensures that consumers are informed of the true cost of credit?
Answer: Truth in Lending Act
The Truth in Lending Act (TILA) is a federal law that protects consumers in credit transactions by requiring clear disclosure of key terms and costs. Its primary purpose is to ensure that consumers are fully informed about the true cost of credit, including interest rates, fees, and other charges. This allows consumers to compare credit offers more effectively.
What does the Fair Debt Collection Practices Act (FDCPA) regulate?
Answer: Third-party debt collection practices
The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates the practices of third-party debt collectors. It prohibits abusive, deceptive, and unfair debt collection practices by these agencies. The FDCPA aims to protect consumers from harassment and ensure fair treatment during the debt collection process.
Why must credit managers stay informed about regulatory changes?
Answer: To avoid regulatory penalties
Credit managers must stay informed about regulatory changes primarily to ensure compliance and avoid severe consequences. Non-compliance with financial regulations can lead to substantial fines, legal action, reputational damage, and even loss of operating licenses. Understanding and adhering to these laws is crucial for the financial health and integrity of their organization.
Which law allows consumers to dispute inaccurate items on credit reports?
Answer: FCRA
The Fair Credit Reporting Act (FCRA) is the law that specifically grants consumers the right to dispute inaccurate or incomplete information on their credit reports. It mandates that credit reporting agencies and information providers investigate such disputes promptly. This ensures that consumers have a mechanism to correct errors and maintain accurate credit histories.