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AFIP CERTIFICATION TEST 2025 EXAM CURRENTLY TESTING NEWEST COMPLETE EXAM QUESTIONS WITH, Exams of Business Administration

AFIP CERTIFICATION TEST 2025 EXAM CURRENTLY TESTING NEWEST COMPLETE EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS 100% Verified Questions and Answers Rated Grade A+ STUDY MATERIAL

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AFIP CERTIFICATION TEST 2025 EXAM CURRENTLY
TESTING NEWEST COMPLETE EXAM QUESTIONS
WITH DETAILED VERIFIED ANSWERS
100% Verified Questions and Answers Rated Grade
A+ STUDY MATERIAL
(True/False): Ignorance of the law will shield you from liability if you are noncompliant. -
ANSFalse
(True/False): As an F&I manager working directly with customers, you are individually
responsible for your actions and what you say to each customer. - ANSTrue
In a typical credit transaction the (bank)/(dealer) is the creditor. - ANSThe dealer is the
creditor
What is a contract? - ANSA contract is an agreement involving a promise or set of promises
that the law enforces or protects.
The formation of a contract requires three elements: - ANS1. Offer
2. Acceptance
3. Consideration
An offer consists of three elements: - ANS1. An expression of a promise or commitment
(intent) to enter a contract
2. An expression of definite and certain terms
3. The communication of the offer to the offeree (in this case, the customer)
An offer may be terminated by: - ANS1. An act of the parties
2. The operation of law
There are three criteria for the acceptance of an offer: - ANS1. The offer is accepted by one
who is entitled to accept
2. The acceptance takes the proper form and is timely
3. The terms of acceptance reflect closely the terms of the offer and, therefore, do not amount
to a counteroffer
The Statute of Frauds - ANSGenerally requires that all contracts involving the sale of goods
for a price of $500 or more be in writing.
The Statute of Frauds requires a written contract for the sale of goods for a price of _______
or more. - ANS$500
What is required in order for the parties (the individuals entering into the contract) to have
"legal capacity?" - ANSThe parties to the contract must be of legal age under the laws of the
state in which the contract is written.
Criteria that can block the formation of a valid contract: - ANS1. The need for a written
agreement under the Statute of Frauds and certain provisions of the Uniform Commercial
Code (U.C.C.)
2. The need for legal capacity of a party to contract
3. The act of fraudulent inducement
What is "consideration" as it applies to a contract? - ANSThe requirement that each party to
the contract receives something of value in exchange for what is given.
Finance Charge - ANSThe Finance Charge is the resulting dollar amount calculated by
applying the Annual Percentage Rate to the Amount Financed over the term of the contract.
How the Itemization of Amount Financed is completed - ANS1. Cash Price (Agreed to price
of vehicle)
2. Total Downpayment
3. Unpaid Balance of Cash Price(Cash Price-Downpayment)
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(True/False): Ignorance of the law will shield you from liability if you are noncompliant. - ANSFalse (True/False): As an F&I manager working directly with customers, you are individually responsible for your actions and what you say to each customer. - ANSTrue In a typical credit transaction the (bank)/(dealer) is the creditor. - ANSThe dealer is the creditor What is a contract? - ANSA contract is an agreement involving a promise or set of promises that the law enforces or protects. The formation of a contract requires three elements: - ANS1. Offer

  1. Acceptance
  2. Consideration An offer consists of three elements: - ANS1. An expression of a promise or commitment (intent) to enter a contract
  3. An expression of definite and certain terms
  4. The communication of the offer to the offeree (in this case, the customer) An offer may be terminated by: - ANS1. An act of the parties
  5. The operation of law There are three criteria for the acceptance of an offer: - ANS1. The offer is accepted by one who is entitled to accept
  6. The acceptance takes the proper form and is timely
  7. The terms of acceptance reflect closely the terms of the offer and, therefore, do not amount to a counteroffer The Statute of Frauds - ANSGenerally requires that all contracts involving the sale of goods for a price of $500 or more be in writing. The Statute of Frauds requires a written contract for the sale of goods for a price of _______ or more. - ANS$ What is required in order for the parties (the individuals entering into the contract) to have "legal capacity?" - ANSThe parties to the contract must be of legal age under the laws of the state in which the contract is written. Criteria that can block the formation of a valid contract: - ANS1. The need for a written agreement under the Statute of Frauds and certain provisions of the Uniform Commercial Code (U.C.C.)
  8. The need for legal capacity of a party to contract
  9. The act of fraudulent inducement What is "consideration" as it applies to a contract? - ANSThe requirement that each party to the contract receives something of value in exchange for what is given. Finance Charge - ANSThe Finance Charge is the resulting dollar amount calculated by applying the Annual Percentage Rate to the Amount Financed over the term of the contract. How the Itemization of Amount Financed is completed - ANS1. Cash Price (Agreed to price of vehicle)
  10. Total Downpayment
  11. Unpaid Balance of Cash Price(Cash Price-Downpayment)

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  1. Other Charges (GAP, VSC, Etc.)
  2. Amount Financed 4 Key Sections of an installment sale contract - ANSSection A) General Information -- Identifies the parties to the agreement. Section B) Mandated Disclosures -- Disclosures required by TILA Section C) Insurance-Related Disclosures --Credit insurance is optional Section D) Signature Blocks - Notice to Buyer Disclosures --Bind all parties to contract The introductory information and promise to pay contained in Section A of Retail Installment Form - ANSPromise to Pay - This section outlines the purpose of the transaction and the primary obligations that will be incurred from signing the contract. The difference between full or partial recourse and no recourse assignments. - ANSEssentially determines the length of time, if any, the seller is responsible for the actions of the buyer. Warranty disclaimers do not apply to _______ warranties on new or used vehicles to which that warranty still applies. - ANSManufacturer's A(n) _______ clause allows the creditor to declare the entire outstanding balance due and payable. - ANSAcceleration As recorded on an installment sale agreement, the total sale price or deferred contract price would be the total of the ________. - ANS-Payments
  • Downpayment
  • Net Trade-In Which is NOT listed as a mandated TILA box disclosure? - ANSHolder-in-Due Course Notice In most states, the _______ is deemed to be part of the purchase agreement. - ANSBuyer's Guide (True/False) Because the late charges that may be imposed on an installment sale agreement are regulated at the state level, the amount of the late charge is NOT a required disclosure item. - ANSFalse At the time of consummation, an installment sale contract is between the _______ and the _______. - ANSCustomer, Dealer The Truth in Lending Act and Reg. Z govern installment sale transactions for vehicles purchased for what type(s) of uses? - ANSPersonal, Family or Household What is always the largest number on an installment sale agreement? - ANSThe total sale price What does "force-placed" or "creditor-placed" mean? - ANSAllows the creditor to force place insurance - that is, buy physical damage insurance to cover the creditor's interest in the vehicle or the creditor's and the buyer's interest in the vehicle if the buyer fails to do so.

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Triggering terms on an advertisement for an installment sale - ANS1) The amount or percentage of any downpayment

  1. The number of payments or period of repayment
  2. The amount of any payment
  3. The amount of any finance charge If any triggering terms are used, an ad must also contain: - ANS-The amount or percentage of the downpayment
  • The terms of repayment; the number of payments and amount of the payments
  • The annual percentage rate stated as APR To avoid civil liability, an F&I manager can, within _______ days of discovering the error (and before being sued by the customer for the error), notify the customer of the error and make the necessary adjustments to ensure he will not be required to pay an amount in excess of the charge actually disclosed or the dollar equivalent of the APR actually disclosed, whichever is less. - ANS The criminal penalties for violating TILA and Reg. Z can result in a fine of up to _______ and up to _______ in jail, or both. - ANS$5,000/One year (True/False) While it's up to dealership management, best practices dictate that you document a transaction that doesn't require TILA disclosures as if it did. - ANSTrue (True/False) TILA and Reg. Z grant consumers the right to rescind a vehicle installment sale contract. - ANSFalse The total sale price or deferred contract price is _______ the largest number on the installment contract. - ANSAlways (True/False) A creditor can claim a bona fide error defense for a violation of TILA or Reg. Z as long as it can prove by a preponderance of evidence that the violation was not intentional and it had maintained procedures reasonably adapted to avoid such an error. - ANSTrue Are there state laws that require TILA and Reg. Z disclosures, even when the federal government doesn't? - ANSYes If a customer is re-contracted five days after the original agreement was executed, how should the second agreement be treated? - ANSYou should re-contract the transaction as of the date of re-contracting, recalculating all deal terms and disclosures as if the re-contracting were a completely new transaction. According to TILA and Reg. Z, with the exception of rules regarding advertisements, dealers must maintain evidence of the TILA and Reg. Z disclosures (copies of the installment sale contracts) for _______. - ANSTwo years after the date disclosures are required to be made or action is required to be taken. Heather receives a cease and desist order for an ad she ran that violated TILA and Reg. Z. If she continues to run the ad, what are the potential penalties? - ANSInitial violations are subject to the FTC's "cease and desist" (C&D) actions. Subsequent violations of that C&D order can expose a dealer to fines of up to $16,000 per day, per violation. Which regulation implements the Truth in Lending Act? - ANSRegulation Z

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(True/False) In any discussion or representation to a prospective or committed customer regarding the cost of credit - oral discussions, advertisements, installment sale contracts - the term "APR" or "annual percentage rate" should be used. - ANSTrue Which types of practices does the Federal Trade Commission Act address as it relates to advertising? - ANSUnfair and Deceptive If a dealership runs a monthly payment ad in which the payment and terms only apply to one or two of the vehicles offered for sale (and that is not specifically stated in the ad), it is running a _______ ad. - ANSBait-and-Switch If a dealership hires an agency that runs advertisements on the dealer's behalf and those ads are later determined to be in violation of either state or federal advertising laws, who may be held liable? - ANSBoth the dealer and the agency What truth-in-advertising rules apply to advertisers? - ANS-Advertising must be truthful and non-deceptive

  • Advertisers must have evidence to back up their claims
  • Advertisements cannot be unfair What makes an advertisement deceptive? - ANSIf an ad contains a statement - or omits information - that:
  • Is likely to mislead consumers acting reasonably under the circumstances
  • Is "material" - that is, important to a consumer's decision to buy or use the product What makes an advertisement unfair? - ANSAn ad or business practice is unfair if:
  • It causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid
  • It is not outweighed by the benefit to consumers What penalties can be imposed against a company that runs a false or deceptive ad? - ANS- Cease and desist orders; and to pay a fine of $16,000 per day per ad if the company violates the law in the future.
  • Civil penalties, consumer redress and other monetary remedies
  • Corrective advertising, disclosures and other informational remedies. Lanham Act - ANSGives companies the right to sue their competitors for making deceptive claims in ads. Bait and Switch - ANSAdvertising a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price. What are the rules on advertising rebates to consumers? - ANSAds that include rebate promotions should prominently state the before-rebate cost, as well as the amount of the rebate. Gross capitalized cost - ANSThe gross capitalized cost represents the agreed-upon value of the vehicle being leased and the cost of any products, services, fees or outstanding balances that will be paid, as part of the monthly lease payments, over the term of the lease. Capitalized cost reduction - ANSIncludes any amounts, such as the net value of a trade-in, factory rebate or cash, that reduce the gross capitalized cost.

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You may be able to remedy a violation of the CLA or Reg. M if, within _______ days of discovering an error (and before being sued by the customer for the error), you notify the customer of the error and make the necessary adjustments to the customer's account to assure that the customer will not be required to pay an amount in excess of the charge actually disclosed or the dollar equivalent of the APR actually disclosed, whichever is less. - ANS (True/False) Almost all states have laws that require disclosures above and beyond the disclosures already required by Regulation M that are just as binding as the federal rules. - ANSTrue What does the following describe? "The amount determined at the inception of the lease to be the value of the vehicle at the end of the agreement." This figure is subtracted from the adjusted capitalized cost to determine the amount of depreciation in the value of the vehicle that will occur over the term of the lease. - ANSResidual Value (True/False) The CLA and Reg. M disclosures must be made prior to consummation in a form the lessee can keep. - ANSTrue (True/False) When completing the "Amount Due at Lease Signing or Delivery" section of a lease agreement, it's permissible to enter a single amount that represents the total of the various amounts that will be due and payable when the contract is executed. - ANSFalse Which act does Regulation M implement? - ANSConsumer Leasing Act A lease agreement in which the lessee's liability at the end of term is limited to excessive wear and excess mileage charges is a(n) _______ lease. - ANSClosed-end Unlike an installment sale agreement, a lease agreement lists the _______ on the left and the _______ on the right. - ANSLessor, Lessee The _______ includes any amounts, such as the net value of a trade-in, factory rebate or cash, that reduce the gross capitalized cost. - ANSCapitalized Cost Reduction (True/False) According to the Consumer Leasing Act, a lessor may extend an existing lease without new disclosures on a month-to-month basis so long as the maximum term is six months or less. - ANSTrue (True/False) A customer wishes to pay for a used car with four cashier's checks drawn on four different banks in the amounts of $7,500, $6,800, $3,000, and $8,300. Since none of the checks exceeds $10,000, the F&I person need not complete IRS / FinCEN Form 8300. - ANSFalse A customer buying a new car is paying $5,000 cash down and owes $7,500 more on the trade-in than was allowed. In this case, the postings on the installment sale agreement can be:

  • ANSa. a downpayment of zero and an additional amount financed of $2,500. OR b. a downpayment of $5,000 and an additional amount financed of $7,500. The purpose of Regulation Z - ANSTo allow people to compare the cost of credit. Are there any defenses to a civil claim for a violation of TILA or Reg. Z? - ANSYes.
  1. "bona fide error" defense; and
  2. "safe harbor"

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Bona fide error defense - ANSA creditor claiming this defense must show by a "preponderance of evidence" that the violation was not intentional and resulted from a bona fide error. (Ex., clerical & calculation errors, computer malfunctions, programming problems and printing errors.) Safe Harbor - ANSIf the creditor relied in good faith on "any rule, regulation or interpretation thereof by the Bureau or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Bureau to issue such interpretations or approvals under such procedures as the Bureau may prescribe." The "lessor" is the ____________. - ANSDealer The "lessee" is the ___________. - ANSConsumer What is the Consumer Leasing Act? - ANSA federal law that requires lessors to make disclosures to consumers about the cost and terms of the leases. Who can change TILA and CLA? - ANSOnly Congress has the authority to change TILA and the CLA. What does the FRB and CFPB constitute as an advertisement? - ANS-Messages in a newspaper, magazine, leaflet, flyer or catalog

  • Radio, TV, or public address system announcements
  • Internet messages
  • Direct Mail
  • Exterior and interior signs
  • Point-of-sale/lease displays
  • Telephone solicitations
  • Price tags with credit/lease information
  • Letters to customers as part of an organized solicitation of business. What isn't an advertisement according to the FRB and the CFPB? - ANS-Direct personal contacts
  • Follow-up letters to consumers
  • Oral or written communications relating to the negotiation of a specific transaction ECOA - ANSEqual Credit Opportunity Act Required TILA disclosures - ANS-APR
  • Finance Charge
  • Amount financed
  • Total selling price or the deferred contract price
  • Dates of the payments
  • Amount of payments -- also, the balloon payment, if applicable
  • Number of payments Advertisment - ANSA commercial message in any medium that promotes directly or indirectly a credit transaction. FCRA - ANSFair Credit Reporting Act Adverse Action - ANSThe denial of a request for credit relative to the dollar amounts, APR, and terms contained in the verbal or written application. Note that the test extends beyond the

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  • Any written statements submitted by the customer alleging a violation of the ECOA. (True/False) The changes in dealership practices required by the adverse action reporting rules mandated by the Fair Credit Reporting Act are the result of new legislation enacted by Congress. - ANSFalse The policy changes required in order to comply with the FCRA are effective: - ANSImmediately According to the FCRA, a dealer must issue an Adverse Action Notice if the request for credit was denied based on: - ANSa. The information provided by a credit reporting agency. b. Information provided by a third party (e.g., an employer or landlord). The adverse action reporting requirements for Notices issued in accordance with the FCRA must contain: - ANSa. A statement that the adverse credit decision was based in whole or in part on information obtained from a credit reporting agency. b. The contact information for the credit reporting agency that provided the report. c. A statement that the credit reporting agency did not make the decision. d. Notice of the consumer's right to obtain a free copy of his or her credit report from the credit reporting agency, if requested within 60 days after receiving the Notice. e. Notice of the customer's right to dispute the accuracy or completeness of any consumer report information with the credit reporting agency. In the course of a transaction, a customer completes a credit application. Based on negative information contained in the application, a decision is made by an employee of the dealership to deny credit - without securing a credit report or sending the deal to a funding source for approval. The dealer: - ANSa. Has an obligation to issue an Adverse Action Notice as required by the ECOA. d. Has no obligation to issue an Adverse Action Notice under the FCRA. In the course of a transaction, a customer completes a credit application and the dealer secures a credit report. Based on negative information contained in the credit report, a decision is made by an employee of the dealership to deny credit - without sending the deal to a funding source for approval. The dealer: - ANSa. Has an obligation to issue an Adverse Action Notice as required by the ECOA. c. Has an obligation to issue an Adverse Action Notice as required by the FCRA. (True/False) In negotiating the in-store funding arrangements, the customer will accept the deal if he only has to tender $1,000 as a downpayment. Based on the information contained in the customer's credit report and the parameters of the deal, a funding source will only approve the transaction with a $3,000 downpayment - which the customer will not agree to. Because the funding source approved the deal with only a slight alteration in the terms, the dealer is not required to issue an Adverse Action Notice. - ANSFalse

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A customer completes a credit application and the dealer secures a credit report. Due to the low credit score, the F&I person makes a maximum effort to find a lender willing to accept the deal. The deal is shopped with five primary lending sources and three secondary lenders. All eight deny the request for credit. In this case, the dealer has an obligation to the customer to _____________. - ANSThe dealer has an obligation to issue a Notice. A funding source will approve the deal based on specific changes in the terms originally submitted. If the customer agrees to the conditions of the counteroffer, the dealer: - ANSDoes not need to issue an Adverse Action Notice. The F&I person is in possession of a credit application that is missing information, without which the application cannot be sent for review. In this case, the F&I practitioner can: - ANSEither: a. Send the customer a written Adverse Action Notice within 30 days. b. Send the customer a written Notice of Incompleteness, noting the items needed to complete the application, establishing a reasonable time to respond, and stating that the application will not be processed unless the requested information is provided. The customer is purchasing a vehicle for use in his business, and corporate credit information is used to complete the credit application. In this case, the F&I practitioner, in accordance with the ECOA, must ask and record: - ANSWhether the business posts a gross annual income of $1 million or less Based on the customer's credit history, the request for credit is denied by all the funding sources who reviewed the deal and no counteroffer was made. In this case, the dealer issued a simplified Adverse Action Notice. Ninety days after receipt of the notice, the customer makes a written request for an explanation as to why credit was denied. The dealer: - ANSHas no obligation to comply with the request, although a business decision might be made to honor it. (True/False) According to the FCRA, a customer can bring a claim under the Act seven years after the date on which the alleged violation occurred. - ANSFalse The ECOA requires that specific documents be retained for: - ANS25 months from the date of the application. (True/False) A copy of the credit report used to evaluate the customer's credit should be included in the documents that are kept on file to comply with the ECOA. - ANSTrue (True/False) Under the ECOA, the Adverse Action Notice must include the specific reason credit was denied - such as the applicant's delinquent credit obligations - or disclose the applicant's right to a specific statement of the reasons if requested within 60 days of the Adverse Action Notice. - ANSTrue (True/False) A creditor must provide the consumer with an Adverse Action Notice any time the creditor denies credit, or refuses to grant credit in substantially the amount or the terms requested by the consumer. - ANSTrue (True/False) Under the FCRA, an Adverse Action Notice must include the name, address, and telephone number of the credit reporting agency that furnished the report, along with a statement that the credit reporting agency was responsible for making the decision to take

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(True/False) In situations involving multiple applicants, ECOA requires that the adverse action notice be issued to the primary applicant, while FCRA requires that it be given to all applicants. Since most notices contain notifications required by both the ECOA and FCRA, best practices suggest that funding sources issue notices to any party submitting an application for credit. - ANSTrue (True/False) A dealer is allowed to require a minority applicant to provide more documentation to obtain credit than a similarly situated non-minority applicant. - ANSFalse (True/False) If an F&I manager, as an integral part of his job, regularly participates in a credit decision - for example, by determining the APR (as a function of the buy rate), setting the payment terms (e.g., 24 or 36 months), establishing other terms (e.g., the amount paid down or the amount financed) - or regularly refers customers to direct lenders, then he is deemed to be a "creditor." - ANSTrue (True/False) In addition to federal discrimination rules, many states have similar regulations with more extensive lists of prohibited practices. - ANSTrue Categories of Credit History as Weighted in FICO Scores - ANSPayment History - 35% Amounts Owed - 30% Length of Credit History - 15% New Credit - 10% Types of Credit in Use - 10% Gramm-Leach-Bliley Act - ANSEnacted to address the disposition and protection of nonpublic personal information. Financial Privacy Rule of November 2000 - ANSMandated that consumers be informed of how their nonpublic information will be used. The Safeguards Rule - ANSEffective May 2003, required those who collect nonpublic information - in both its electronic and paper formats - to protect it from theft or compromise. The Red Flags Rule - ANSRequires creditors to take steps to ensure that the customer is who he or she purports to be. How long is an active-duty alert active? - ANSOne Year The FCRA provides that no person who accepts credit or debit cards may print more than the last _______ digits of the card number or the expiration date on any receipt provided to the cardholder at the point of sale or transaction. - ANS (True/False) If a funding source contacts an F&I manager to let him know about its decision to extend credit to a specific consumer, this is considered a consumer report. - ANSTrue Most dealerships will issue the simplified _______ to comply with the Risk-Based Pricing Rule. - ANSException Notice (True/False) In some cases, information about government-insured or - issued student loans may remain on file for longer than seven years. - ANSTrue (True/False) A dealer who is the original creditor in a three-party financing transaction must provide either a RBP Notice or Exception Notice to consumers. - ANSTrue How long does most negative information remain on your credit file? - ANS7 Years

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(True/False) A dealer can avoid the requirement to establish an ITPP by processing all requests for credit through a credit portal that weighs the information provided against its own established set of red flags. - ANSFalse If a customer has declared bankruptcy, how long will that information remain on the customer's consumer report? - ANS10 years prior to the date of the consumer report How long is an initial fraud alert active? - ANS90 Days (True/False) The RBP Rule Exception Notice and the Adverse Action Notice share the same timing requirements. - ANSFalse How long is an extended fraud alert active? - ANS7 Years (True/False) The Red Flag Rule went into effect January 1, 2008, with a mandatory compliance deadline of November 1, 2008. However, because the FTC delayed its enforcement of the Rule several times, compliance wasn't mandatory until November 2009. - ANSFalse (True/False) Best practices dictate that the exception notice be signed by the customer and retained in the customer's file. - ANSTrue (True/False) As a general rule and best practice, a dealership should not attempt to obtain a consumer report without the consumer's written authorization. - ANSTrue How long must tax liens remain on file? - ANSA consumer-reporting agency may not report paid tax liens that predate the issuance of the consumer report by more than seven years A dealer may be liable for civil damages through enforcement action brought by the _______ for violations of the FCRA. - ANSFTC and State Attorney General If a dealer sends a direct mailing to consumers that contains advertising for vehicles offered for sale and an offer of credit to those who respond, it must include a notice giving the recipients the ability to opt out of future offers for a _______-year period. - ANS Who is exempt from the Used Car Rule? - ANSBanks and financial institutions, businesses that sell vehicles to their employees, and lessors who sell a leased vehicle to a lessee, an employee of the lessee, or a buyer found by the lessee. "Preservation of Consumers' Claims and Defenses" is now known as the ______. - ANSThe Holder-in-Due-Course Rule Penalties for violating the Credit Practices Rule - ANSUp to $16,000 for each violation and can issue an order prohibiting further violations. The potential penalty or penalties for non-compliance with the FOA is / are _______. - ANS- The DOT may impose a penalty of up to $2,000 per violation. (The maximum amount is $100,000)

  • Action by the Attorney General
  • Up to 3 years in prison
  • He or she can collect three times the actual damages, or $1,500, whichever is greater, if the violator acted with intent to defraud. (True/False) According to the FOA, if there are two people on the title, both must sign the odometer disclosure statement. - ANSFalse

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  1. How can the customer get warranty service?
  2. How will state law affect your customer's rights under the warranty? The rules regarding the availability of warranties - ANS-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 - ANS-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 - ANSService contracts, unlike warranties, are purchased separately from a product. What the MMWA requires of service contracts - ANS-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 - ANS1. 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.
  1. 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.
  2. 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 - ANSEnacted 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 - ANSPrivacy 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 - ANS-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 - ANS-Traditional car dealers.

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  • 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 - ANS1. You must provide certain notices: notify customers about its privacy policies & practices
  1. Your right to use Customer Information is limited
  2. You also must allow the consumer to impose more restrictions Nonpublic Personal Information (NPI) - ANSAny "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 - ANSSomeone 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"? - ANSOnce 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 - ANS-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: - ANSThe 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 - ANS-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 - ANS-The notices must be delivered whether the NPI is shared with unrelated entities or not.

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The Safeguards Rule applies to customer information in _______ form. - ANSPaper & 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. - ANSTrue (True/False) The Gramm-Leach-Bliley Act addresses the use and protection of consumers' nonpublic personal information. - ANSTrue Best practices dictate that creditors protect NPI from who? - ANSCustomers & Consumers Which two Rules implement the Gramm-Leach-Bliley Act? - ANSSafeguard & Privacy Rule As long as the required elements of the privacy notice are disclosed to the customer, the information can be given to the customer _______. - ANSIn writing (True/False) While many states have their own privacy notice requirements, dealerships may ignore those when drafting their privacy notices because the federal law about privacy notices always trumps state law. - ANSFalse The service provider exception to the Privacy Rule allows _______ to contact your customers. - ANS-An independent firm with which you joinly offer financial products and services

  • A firm under contract to the selling dealer to conduct surveys of customer satisfaction Which of the following is an example of a service provider? A) DMS or CRM provider B) Billing, mailing, or shredding companies C) Lender D) Cleaning services, individual courier firms that disseminate documents that contain NPI to funding sources and state agencies E) All of the above F) All of the above except C - ANSF) All of the above except C What is the purpose of the IRS/FinCEN Form 8300? - ANSThe information contained in the form assists law enforcement in its anti-money laundering efforts. When businesses comply with the reporting laws they provide authorities with an audit trail to stop tax evasion, drug dealing, terrorist financing and other criminal activities. What are the statutes behind the IRS/FinCEN Form 8300? - ANS-The USA Patriot Act of 2001 increased the scope of these related laws to help trace funds used for terrorism.
  • The IRS's 8300 Reporting Rule Who's required to comply with the rules for filing Form 8300? - ANSAny person in a trade or business who receives more than $10,000 "cash" in a single "transaction: or in "related transactions" must file Form 8300. How the IRS defines "transaction" in the rules for filing Form 8300? - ANSA transaction occurs when goods, services or property are sold-you sell a car or someone pays for body or other repair work. What is the definition of "cash" in the rules for filing Form 8300? - ANSCurrency and coin of the U.S. and any other country. Cash also includes certain money instruments - a cashier's

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check, bank draft, traveler's check, or money order - if they have a face amount of $10,000 or less and are not otherwise excepted from the definition. What are the exclusions that apply to the definition of "Cash"? - ANS-If the cashier's checks, bank drafts, traveler's checks or money orders you collect have a face amount of more than $10,000.

  • If the item is part of the proceeds of a bank loan.
  • If it is received on the payment of a promissory note or an installment contract.
  • If you received it in payment for a consumer durable or collectible. What are the types of cash payments that trigger the requirement to file Form 8300? - ANS- More than $10,000 in cash
  • Received as (1) one lump some of more than $10,000; (2) installment payments that cause the total cash received within 1 year of the initial payment to total more than $10,000; or (3) other previously unreportable payments that cause the total cash received within a 12-month period to total more than $10,
  • Received in the course of your trade or business
  • Received from the same buyer
  • Received in a single transaction or in related transactions. Under Form 8300, what do you do if the transaction is terminated? - ANSYou will still have to file the Form 8300 if you took in more than $10,000 before the transaction was terminated. Once the dealership receives the cash, the Form must be filed. Which sale transactions qualify as "designated reporting transactions"? - ANS1. A consumer durable, such as an automobile or boat. A consumer durable is property, other than land or buildings, that: a. Is suitable for personal use. b. Can reasonably be expected to last at least 1 year under ordinary use. c. Has a sales price of more than $10,000. d. Can be seen or touched (tangible property)
  1. A collectible (for example, a work of art, rug, antique, metal, gem, stamp, or coin).
  2. Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction (or related transactions) is more than $10,000. What are the FinCen 8300 rules regarding related transactions? - ANS-Transactions between a buyer and seller that occur within a 24-hour period are related transactions.