Deck 45: A: Consumer Law

Question 1

Due to the increasing number of protections afforded debtors,creditors are without means of securing payment on debts.

Answer 1

False

Question 2

Credit can be denied solely on the basis of national origin.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

A consumer who receives unsolicited merchandise must return it within three business days.

Question 5

Common law judicial decisions that serve to protect the interests of consumers are not classified as consumer law.

Question 6

Labels must be accurate.

Question 7

Debt collectors who use a prohibited debt-collection tactic are exempt from liability if they can show that the debtor used misrepresentation in assuming the debt.

Question 8

Puffery constitutes deceptive advertising.

Question 9

There is no distinction between regulating the information dispensed about a product and regulating the actual content of the product.

Question 10

State laws often provide more sweeping and significant protections for the consumer than federal laws.

Question 11

Manufacturers are required to report on any products intended for sale if the products have proved to be hazardous.

Question 12

All ads-both online and offline-must be truthful.

Question 13

Food labels are not required to provide standard nutrition facts.

Question 14

A credit-card company is not required to provide advance notice to consumers before changing credit-card terms.

Question 15

Creditors are required to provide consumers with copies of records that can help the consumer prove that an account or transaction is fraudulent.

Question 16

Bait-and-switch advertising occurs when an ad appears to be based on factual evidence but in fact is not reasonably supported by evidence.

Question 17

Labels on vegetables and fruits are not required to indicate where the food originated.

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

Credit provisions associated with sales contracts are not regulated by any federal agency.

Question 20

A sanction known as counteradvertising requires a company to focus its marketing on point-of-sale displays.

Question 21

Precise GPS Company's ad states that its product is "the finest 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 22

The credit department of Mega-Mart calls Nora at work about an overdue bill.Nora's employer objects.Mega-Mart continues to call Nora 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 23

Creditworthy Loan Company extends credit in the ordinary course of its busi?ness.Under the Truth-in-Lending Act,which is the key federal statute regulating the credit and credit-card industries,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)Creditworthy's credit terms.
D)the borrowers' credit scores.

Question 24

Kirk receives an unsolicited credit card in the mail and tosses it on his desk.Without Kirk's permission,his roommate Leif uses the card to buy a new per?sonal computer for $1,000.Kirk is

A)liable for $1,000.
B)liable for $500.
C)liable for $50.
D)not liable for any amount.

Question 25

Dog 'n Cat Company makes and sells pet supplies,including toys and chew items.One of the chew items is believed to be haz?ardous.The appropriate government agency may require Dog 'n Cat to

A)export the item 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 item from the market.

Question 26

Corner Market sells groceries.Delite Food & Drug Store sells groceries and fills prescriptions.The party with the chief responsibility to prevent unsafe food and drugs from being sold is

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

Question 27

Travel Tours Company faxes ads to Samantha 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 28

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

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

Question 29

Ron signs a contract with Sam,a door-to-door salesperson for Tutors,Inc. ,to buy a foreign-language course.To cancel the contract,Ron has up to

A)three days.
B)thirty days.
C)sixty days.
D)ninety days.

Question 30

Orange Company makes computers.The company's ad states that "if you aren't eatin' an Orange,you aren't gettin' any 'C.' " The Federal Trade Com?mission would consider this ad

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

Question 31

In the ordinary course of business,EZ Funds Corporation offers credit to Fay and other consumers and reports on the loans to credit agencies.To save time and money,EZ 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 32

Quik Collection Agency calls Pat several times a day,and some?times in the middle of the night,about an overdue bill that Regal Sporting Goods turned over to Quik 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 33

GR8 Fashion,Inc. ,complains to the Federal Trade Commission (FTC)about an ad broadcast by Hy-Time Clothes Company,GR8'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 GR8 to broadcast similarly deceptive counteradvertising.

Question 34

Through careless manufacturing practices,Insta-Market Company makes and sells unsafe products to Jess 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

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)disability.
B)education.
C)income.
D)race.

Question 36

Brad borrows $20,000 from City Bank to repair his home and to buy a car.Brad buys a stereo from Discount 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 37

Eva borrows $10,000 from First National Bank to remodel a room in her home.This transaction is subject to

A)the Consumer Leasing Act.
B)the Magnuson-Moss Warranty Act.
C)the Truth-in-Lending Act.
D)the Uniform Commercial Code.

Question 38

Like other manufacturers and sellers,Real-Built Tools Company packages its products with labels.Under federal law,such labels must be

A)accurate and use easily understood words.
B)bright and feature eye-catching colors.
C)graphically distinctive and well-designed.
D)interesting and revealing to the average consumer.

Question 39

Owen signs an installment contract with Pixel Video Store to finance the purchase of a new Quotient-brand 3D HD-TV for $4,999.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 40

Furniture Depot sells Gail a bedroom suite on credit.Gail fails to make the scheduled payments for six months.Furniture Depot sends her a let?ter,asking for immediate payment.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 41

Mouth-Waterin' Eats Company wants to sell its candy in a normal-sized package la?beled "Gigantic Size." NuFabrics,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 their products as they would like?

Question 42

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