Legal & Regulatory Compliance in Credit Management Flashcards
7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal & Regulatory Compliance in Credit Management flashcards as text
A credit manager discovers that a customer's check was returned for insufficient funds (NSF). Under which legal framework would criminal bad check statutes most likely apply?
Answer: State criminal law and the Uniform Commercial Code (UCC)
Bad check statutes are governed by state criminal law, while the UCC governs the commercial aspects of negotiable instruments like checks.
Under the Uniform Commercial Code (UCC) Article 2, when does title to goods typically pass from seller to buyer in a credit sale with no specific agreement on title transfer?
Answer: When the goods are identified to the contract and delivered to the buyer
Under UCC Article 2, title passes to the buyer when the seller completes their performance with respect to the physical delivery of the goods, typically at the time of identification and delivery.
What is a 'preference payment' in bankruptcy law, and why is it significant for credit managers?
Answer: A payment made by the debtor to a favored creditor within 90 days before bankruptcy, which can be recovered by the trustee
A preference payment is a transfer made to a creditor within 90 days before bankruptcy (one year for insiders) that allows the trustee to recover those funds and redistribute them equally among creditors.
What is the primary function of a demand letter in the credit collection process from a legal standpoint?
Answer: To formally notify the debtor of the outstanding obligation and intent to pursue legal remedies if not paid
A demand letter formally notifies the debtor of the amount owed and puts them on notice that legal action will follow if payment is not received, which can also be a prerequisite for certain legal remedies.
Under the ECOA and Regulation B, what is the maximum number of days a creditor has to notify an applicant of action taken on a completed credit application?
Answer: 30 days
Under ECOA and Regulation B, creditors must notify applicants of the action taken on a completed credit application within 30 days of receiving it.
Which type of lien gives a creditor the right to retain possession of a debtor's property until a debt is paid?
Answer: Artisan's lien (possessory lien)
An artisan's or possessory lien gives a creditor (such as a repair shop) the right to retain physical possession of the debtor's property until the debt for services is paid.
Which federal statute regulates the privacy of nonpublic personal financial information held by financial institutions and requires annual privacy notices to customers?
Answer: Gramm-Leach-Bliley Act (GLBA)
The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to protect the privacy of consumers' nonpublic personal information and to provide annual privacy policy notices.