Florida Broker Practice Exam

What type of advertisements does TILA classify as illegal?

1. Advertisements with favorable financing terms

2. Advertisements containing "bait and switch" techniques

3. Advertisements without a physical address

4. Advertisements with vague pricing information

The correct answer is: Advertisements containing "bait and switch" techniques

"Advertisements containing 'bait and switch' techniques" is classified as illegal under the Truth in Lending Act (TILA) because this practice misleads consumers into believing they are being offered a great deal or low price for a product or service, only to have that offer falsely represented or unavailable. The intent behind TILA is to promote transparency and fairness in lending practices, ensuring that consumers are not deceived by misleading advertising practices. Bait and switch tactics compromise this intent by creating a false impression about the availability of products or services at certain favorable terms, only to attempt to sell them something less favorable afterward. This type of deceptive advertising practices undermines consumer trust and violates laws designed to protect consumers. In contrast, favorable financing terms, advertisements without a physical address, and vague pricing information may not inherently constitute illegal activity under TILA, though they may raise other consumer protection concerns. For example, while vague pricing information can be misleading, it doesn't necessarily fall under the same category of deceptive practices defined by TILA. However, the key breach under TILA specifically relates to false representations and misleading offers, which are characteristic of bait and switch schemes.