Deck 44: Consumer Law

Question 1

State consumer protection agencies are charged by Congress with the broadly stated goal of preventing unfair and deceptive trade practices.

Answer 1

False

Question 2

Major credit reporting agencies must provide consumers with free copies of their own credit reports every six months.

Answer 2

False

Question 3

Labels on fresh meats are not required to indicate where the food originated.

Answer 3

False

Question 4

Credit can be denied solely on the basis of race.

Question 5

Account numbers on credit-card receipts must be truncated (shortened).

Question 6

A sanction known as counteradvertising requires a company to advertise anew to inform the public about earlier misinformation.

Question 7

Deceptive advertising does not occur in the online environment.

Question 8

The Food and Drug Administration does not have the authority to directly recall any food products that it suspects are tainted but must rely on the producers to recall items.

Question 9

A credit-card company must send monthly bills to cardholders twenty-one days before the due date.

Question 10

The Consumer Product Safety Commission is the primary agency that issues regulations on food labeling.

Question 11

Puffery constitutes deceptive advertising.

Question 12

Restaurants must post guidelines on the number of calories that an average person requires daily.

Question 13

Advertising that appears to be based on factual evidence will not be deemed deceptive even if it is not reasonably supported by evidence.

Question 14

Advertising that contains an endorsement by a celebrity will not be deemed deceptive.

Question 15

Insurance companies must spend at least 85 percent of all premium dollars from large employers on benefits and quality improvements.

Question 16

The Food and Drug Administration must ensure the safety of new medications.

Question 17

The Federal Reserve Board of Governors has issued a regulation that governs credit provisions associated with sales contracts-Regulation Z.

Question 18

A debt-collection agency is someone who regularly attempts to collect debts on behalf of someone else, usually for a percentage of the amount owed.

Question 19

The Consumer Product Safety Commission conducts research on the safety of individual consumer products and maintains a clearinghouse on the risks associated with various products.

Question 20

Merchants must issue a refund within a specified period of time when a consumer cancels an order.

Question 21

Lucy takes out a student loan from Midtown Bank. When she fails to make the scheduled payments for six months, Midtown advises her of further ac?tion 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 22

Spicy Salsa, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Tangy Taco Sauce Company, Spicy Salsa'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.
C) issue a cease-and-desist order.
D) permit Spicy Salsa to broadcast similarly deceptive counteradvertising.

Question 23

SmartPhone Company's ad states that its product is "The Best that Money Can Buy." Because of this ad, the Federal Trade Com?mission is most likely to issue

A) a cease-and-desist order.
B) a counteradvertising order.
C) a multiple product order.
D) none of the choices.

Question 24

The credit department of Discount Retail Stores Inc. calls Emmett at work about an overdue bill. Emmett's employer objects. Discount Retail's credit department continues to call Emmett at work. This is a viola?tion 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 25

Cecilia borrows $20,000 from Debit & Credit Union to repair her home and to buy a car. She buys a laptop from eStuf Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z ap?plies 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 26

In the ordinary course of business, Loan2Buy Corporation offers credit to Mai and other consumers and reports on the loans to credit agencies. To save time and money, Loan2Buy generally does not correct or update its reported information. This is most likely to result in

A) a levy of a nominal fine.
B) an assessment of damages.
C) an order of rescission of the loan contracts.
D) no sanctions.

Question 27

Debt & Loan Collection Agency calls Ethel several times a day, and some?times in the middle of the night, about an overdue bill that a Furniture4U store turned over to Debt & Loan 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 28

Slow-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 Com?mission would consider this ad to be

A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) none of the choices.

Question 29

Tory borrows $10,000 from USA National 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 30

Grover signs an installment contract with Home Appliance Store to finance the purchase of new kitchen appliances-stove, refrigerator, dishwasher, microwave, and toasteroven-for $3,999. This transaction is sub?ject to

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

Question 31

Grid Tool Company makes and sells tools. One of the tools is believed to be haz?ardous. The appropriate government agency may require Grid 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.

Question 32

Under federal law, the calorie content of the food on a menu must be posted by Organic Mix, LLC, if Organic Mix is

A) a restaurant chain with twenty or more locations.
B) a food distributor with twenty or more customers.
C) a food processor with twenty or more products.
D) a food producer with twenty or more acres.

Question 33

Mouth & Gums, Inc. (CSI), engages in de?ceptive advertising when it markets its product Oral Rinse as able to kill germs over long periods of time. In an action against Mouth & Gums, the firm is ordered to stop its false advertis?ing of Oral Rinse and other products. This is

A) a counteradvertising order.
B) a multiple product order.
C) a "cooling-off" law.
D) a validation notice.

Question 34

Through careless manufacturing practices, Metalworks Company makes and distributes unsafe products that are sold to Nabi and other consumers. This may be subject to sanctions under

A) federal and state law.
B) federal law only.
C) no law, according to the principles of freedom to contract.
D) state law only.

Question 35

Nature's Food Market sells groceries. Metro Snacks & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is

A) Nature's Food Market and Metro Snacks & Drug Store.
B) Metro Snacks & Drug Store only.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 36

Sweet Treats, Inc., wants to market a new snack food. On the prod?uct's la?bel, standard nutrition facts are

A) prohibited.
B) required.
C) strictly voluntary.
D) warranted by the nature of the food.

Question 37

Jasmine receives an unsolicited credit card in the mail and tosses it on her desk. Without Jasmine's permission, her roommate Ilene uses the card to buy a new tablet for $500. Jasmine is

A) liable for $500.
B) liable for $250.
C) liable for $50.
D) not liable for any amount.

Question 38

Medi-Insurance Company faxes ads to Nancy and other individual consumers without the recipients' permission. This is subject to

A) a cease-and-desist order by the Federal Trade Commission.
B) no sanctions.
C) possible fines by the Federal Communications Commission.
D) rescission on the order of the Federal Reserve Board.

Question 39

Kip opens an account at a Lotsa Goodies Store, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, Mako, the manager, 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 40

QuikPay Inc. extends credit to consumers. QuikPay is subject to the Equal Credit Opportunity Act, which prohibits credit dis?crimination based on

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

Question 41

Candy & Caramel Company wants to sell its products in normal-sized packages la?beled "Super Size." Darn Yarn, Inc., wants to advertise its sweaters as hav?ing "That Wool Feel," but does not want to specify on labels that the sweat?ers are 100 percent polyester. What stops these firms from market?ing the products as they would like?

Question 42

Fastart Corporation makes batteries for motor vehicles. The Federal Trade Commission (FTC) learns that Gas-Up Auto Parts Stores, a retail company that sells Fastart's batteries, engages in deceptive advertising practices. What actions can the FTC take against Quantum?