A servicer's payment-allocation practice causes substantial consumer credit injury that consumers cannot reasonably avoid, with no countervailing benefit to consumers or competition. Which statutory UDAAP test is established by these three elements?
Correct Answer
A) Unfairness
A. The facts meet the stated unfairness test. The scenario supplies substantial injury, lack of reasonable consumer avoidance and no outweighing consumer or competitive benefits. Those are the statutory unfairness elements; an additional affirmative lie or complaint from every affected person is not required by that test. Scope and exceptions: This tests unfairness on stipulated facts. Whether conduct is also deceptive or abusive calls for the corresponding separate analysis. 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
A. The facts meet the stated unfairness test. The scenario supplies substantial injury, lack of reasonable consumer avoidance and no outweighing consumer or competitive benefits. Those are the statutory unfairness elements; an additional affirmative lie or complaint from every affected person is not required by that test. Scope and exceptions: This tests unfairness on stipulated facts. Whether conduct is also deceptive or abusive calls for the corresponding separate analysis.
Why the Other Options Are Wrong
Option B: No unfairness unless every injured consumer complains
Universal complaints are not an element.
Option C: Unfairness only if there is also an intentional false statement
An affirmative falsehood is not necessary to the unfairness test.
Option D: No unfairness if the conduct appears in a contract
A contractual term is not an automatic exemption from consumer-protection law.
Exam Tip
Recognize the unfairness elements without borrowing requirements from another test.
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