Consumer Rights, Fraud, and Financial Decision Making
What this domain tests
Consumer Rights, Fraud, and Financial Decision Making covers the protections you can invoke, the red flags of scams, and the reasoning tools that separate a good deal from an expensive one.
Core rules
- Truth in Lending Act: lenders must disclose the APR and key terms before you sign.
- Fair Credit Billing Act: dispute a billing error in writing within 60 days of the statement; you can withhold payment on the disputed amount while it is investigated.
- FCRA: free credit reports from each bureau and the right to dispute inaccurate information.
- FDCPA: debt collectors cannot call before 8 a.m. or after 9 p.m. local time, cannot call at work after being told to stop, and must send written validation information.
- Cooling-off rule: door-to-door sales over $25 generally allow three business days to cancel.
- Fraud red flags: upfront payment to claim a prize, urgency, secrecy, payment by gift card, wire, or crypto, guaranteed investment returns, and requests for a verification code. A free credit freeze with all three bureaus blocks new accounts.
- Decision tools: weigh opportunity cost, think at the margin, ignore sunk costs, and compare total cost of ownership.
Worked example
A payday lender charges $75 to borrow $500 for two weeks. That is 15% per two-week period; 26 periods per year gives 15% times 26 = 390% simple APR. In dollar terms, $500 at 390% simple interest would accrue about $1,950 in fees over a year, which is a strong signal to find a cheaper option.
Traps
Honoring sunk costs (I already paid $400, so I must finish); anchoring on the sticker price instead of total cost; assuming caller ID proves identity; paying a fee to release winnings; trusting a risk-free 10% monthly offer; missing auto-renewal deadlines on free trials.