State RegulationsCO specificDifficulty 2/5
A Denver lender requires every borrower to purchase credit life coverage from the lender's own affiliated agency as a condition of receiving the loan. Which unfair practice has the lender committed?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
C.R.S. 10-3-1105, the Colorado coercion-of-debtors provision, prohibits requiring insurance from a particular insurer, agent, or producer as a condition of a loan or extension of credit. The lender may require the insurance itself, but the debtor's freedom to choose where to buy it is protected by the statute.
Why the other options are wrong
- A) No false or malicious statement about another insurer's financial condition was made, so defamation under C.R.S. 10-3-1104(1)(c) is not implicated.
- B) Nothing was rebated; the violation is the forced purchase, not a return of premium or other benefit.
- C) No benefit, dividend, or policy term was misrepresented; the conduct is coercive, not deceptive.
Memory hook
Loan okay, leash not - the debtor picks the insurer.