A producer exaggerates the weaknesses of a client's existing life policy and falsely claims it is about to lapse, in order to persuade the client to surrender it and buy a new policy that generates a fresh commission. Under Virginia unfair-trade-practices law, what is this conduct called, and is it permitted?

Why D is correct

Va. Code § 38.2-503 prohibits misrepresentation not only of a new policy's terms but also any misrepresentation made to induce the lapse, forfeiture, exchange, or surrender of another policy — the practice known as twisting. The Virginia Bureau of Insurance treats twisting as a serious unfair trade practice because it converts the client's existing coverage into a commission at the client's expense. Written consent or a competitor's involvement is no defense.

Why the other options are wrong

• A) Rebating is giving something of value as an inducement; the conduct described is inducing surrender by misrepresentation, which is twisting and is prohibited.
• B) Defamation targets false statements about a competitor; the misconduct here is misrepresentation to the client about the client's own policy.
• C) Unfair discrimination concerns differential treatment of similarly situated risks; the client's consent does not legalize induced surrender by misrepresentation.

Memory hook

Twisting scares a client out of the old policy — misrepresentation by another name.