An advertisement promises no closing costs, but $9,400 of costs are financed into the loan. The claim is likely to mislead a reasonable consumer and is material to choosing the loan. Which UDAAP test do those specific elements establish, without ruling out other violations?
Correct Answer
C) Deception: a material representation or omission likely to mislead a reasonable consumer
C. The stated facts satisfy the deception test. Financing $9,400 changes payment timing, not whether the borrower bears costs. Scope and exceptions: Not every no-closing-cost offer is deceptive; evaluate actual terms and the overall impression. Other violations require separate analysis. Source: Deceptive Acts or Practices, pages 5–7 — https://files.consumerfinance.gov/f/documents/cfpb_unfair-deceptive-abusive-acts-practices-udaaps_procedures_2023-09.pdf
Why This Is the Correct Answer
C. The stated facts satisfy the deception test. Financing $9,400 changes payment timing, not whether the borrower bears costs. Scope and exceptions: Not every no-closing-cost offer is deceptive; evaluate actual terms and the overall impression. Other violations require separate analysis.
Why the Other Options Are Wrong
Option A: No deception because financed costs are never costs to the borrower
Financed costs remain payable.
Option B: No deception whenever accurate figures appear in a later disclosure
Later disclosure does not automatically cure misleading advertising.
Option D: Deception only if the consumer proves the advertiser intended to lie
Intent to deceive is not required.
Exam Tip
No cash at closing does not mean no cost.
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