Purpose
This article provides answers to frequently asked questions (FAQs) for merchants participating in a Universal Account Servicing, LLC (UAS) bank-originated loan program. It is designed to help merchants understand key aspects of the program, including financing products, compliance with fair lending laws, prevention of identity theft, and more.
Financing Products and Terms
What financing product can consumers use in my Program?
The specific product offered in your program is a closed-end, bank-originated installment loan. This means your customer will receive a loan from a UAS Lending Partner to cover the cost of your goods or services, with a fixed term length for repayment. Please refer to your Merchant Agreement for detailed information about your Program’s product terms.
What is the Amount Financed?
The Amount Financed is the money the consumer is borrowing from the lender to purchase your goods or services. It is the starting principal balance of the loan before any interest or fees are applied.
What are the Annual Percentage Rate (APR) and Finance Charge?
The Annual Percentage Rate (APR) is the yearly cost of borrowing money, expressed as a percentage of the principal loan amount. UAS utilizes a simple interest calculation, applied daily, with no prepayment penalties.
The finance charge represents the total estimated interest a consumer will pay over the life of the loan, assuming they make regular, on-time payments every month.
What is a loan’s Term?
A loan’s term is the period of time a borrower has to repay the loan. Term lengths typically range from 12 to 36 months, depending on the program and the consumer’s loan amount.
What is Deferred Interest?
A Deferred Interest program allows a borrower to avoid paying interest on a purchase if they pay off the loan balance in full within a specified period. However, if the balance is not paid off within that time, interest may be charged retroactively from the date of the loan.
Fair Lending Laws & UDAAP
What is Fair Lending and how does it apply to me?
Fair Lending laws aim to prevent discrimination and promote the availability of credit to all creditworthy applicants without regard to any prohibited basis factors. When offering financing through your Program, you should provide credit without regard to:
Sex
Marital status
Race
Color
Religion
National origin
Age
Receipt of public assistance income
Exercise of rights under the Consumer Credit Protection Act
Creed
Disability
Sexual Orientation
Military Status
Familial Status
Childbearing Potential
Capacity to Reproduce
Use of Spouse’s Surname
You should not discourage any individual from applying for credit and must treat all consumers fairly and equitably.
What is UDAAP and how does it apply to me?
UDAAP stands for Unfair, Deceptive, or Abusive Acts or Practices, which are prohibited in consumer financial services. As a business offering financing, you should avoid actions that could be considered:
Unfair
The act or practice causes or is likely to cause substantial injury (e.g., monetary harm) to consumers that they cannot reasonably avoid.
Deceptive
The act or practice misleads or is likely to mislead consumers, by representation or omission, and the misleading information is material to their decisions.
Abusive
The act or practice materially interferes with a consumer’s ability to understand a term or condition of a financial product or service or takes unreasonable advantage of the consumer's lack of understanding or inability to protect their interests.
As a business offering financing, you should avoid Unfair, Deceptive, or Abusive Acts or Practices.
Identity Theft and Fraudulent Activity
What is Identity Theft?
Identity theft occurs when someone fraudulently uses another person’s identifying information without authorization. This information may include, but is not limited to:
Name
Address
Email
Social Security Number
Financial accounts
Credit card numbers
How does UAS aim to prevent Identity Theft & Fraudulent Activity during the application process?
UAS employs various measures to verify the applicant's identity before approving a loan. These may include requiring applicants to answer Knowledge-Based Authentication (KBA) questions or provide a valid, unexpired photo ID. As part of your Program, you are encouraged to review applicants’ identification documents for authenticity.
How can you help prevent Identity Theft and Fraudulent Activity?
Be vigilant and report any Red Flags during the application process. Red Flags are indicators of potential identity theft, including:
Suspicious documents or refusal by the customer to provide required documentation or additional information.
The customer applies for financing on behalf of someone else.
By identifying and addressing these warning signs, you can help reduce the risk of identity theft and protect your customers and your Program.
Regulation P - Privacy of Consumer Financial Information
What is Regulation P?
Regulation P, issued by the Consumer Financial Protection Bureau (CFPB), implements the Gramm-Leach-Bliley Act (GLBA) provisions regarding the protection of consumer financial information. It governs how financial institutions collect, use, and share nonpublic personal information (NPI) about consumers. The goal is to ensure that consumers’ sensitive financial data is handled securely and transparently.
What is Nonpublic Personal Information (NPI)?
NPI refers to any personally identifiable financial information that a consumer provides to a financial institution, resulting from a transaction or service. Examples include:
Social Security Numbers
Account Numbers or Balances
Payment History
Transaction Details
Income or Employment Information
Publicly available information (e.g., information found in public records) is not considered NPI.
How can you adhere to Regulation P?
If your business participates in a UAS bank-originated loan program, you should:
Limit Disclosure of NPI
Ensure that NPI is only shared as permitted by law or authorized by the consumer.
Safeguard Consumer Data
Implement measures to protect consumer information from unauthorized access, disclosure, or misuse.
Contact UAS for Consumer Inquiries
Direct consumers to UAS if they have questions about how their information is shared, UAS's privacy notice, or how to opt out of information sharing.
The most important obligation for you is to keep consumer information safe. Always handle consumer data responsibly, share it only as permitted by law, and direct any inquiries about privacy to UAS for proper handling.