A mortgage lender advertises fixed-rate mortgages but only actually offers adjustable-rate mortgages. This conduct would be best described as:

• A. Disparate impact
• B. Bait-and-switch lending
• C. Unfair, deceptive, or abusive act or practice
• D. Deceptive advertising

Answer: (C)

UDAAP rules prohibit unfair, deceptive, or abusive acts or practices by financial institutions. Advertising fixed-rate mortgages while actually offering only adjustable-rate loans is deceptive because it misrepresents what is being sold and what terms are available, leading consumers to rely on false information. When a lender uses that misrepresentation, it can also create an unfair outcome by steering people into a product they wouldn’t choose if fully informed, causing harm. The broad category of unfair, deceptive, or abusive acts or practices covers both the misrepresentation and the resulting harm, making it the most complete description of the conduct. Disparate impact doesn’t apply here since there’s no indication of a discriminatory effect on a protected class.