diff --git a/common/lib/xmodule/xmodule/capa_base.py b/common/lib/xmodule/xmodule/capa_base.py
index 00b9e77b21..5a74a8aaa2 100644
--- a/common/lib/xmodule/xmodule/capa_base.py
+++ b/common/lib/xmodule/xmodule/capa_base.py
@@ -659,7 +659,7 @@ class CapaMixin(CapaFields):
             check_button_checking = False
 
         content = {
-            'name': self.display_name_with_default_escaped,
+            'name': self.display_name_with_default,
             'html': html,
             'weight': self.weight,
         }
diff --git a/common/lib/xmodule/xmodule/capa_module.py b/common/lib/xmodule/xmodule/capa_module.py
index 75ced83ea1..774b39a39a 100644
--- a/common/lib/xmodule/xmodule/capa_module.py
+++ b/common/lib/xmodule/xmodule/capa_module.py
@@ -128,6 +128,19 @@ class CapaModule(CapaMixin, XModule):
 
         return json.dumps(result, cls=ComplexEncoder)
 
+    @property
+    def display_name_with_default(self):
+        """
+        Constructs the display name for a CAPA problem.
+
+        Default to the display_name if it isn't None or not an empty string,
+        else fall back to problem category.
+        """
+        if self.display_name is None or not self.display_name.strip():
+            return self.location.block_type
+
+        return self.display_name
+
 
 class CapaDescriptor(CapaFields, RawDescriptor):
     """
diff --git a/common/lib/xmodule/xmodule/tests/test_capa_module.py b/common/lib/xmodule/xmodule/tests/test_capa_module.py
index 3fad0fdc9d..afa2454af3 100644
--- a/common/lib/xmodule/xmodule/tests/test_capa_module.py
+++ b/common/lib/xmodule/xmodule/tests/test_capa_module.py
@@ -1719,6 +1719,34 @@ class CapaModuleTest(unittest.TestCase):
                               ('answerpool', ['choice_1', 'choice_3', 'choice_2', 'choice_0']))
             self.assertEquals(event_info['success'], 'incorrect')
 
+    @ddt.unpack
+    @ddt.data(
+        {'display_name': None, 'expected_display_name': 'problem'},
+        {'display_name': '', 'expected_display_name': 'problem'},
+        {'display_name': ' ', 'expected_display_name': 'problem'},
+        {'display_name': 'CAPA 101', 'expected_display_name': 'CAPA 101'}
+    )
+    def test_problem_display_name_with_default(self, display_name, expected_display_name):
+        """
+        Verify that display_name_with_default works as expected.
+        """
+        module = CapaFactory.create(display_name=display_name)
+        self.assertEqual(module.display_name_with_default, expected_display_name)
+
+    @ddt.data(
+        '',
+        '   ',
+    )
+    def test_problem_no_display_name(self, display_name):
+        """
+        Verify that if problem display name is not provided then a default name is used.
+        """
+        module = CapaFactory.create(display_name=display_name)
+        module.get_problem_html()
+        render_args, _ = module.system.render_template.call_args
+        context = render_args[1]
+        self.assertEqual(context['problem']['name'], module.location.block_type)
+
 
 @ddt.ddt
 class CapaDescriptorTest(unittest.TestCase):
diff --git a/lms/templates/problem.html b/lms/templates/problem.html
index 582d5fcfd4..55e1e77c78 100644
--- a/lms/templates/problem.html
+++ b/lms/templates/problem.html
@@ -1,4 +1,8 @@
-<%! from django.utils.translation import ugettext as _ %>
+<%page expression_filter="h"/>
+<%!
+from django.utils.translation import ugettext as _
+from openedx.core.djangolib.markup import HTML
+%>
 
 <%namespace name='static' file='static_content.html'/>
 <h3 class="hd hd-2 problem-header">
@@ -9,7 +13,7 @@
 
 <div class="problem">
     <div aria-live="polite">
-        ${ problem['html'] }
+        ${ HTML(problem['html']) }
     </div>
   <div class="action">
     <input type="hidden" name="problem_id" value="${ problem['name'] }" />