Final answer:
A lender will get in trouble under the Truth In Lending Act for charging undisclosed fees. This act mandates accurate disclosures of all loan costs and terms to the borrower. Transparent practices are required and supervised by the Federal Reserve to ensure consumer protection laws are followed.
Step-by-step explanation:
Under the Truth In Lending Act, a lender will get in trouble for charging undisclosed fees.
This legislation is designed to protect consumers by requiring lenders to provide clear and accurate disclosures about loan terms. Other actions such as providing accurate loan disclosures, offering competitive interest rates, and transparent communication of loan terms are, in fact, required by law and considered best practices.
The Truth In Lending Act requires that lenders disclose all costs and terms associated with a credit transaction. Failure to do so or charging extra fees that have not been communicated to the borrower can lead to legal consequences, including fines and penalties.
The Federal Reserve (the Fed) also ensures that banks adhere to a wide variety of consumer protection laws, including those that prevent discrimination and require transparency in loan distribution. By charging undisclosed fees, a lender would not only be violating the Truth In Lending Act but also undermining the transparency and consumer protections that are mandated by federal regulations.