Deck 21: Consumer Protection

Question 1

The Federal Trade Commission actively monitors online advertising.

Answer 1

True

Question 2

The Federal Commerce Commission is charged with the goal of preventing unfair and deceptive trade practices.

Answer 2

False

Question 3

Automakers must attach an information label to every new car that includes the fuel economy estimate for the vehicle.

Answer 3

True

Question 4

Federal law does not require food product labels to identify the product .

Question 5

The Lanham Act protects against the deceptive use of trademarks but does not cover false advertising claims.

Question 6

Half-truths-information that is true but incomplete-are not deceptive because such statements are at least half true.

Question 7

Consumer protection law is exclusively governed by the federal government.

Question 8

Vague generalities and obvious exaggerations constitute deceptive advertising.

Question 9

Merchants are not required to issue a refund within a specified period of time when a consumer cancels a mail or telephone order.

Question 10

Federal law regulates the definition and use of the term " fresh " on food labels.

Question 11

The Truth-in-Lending Act does not apply to sales or loans between two consumers.

Question 12

Deceptive advertising occurs if a reasonable consumer would be misled by an advertising claim.

Question 13

Labels on products must use words that are easily understood by the general consumer.

Question 14

False or deceptive advertising may arise from a false statement or claim about a competitor's products.

Question 15

Federal law does not require food labels to provide standard nutrition facts.

Question 16

Generally, online ads-unlike other ads-can be less than truthful and not every claim must be substantiated

Question 17

False or deceptive advertising may arise from a false statement or claim about a company's own products.

Question 18

A toothpaste ad that states, "Nine out of ten dentists support our product," would not be deceptive if the company asked ten dentists.

Question 19

If an advertisement is proven to be deceptive, it may be subject to a cease-and-desist order.

Question 20

Bait-and-switch advertising occurs if the seller fails to have reasonably adequate quantities of the advertised item available.

Question 21

Major credit-reporting agencies must provide consumers with a free copy of their credit reports every twelve months.

Question 22

The Truth-in-Lending Act does not apply to those who lease consumer goods in the ordinary course of their business.

Question 23

Under the Truth-in-Lending Act, most, but not all, of the terms of a credit instrument must be fully disclosed.

Question 24

Credit cannot be denied solely on the basis of marital status.

Question 25

When a credit card is lost, the cardholder is not liable for any unauthorized charges after the time of the loss and before the cardholder notifies the credit card company that the card is lost.

Question 26

Under the Fair Credit Reporting Act, a consumer can request the identity of anyone who has received a credit agency's report on the consumer.

Question 27

Credit cannot be denied solely on whether a person receives certain forms of income, such as public-assistance.

Question 28

The government cannot remove a product from the market simply because it is considered imminently hazardous.

Question 29

Because federal law requires companies to disclose accurate information about their products, the federal government does not regulate how a product is made or the ingredients/components of a product.

Question 30

The manufacture and sale of any product that poses an unreasonable risk to consumers can be banned.

Question 31

Lawn Company and Mowers Inc. both make yard tools. Both companies use only steel produced in the United States. Lawn's ad claims, "We use only U.S. steel, while our competitor uses inferior foreign steel!" This statement is

A) an obvious exaggeration.
B) puffery.
C) a false claim about a competitor's product.
D) a half-truth.

Question 32

Creditors that use information from credit-reporting agencies cannot be held liable for violations of the Fair Credit Reporting Act.

Question 33

A creditor can always require the signature of a cosigner on a credit application.

Question 34

Home Products, Inc., in its advertisements, makes false claims about its own products and about the products of its competitors. The firm may be subject to sanctions for the false claims about

A) its products only.
B) its competitors' products only.
C) its products and its competitors' products.
D) neither its products nor its competitors' products .

Question 35

The Fair Debt Collection Practices Act allows debt collectors to do thorough investigations, including interviewing parents, spouses, co-workers, employers, and landlords about a consumer who owes a debt.

Question 36

Marketmaster Inc. includes in its advertising accurate pictures of the product, statements about the product that are technically true but leave out some important information, vague generalities, and puffery about its products. The firm may be subject to sanctions for

A) the partially true statements.
B) the vague generalities.
C) the puffery.
D) the pictures.

Question 37

Federal and state laws are aimed at protecting consumers from

A) unfair trade practices.
B) unsafe products.
C) unreasonable credit requirements.
D) all of the choices.

Question 38

Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!' " The Federal Trade Commission would consider this ad to be

A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) a fair ad using puffery.

Question 39

Once a debt- collection agency receives notice that a consumer refuses to pay a debt, the debt-collection agency may continue to contact them to remind them of the debt's existence.

Question 40

Federal law establishes food standards, including safe levels of potentially hazardous food additives.

Question 41

The federal agency that oversees the practices of banks, mortgage lenders, and credit-card companies is

A) Regulation Z.
B) the Federal Reserve Board.
C) the Consumer Product Safety Commission.
D) the Consumer Financial Protection Bureau

Question 42

Crunchy Inc. makes claims in its advertising about its snack products. Crunchy's claims would most likely be deemed deceptive if the claims

A) mislead a reasonable consumer.
B) contain vague generalities.
C) consist of puffery.
D) include obvious exaggerations.

Question 43

Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. The company may violate the Federal Trade Commission's Mail or Telephone Order Merchandise Rule if it

A) ships orders too early.
B) fails to notify consumers when orders cannot be shipped on time.
C) issues a refund immediately when a buyer cancels an order.
D) uses a shipping company other than the U.S. Post Office to send the goods.

Question 44

Elliptical Company advertises Fitness Step, an exercise machine, online. There are several disclosures that Fitness Step needs to make, including shipping costs, surcharges for shipping the large machine, and warnings about the use of the machine by people with certain health conditions. In this context, the company must

A) not address all of the disclosures online because it will clutter up the information.
B) clearly and conspicuously disclose the information online.
C) include a hyperlink in a footnote so that consumers can find the disclosures if they are interested.
D) note that disclosures exist and place a link for consumers to click to request a hard copy of the disclosures.

Question 45

Credit Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of

A) credit terms offered by other lenders.
B) comparative prices for goods to be bought with the borrowed funds.
C) Credit Loan's credit terms.
D) the borrowers' credit scores.

Question 46

Urban Loan Company extends credit to consumers. Urban is subject to the Equal Credit Opportunity Act, which prohibits credit discrimination based on  which of the following

A) credibility.
B) financial awareness.
C) occupation.
D) gender.

Question 47

An ad for Running Shoes Inc. states that its footwear is "The Athlete's Choice." Because of this ad, the Federal Trade Commission most likely will

A) issue a cease-and-desist order.
B) issue a counteradvertising order.
C) work with Running and its competitors to negotiate a settlement.
D) take no action against Running Shoes.

Question 48

Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to

A) no federal law.
B) the Consumer Leasing Act.
C) the Consumer Product Safety Act.
D) the Truth-in-Lending Act.

Question 49

Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should

A) disclose the shipping cost in its ads.
B) display the shipping cost on a poster board near its cash registers in its stores.
C) include the shipping cost in small print on its receipts.
D) not reveal the shipping cost.

Question 50

Marilyn receives an unsolicited credit card in the mail and tosses it on her desk. Without Marilyn's permission, her roommate Nancy uses the card to buy a new laptop for $1,800. Marilyn is

A) liable for $1,800.
B) liable for $500.
C) liable for $50.
D) not liable for any amount.

Question 51

Soundbyte Corporation sells phones. Soundbyte's ad states that on its phones voice comes through as "clear as the sky on a cloudless day." The Federal Trade Commission would consider this claim

A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) puffery that is allowed.

Question 52

Spicy Salsa, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Tangy Taco Sauce Company, Spicy's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to

A) conduct negotiations between the competitors.
B) draft a formal complaint to Tangy Taco .
C) issue a cease-and-desist order.
D) permit Spicy to broadcast similarly deceptive counteradvertising.

Question 53

Breadboard, Inc., makes and sells grain products. Breadboard's product packages must include

A) the company owner's identity.
B) the contents' net quantity.
C) the restaurants and stores in which the product is sold.
D) the type of consumer most likely interested in the product.

Question 54

Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit dis-crimination based on

A) intelligence.
B) education.
C) culture.
D) race.

Question 55

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. If done systematically, this is

A) a cease-and-desist order.
B) bait-and-switch advertising.
C) counteradvertising.
D) puffery.

Question 56

Mac n' Cheese Company wants to make and market new processed pasta and sauce products. On each product's label, standard nutrition facts are

A) prohibited.
B) required.
C) voluntary.
D) arbitrary.

Question 57

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. Bea will pay those loans off over two to four years. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

A) the car loan only.
B) the home repair loan only.
C) the retail installment sale only.
D) the car loan, the home repair loan, and the retail installment sale.

Question 58

Elise and other consumers complain to the Federal Trade Commission (FTC) that a Faux Diamonds Company ad is deceptive. The FTC's first step is to

A) draft a formal complaint .
B) investigate.
C) issue a cease-and-desist order.
D) order restitution.

Question 59

Greg signs an installment contract with Home Appliance Store to finance the purchase of new kitchen appliances. This transaction is subject to

A) no federal law.
B) the Fair Credit Reporting Act.
C) the Telecommunications Act.
D) the Truth-in-Lending Act.

Question 60

Pro Motor Company makes cars. Federal law requires Pro to attach a label that includes the Environmental Protection Agency's fuel economy estimate for a vehicle to

A) every new car.
B) no car-compliance with the law is voluntary.
C) select old and new cars.
D) whichever vehicles the car maker chooses.

Question 61

The Federal Trade Commission (FTC) learns that Chuck's Automotive Stores engages in deceptive advertising practices. What actions can the FTC take against Chuck's?

Question 62

Credit Agency Corporation issues consumer credit reports. The company generally does not delete unverifiable or erroneous information from the reports. Under the Fair Credit Reporting Act, this firm may be subject to

A) finance charges .
B) monetary damages.
C) a cease-and-desist order.
D) no sanctions.

Question 63

Dian takes out a loan from Equity Bank. When she fails to make the scheduled payments, Equity advises her of further action that it will take. This violates

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 64

Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics, Inc., wants to advertise its sweaters as having "That Wool Feel" but does not want to specify on labels that the sweaters are 100 percent polyester. Can these firms market their products as they would like? If not, why not?

Question 65

QT Collection Agency calls Rob several times a day, and in the middle of the night, about an overdue bill that Standard Credit Company turned over to QT for collection. This is a violation of

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 66

Logan's application to Metro Bank for a credit card is denied. Logan can obtain information on his credit history in a credit agency's files under

A) no federal law.
B) the Equal Credit Opportunity Act.
C) the Fair Credit Reporting Act.
D) the Fair Debt Collection Practices Act.

Question 67

Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to monitor and enforce laws designed to protect consumers from unsafe food and drugs being sold is

A) Corner Market and Deli & Drug.
B) Deli & Drug only.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 68

Kip opens an account at Lotsa Goodies, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, a Lotsa Goodies representative contacts Kip's parents. This violates

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 69

The credit department of Mega-Mart often calls Nora at work about an overdue bill. Nora's employer objects, but the credit department continues to call her at work. This violates

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 70

Bob has a credit card from Credible Cards, Inc. Credible Cards wants to change the terms. Credible

A) must give Bob at least thirty days' notice.
B) must give Phil at least forty-five days' notice.
C) need not give Phil any notice.
D) cannot change the terms.

Question 71

The government agency that has the authority to order a company to remove a product from the market that poses an unreasonable risk of harm is

A) the Consumer Product Safety Commission.
B) the Product Manufacturing Standards Board.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 72

Cutting Edge Inc. makes and sells tools. One of the tools is believed to be hazardous. The firm may be required to

A) export the tool and sell it only abroad.
B) increase the price to cover the cost of any injuries or damage.
C) reduce the price to indicate the hazard to consumers.
D) remove the tool from the market.