Life License Qualification Program (LLQP) Practice Exam

Which unfair trade practice involves making malicious statements about another person's financial condition?

1. Boycotting

2. Defamation

3. Unfair discrimination

4. Misrepresentation

The correct answer is: Defamation

Defamation refers specifically to the act of making false or misleading statements about someone that can harm their reputation or financial standing. In the context of unfair trade practices, defamation involves intentionally spreading unfounded rumors or negative information about another individual’s financial condition, which can undermine their credibility and business prospects. This practice not only damages the targeted individual’s reputation but can also influence potential clients' perceptions, leading to unfair competitive advantages. The other practices mentioned—like boycotting, unfair discrimination, and misrepresentation—address different aspects of unethical behavior in trade but do not specifically involve the malicious dissemination of false information about someone's financial state. Boycotting refers to avoiding business with a particular entity as a form of protest; unfair discrimination involves treating clients differently based on prohibited factors; and misrepresentation involves providing false or misleading information about one’s own products or services. Each of these practices differs in focus from the harmful act of defamation, which is centered on damaging another person’s financial reputation through false statements.