A practice costs 1 in 400 borrowers about $18 each, and it lets the lender price every loan roughly 0.05 points cheaper across the book. If reliable evidence establishes that the consumer or competitive benefits outweigh the injury, which conclusion follows under the statutory unfairness test?
Correct Answer
C) Not unfair: the $18 injury is outweighed by countervailing benefits
C. On the stipulated evidence, the countervailing-benefits element is not met. Unfairness requires substantial injury that consumers cannot reasonably avoid and that is not outweighed by benefits to consumers or competition. The question explicitly stipulates reliable evidence that benefits outweigh injury. It therefore defeats that element rather than proving that $18 is always insignificant. Scope and exceptions: The percentages and dollar amount do not independently prove the stipulated comparison. Failure of this test does not establish compliance with every other consumer-protection law. Source: 12 USC 5531(c)(1), 2024 codified edition — https://www.govinfo.gov/content/pkg/USCODE-2024-title12/html/USCODE-2024-title12-chap53-subchapV-partC-sec5531.htm
Why This Is the Correct Answer
C. On the stipulated evidence, the countervailing-benefits element is not met. Unfairness requires substantial injury that consumers cannot reasonably avoid and that is not outweighed by benefits to consumers or competition. The question explicitly stipulates reliable evidence that benefits outweigh injury. It therefore defeats that element rather than proving that $18 is always insignificant. Scope and exceptions: The percentages and dollar amount do not independently prove the stipulated comparison. Failure of this test does not establish compliance with every other consumer-protection law.
Why the Other Options Are Wrong
Option A: Not unfair, because $18 is too small to count as an injury at all
A small individual loss can still matter; amount alone does not settle the test.
Option B: Unfair: 1 in 400 borrowers is a substantial number of people affected
Counting affected consumers does not replace the elements.
Option D: Unfair: any injury to a consumer satisfies the substantial injury test
The test does not classify every injury as unfair regardless of benefits.
Exam Tip
Apply all unfairness elements; do not substitute a dollar cutoff.
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