As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
Understand the Problem
The question describes a scenario where a bank is requiring a borrower to purchase credit insurance from a specific company as a condition for a loan. It asks what the bank is guilty of among the options: Defamation, Rebating, Misrepresentation, or Coercion. The key here is to identify the unfair or illegal practice the bank is engaging in.
Answer
The bank is guilty of coercion.
When a bank requires a borrower to purchase credit insurance from a specific company as a condition for a loan, the bank is guilty of coercion. This is because the bank is using its position to force the borrower into a transaction they may not otherwise agree to.
Answer for screen readers
When a bank requires a borrower to purchase credit insurance from a specific company as a condition for a loan, the bank is guilty of coercion. This is because the bank is using its position to force the borrower into a transaction they may not otherwise agree to.
More Information
Coercion involves pressuring someone to do something against their will. In this case, the bank is leveraging its control over the loan to force the borrower to buy insurance from a particular company.
Tips
It is important to differentiate coercion from other similar terms like misrepresentation or defamation. Coercion specifically involves the use of pressure or force.
Sources
- Solved As a condition for a loan, a bank requires the | Chegg.com - chegg.com
- As a condition for a loan, a bank requires the borrower to purchase ... - gauthmath.com
- Final answer: The bank is guilty of coercion when it requires borrowers to buy credit insurance from a specific company as a condition for getting a loan. This practice unfairly pressures borrowers and ties the loan approval process to the purchase of insurance. - brainly.com
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