An MLO is reviewing procedures for a case where marketing proposes a rate the company is not prepared to offer. What is the proper handling?
Correct Answer
A) Advertise only credit terms actually available
Why this is correct: The governing concept is Regulation Z's advertising rule (the governing federal rule It prohibits "bait and switch" tactics. Any specific credit term advertised, such as an interest rate, must be a term the creditor is actually prepared to offer at the time of the advertisement. The correct action is to ensure marketing only advertises terms that are genuinely available. Why the other choices are wrong: "Use the consumer-facing workflow as a reason to postpone the required compliance step" is wrong because compliance steps cannot be delayed for convenience. "Skip the rule because the consumer-facing workflow appears routine" is wrong because routine processes must still comply with the law. "Assume advertising and consumer protection is outside compliance review because no fee has been charged yet" is wrong because advertising rules apply regardless of whether a fee has been charged. Exam tip: For advertising questions, remember the core rule: you can only advertise terms you can actually deliver.
Why This Is the Correct Answer
The correct response is "Advertise only credit terms actually available". Specific advertised terms must be terms the creditor actually is or will be prepared to offer.
Why the Other Options Are Wrong
Option B: Use the consumer-facing workflow as a reason to postpone the required compliance step.
Use the consumer-facing workflow as a reason to postpone the required compliance step. is not correct because it bypasses the rule supported by the explanation.
Option C: Skip the rule because the consumer-facing workflow appears routine.
Skip the rule because the consumer-facing workflow appears routine. is not correct because it bypasses the rule supported by the explanation.
Option D: Assume advertising and consumer protection is outside compliance review because no fee has been charged yet.
Assume advertising and consumer protection is outside compliance review because no fee has been charged yet. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For advertising, ask whether the exact term is real and available.
Exam Tip
For advertising, ask whether the exact term is real and available.
Common Mistakes to Avoid
- -A disclaimer does not cure a term that is not actually available.
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