Chapter 31 — Exercises: Consumer Protection Law

Work these after reading the chapter. They move from recall to judgment. Most need no answer key here (selected answers live in Appendix I); where an exercise has a clean factual answer, it's tucked in a <details> block so you can self-check.

Difficulty legend: ⭐ basic · ⭐⭐ applied · ⭐⭐⭐ synthesis/judgment · ⭐⭐⭐⭐ advanced/extension

A standing reminder for every answer: the laws here are real but they vary by state and change over time. When an exercise touches a state-specific rule (doc fees, lemon thresholds, cancellation rights, licensing), the correct professional answer often includes "verify with the state DMV/dealer board, the FTC/CFPB, or counsel." Saying "it depends, and here's who I'd ask" is a right answer, not a dodge.

Part A — Conceptual Understanding ⭐

Short answers. One to three sentences each.

A1. In one sentence each, state what these federal laws require of a salesperson: TILA, ECOA, FCRA.

A2. What is the Buyers Guide, which law requires it, and on which vehicles must it appear?

A3. Fill in the blank and explain: "When the Buyers Guide and a salesperson's spoken promise disagree, the __ wins." Why does this rule exist?

A4. True or false, and why: "There's a federal three-day cooling-off period that lets a customer return any car within three days of buying it."

A5. What is the difference between a lemon law and the Magnuson-Moss Warranty Act — which is state, which is federal, and what does each cover?

A6. Under the TCPA, what is the single most important thing you need before sending a customer a marketing text, and what must you do the instant they reply "STOP"?

A7. Name the four numbers that appear in the TILA box on a Retail Installment Sale Contract. (Spaced review from Chapter 25.)

A8. Define curbstoning and title jumping in plain English, and name one way each harms the buyer.

A9. Explain the chapter's frame in your own words: what does it mean that "law is the floor and ethics is the building"?

A10. What does GLBA require a dealership to do with a customer's financial information, and name two everyday floor behaviors that violate it.

A11. What is UDAP (and the state "Little FTC Acts"), and why does it matter that this conduct is reachable even if the CARS Rule's status is uncertain?

A12. A customer says, "The dealer told me I have to do all my service here or my warranty is void." Is that generally true? Which federal law speaks to it?

A13. Why does the chapter say "documentation is the case" for a lemon-law claim? Name three things a customer should keep.

A14. Distinguish, in one sentence each: a regulatory enforcement action, a civil lawsuit, and a class action. Which one is the "existential number" for a dealership, and why?

Part B — Applied Analysis ⭐⭐

Apply the chapter to specific situations. A short paragraph each.

B1. A salesperson moves a freshly reconditioned used car to the front line and notices there's no Buyers Guide in the window. They get busy and forget. That afternoon the car sells "as-is," and the salesperson tells the buyer "we stand behind our cars." Identify every legal exposure you can see in this scenario, and explain how each could have been prevented. (This is the chapter's hook — name the layers.)

B2. An eager green pea wants to "save time" by getting browsers' driver's licenses at the door and running their credit before they've picked a car or signed anything, so they'll "already be approved." Which law does this violate, what's the missing ingredient, and what should the green pea do instead?

B3. A customer says, "I think this car's a lemon — it's been in the shop twice for a weird noise." Walk through the questions you'd ask and the facts you'd need to know before you can even guess whether a lemon-law claim is plausible. (Don't give a verdict — show the analysis.)

B4. Your sales manager says, "Saturday's slow — text everybody in the CRM about the tent sale." There are about 4,000 numbers in there. Explain the TCPA problem, estimate (in plain English, no invented dollar figure) why the risk is large, and propose a compliant alternative.

B5. A customer with a 580 score (think Devon Wallace from Chapter 26) is quoted a higher rate than a prime customer. Under what circumstance is that legal, and under what circumstance would it be an ECOA violation? What's the deciding factor?

B6. A dealership advertises a car at one price online, then tells arriving customers that price "requires" financing through the dealer and three add-on products. Which laws/principles does this implicate — and explain why the answer doesn't actually depend on the uncertain status of the CARS Rule.

B7. A customer paid off their car loan two years ago and now can't sell the car because the title still shows the old lender as lienholder. Whose duty was it to release the lien, and what should the customer do? (Tie this to the dealer's title duties and the customer's "get it in writing / keep your paperwork" responsibility.)

B8. A used-car shopper finds a great deal from a "private seller" on a classified site — but the same phone number is attached to a dozen recent listings, and the seller wants to meet in a parking lot and "do the title later." Name what's likely going on, the two consumer protections the buyer is losing by buying this way, and what you'd advise a friend in this situation.

B9. Two dealerships sit fifty miles apart, one on each side of a state line. One charges a $599 doc fee; the other's state caps doc fees far lower. Both are following the law. Explain how that's possible using the chapter's "federal floor, state ceiling" model — and what it tells you about answering a customer's "is that fee even legal?" question.

B10. A manager says, "Just put 'as-is' in the contract — we don't need the window sticker, the contract covers us." Explain why the manager is wrong, citing the specific requirement, and what exposure remains even though the word "as-is" is in the contract.

Part C — Skills & Practice ⭐⭐–⭐⭐⭐

The doing exercises. Write the actual words; calculate the actual numbers.

C1. Write your cooling-off myth-buster. A hesitant customer asks, "I've got a few days to change my mind after I sign, right?" Write your word-for-word response (3–6 sentences) that (a) tells the truth for your state — note where you'd verify it, (b) doesn't kill the deal, and (c) turns the absence of a return right into a reason to resolve any concern now. Then write one sentence explaining why each part works.

C2. Write your Buyers Guide walk-up. Write exactly how you'd walk a customer to the Buyers Guide on an as-is used car and explain it honestly — making "as-is" a price/risk statement, not a scary defect, and pointing out their right to inspect and to add a service contract. (Model the tone on Chapter 20 §20.5.)

C3. Draft your "I don't know the legal answer" line. Write the sentence you'll say when a customer asks a state-specific legal question you can't answer from memory (doc-fee cap, cancellation right, lemon threshold). It should sound confident and professional, not evasive. Then list five questions you'll always route to compliance rather than guess.

C4. Role-play the income-falsification pressure (interleave with Chapter 25 §25.7). A customer you like is short on income to qualify and says, "Just put down I make a little more — my buddy at another store would." Write your spoken response that refuses without lecturing, names the law plainly, and pivots to the deal you can do. Then name the laws/exposures (federal and personal) you just avoided.

C5. Build your one-page quick-reference (the Project Checkpoint artifact). Produce the actual one-page card: the federal floor (one line each, with the violation that bites), the "verify locally" list, and your three go-to sentences. This is gradeable as a deliverable — make it something you'd genuinely tape inside your desk.

C6. Diagnose the missing-disclosure deal. Take the B1 scenario and write the incident report a sharp F&I manager or compliance officer would want: what went wrong, which rules were implicated, what it could cost, and the three process changes that prevent a repeat. (Practice thinking like the person who has to clean it up.)

C7. Write the lemon-vs-warranty triage. A customer calls upset about a recurring problem with their vehicle. Write the first four questions you'd ask to figure out whether you're in a warranty repair conversation or a potential lemon-law conversation — and write the honest, non-promising thing you'll say while you find out (you're not a lawyer and won't pretend to be). End with the line you use to point them to the right next step.

C8. Draft your recon-to-delivery Buyers Guide checklist. Turn the lesson of the hook into a real artifact: a short checklist (5–8 items) that ensures a correct Buyers Guide is on every used car before it hits the line and gets shown to the customer at the right moment — with an owner named at each step (recon tech, lot porter, salesperson, sales manager). Make it something a store could actually adopt.

C9. Self-audit your own compliance habits. Honestly score yourself (yes / no / unsure) on five behaviors from the chapter: (1) Do I only pull credit with a signed authorization on a real deal? (2) Do I only text consenting customers and honor STOP instantly? (3) Do I keep customer data secure (no exposed SSNs, DMS logged out)? (4) Do I point used buyers to the Buyers Guide? (5) Do I route state-law questions to compliance instead of guessing? For each "no" or "unsure," write the one change you'll make this week.

Part D — Synthesis & Critical Thinking ⭐⭐⭐

Judgment, ethics, and trade-offs. There isn't always one right answer — show your reasoning.

D1. The chapter argues that "almost everything illegal is also unethical, but plenty of legal things are still wrong." Give two examples from car sales of conduct that is legal but unethical, and explain why each fails the Chapter 3 gut-check ("would I be comfortable if this customer could hear my thoughts?"). (Ties Ch 31 to Chapter 30.)

D2. The CARS Rule's status is contested. The chapter claims this "barely changes your behavior." Argue for that claim, then argue against it (is there any way the rule's status genuinely matters to how a dealer operates?). Which argument do you find stronger, and why?

D3. A manager argues: "Consumer-protection laws are just red tape that protects deadbeats and hamstrings honest dealers." Write a rebuttal grounded in the chapter — what are these laws actually prohibiting, and how does that connect to theme #3 (ethics are profitable)?

D4. Many dealers use arbitration agreements (recall Chapter 25 §25.2). They're legal in many places but contested. Lay out the honest case for disclosing arbitration clauses straightforwardly versus the temptation to bury them — and explain why burying them is short-sighted even where it's currently legal.

D5. "Personal liability" sounds abstract until it isn't. Pick one violation from the chapter that could expose you personally (not just the dealer) — explain the conduct, the exposure (civil, license, or criminal), and why "I was just trying to make the deal" is not a defense.

D6. The chapter claims the cooling-off myth-buster is "also the better closer." Is that always true, or is it sometimes a real cost (you lose a deal you'd have closed with the lie)? Argue honestly — and if there is a short-term cost, explain why the professional pays it anyway (connect to theme #3 and the Chapter 16 long game).

D7. Consider the disparate-impact concern behind ECOA and dealer rate markup. Some argue markup discretion should be eliminated entirely (flat fees only) to prevent discrimination; others argue that punishes dealers for patterns no individual intended. Lay out both positions fairly, then take a stance: how should an individual ethical salesperson behave regardless of how the policy debate resolves?

D8. "Verify locally" can feel like a cop-out to an impatient customer who wants an answer now. Write how you'd hold that line without sounding evasive or incompetent — and explain why being confidently wrong about a state rule is more dangerous to you (and the customer) than admitting you'll check.

Part M — Mixed / Interleaved Practice ⭐⭐–⭐⭐⭐

These deliberately combine this chapter with earlier ones. That's the point — real deals don't come labeled by chapter.

M1. (Ch 31 + Ch 25) Take the Okafor financing build from Chapter 25 ($41,030 financed at the 7.9% sell rate, 72 months → ~$10,622 finance charge, ~$51,652 total of payments). Explain which law requires those numbers to be disclosed, in which document, and what specifically would make the disclosure a violation rather than a compliant one.

M2. (Ch 31 + Ch 24) Rick's packed deal from the Chapter 24 hook (bundling ESC, GAP, and an appearance package into a payment without naming them) — map it to specific legal exposures in this chapter. Which law(s) does the non-disclosure implicate, and how does the CARS Rule's spirit (and UDAP) reach it?

M3. (Ch 31 + Ch 29) A BDC rep wants to text a purchased list of "in-market" phone numbers about a sale. Combine the Chapter 29 consent rules with this chapter's consequences: what's the violation, why are the damages frightening, and what's the compliant move?

M4. (Ch 31 + Ch 20 + Ch 21) A customer buys an as-is used car from an independent lot (think Del Rio Motors, Chapter 21). Explain how the Buyers Guide (Chapter 20), the dealer bond/licensing, and the title duties all protect this buyer — and why a curbstoner dodges every one of those protections.

M5. (Ch 31 + Ch 13) A customer is stalling — "we need to think about it" (the Hendersons, Chapter 13). A weak closer reaches for the cooling-off lie to break the stall. Explain why that's both an objection-handling failure and a legal violation, and write the honest move that handles the real objection without lying.

M6. (Ch 31 + Ch 26 + Ch 22) Explain, end to end, why ECOA matters most in subprime: connect the buy/sell dealer reserve (Chapter 22), disparate impact, and Devon Wallace's situation (Chapter 26). Where is the legal line between a legitimate higher rate and a discriminatory one?

M7. (Ch 31 + Ch 25 + Ch 15) A spot delivery that turns into a yo-yo (Chapter 25 §25.6) touches both process compliance and consumer-protection law. Explain the through-line from the warm delivery (Chapter 15) to the predatory rewrite, name the consumer-law exposures the yo-yo creates, and describe the "honest unwind" that keeps the dealer on the right side of the floor.

M8. (Ch 31 + Ch 30) Build a two-column table of five practices: in column one, mark whether each is illegal, legal-but-unethical, or both fine; in column two, name the law (if illegal) or the ethics principle (if unethical) at stake. Use: (a) packing a product into the payment undisclosed; (b) disclosing a rate markup the law doesn't require you to disclose; (c) telling a customer they have a fake 3-day return right; (d) letting a customer overpay on a trade because they didn't research it; (e) pulling a browser's credit with no signed app. (Sharpens the Chapter 30 floor-vs-building distinction.)

Part E — Research & Extension ⭐⭐⭐⭐

Optional, for the motivated reader. These send you to primary sources — the right instinct for a professional.

E1. Go to the FTC's website and find its consumer and business guidance on the Used Car Rule / Buyers Guide. Summarize, in your own words, what the current Buyers Guide must contain. (Notice: you went to the primary source instead of trusting a textbook — that's the reflex.) Note the date you accessed it, since rules change.

E2. Look up your own state's rules on (a) whether there's any car-purchase cancellation/cooling-off right, and (b) your state's lemon-law thresholds (repair attempts or days out of service, time/mileage window, new vs. used coverage). Use your state DMV/motor-vehicle dealer board or attorney general's consumer pages. Write a one-paragraph "what's true in my state" note for your portfolio — and flag anything you'd still confirm with counsel.

E3. Research the current status of the FTC CARS Rule as of the date you're reading this — is it in effect, stayed, modified, or litigated? Cite where you found the information and the date. Then write two sentences on how (if at all) its status changes what a compliant, ethical salesperson actually does day to day. (This is the chapter's honesty exercise: the rule moves; your conduct shouldn't have to.)