Question 1

When improper collection methods are used, it is no defense to the creditor that the improper acts were performed by an agent, an employee, or any other person acting on behalf of the creditor.

Accepted Answer

The creditor is ultimately responsible for the actions of their agents or employees during the collection process, and cannot use them as a defense in cases of improper collection methods.

Question 2

Unreasonable methods of debt collection may be held by the courts to constitute an unreasonable invasion of privacy.

Accepted Answer

According to the Fair Debt Collection Practices Act, debt collectors are prohibited from engaging in any conduct that is considered an unreasonable invasion of privacy. If a debtor feels that their privacy has been invaded by a debt collector, they have the right to file a complaint and seek legal action. Therefore, unreasonable methods of debt collection may be held by the courts to constitute an unreasonable invasion of privacy.

Question 3

A letter from a collection agency to a consumer that gives the impression a lawsuit is about to be brought against the consumer when in fact it will not be brought is not a violation of the Fair Debt Collection Practices Act.

Accepted Answer

According to the Fair Debt Collection Practices Act, it is illegal for a collection agency to make false or misleading statements to consumers, including giving the impression that a lawsuit is about to be brought when it will not be. Therefore, such a letter would be a violation of the FDCPA.

Question 4

Pursuant to the Credit Repair Organization Act of 1996, credit repair organizations must be "non-profit."

Accepted Answer

The Credit Repair Organization Act of 1996 does not require credit repair organizations to be non-profit. However, they are required to provide clients with a written contract specifying services to be performed, charges, and timeframes for results, among other things.

Question 5

The policing of fraudulent advertising is entrusted to which of the following administrative agencies?

Accepted Answer

The FTC (Federal Trade Commission) is responsible for policing fraudulent advertising and other unfair business practices. The IRS (Internal Revenue Service) deals with tax-related issues, the UCCC (Uniform Consumer Credit Code) regulates consumer credit transactions, and the FDA (Food and Drug Administration) regulates food, drugs, and medical devices.

Question 6

What is not a correct statement concerning consumer protection legislation?

Accepted Answer

The answer of What is not a correct statement concerning...

Question 7

Under the Equal Credit Opportunity Act, it is unlawful to discriminate against an applicant because all or part of the applicant's income is obtained from a public assistance program.

Accepted Answer

The Equal Credit Opportunity Act prohibits discrimination based on the source of an applicant's income, including public assistance programs.

Question 8

__________ lending is a practice on the part of the subprime lending market whereby lenders take advantage of less sophisticated consumers or those who are desperate for funds by using the lenders' superior bargaining positions to obtain credit terms that go well beyond compensating them for their risks.

Accepted Answer

Predatory lending refers to the practice of taking advantage of vulnerable consumers by offering them credit terms that are exploitative and unfair. This type of lending often targets individuals with poor credit or those who are in urgent need of funds, and the lenders use their superior bargaining power to impose exorbitant interest rates, high fees, and hidden charges that go well beyond compensating them for their risks. This can lead to a cycle of debt that is difficult to escape, trapping borrowers in a cycle of poverty and financial insecurity.

Question 9

A consumer may rescind a contract without liability when the contract is for:

Accepted Answer

According to the Federal Trade Commission's Cooling-Off Rule, a consumer has the right to cancel a home-solicited sale (meaning the sale was made in the consumer's home, workplace or dormitory) of goods or services within three business days after the transaction. Option C specifies that it is a home-solicited sale of services made two days earlier, so the consumer still has one day left to rescind the contract without liability.

Therefore, the correct answer is:

Answer: C

Question 10

When an enterprise has made false and deceptive statements in advertising, the FTC may require new advertising to correct the former statement so that consumers are aware of the truth. This corrective advertising required by the FTC is also called __________ advertising.

Accepted Answer

Retractive advertising is the correct term used by the FTC for corrective advertising. It is called "retractive" because it aims to retract or correct the false or deceptive claims made in previous advertising. Redactive, retroactive, and refractive are not the correct terms used for this type of advertising.

Question 11

Anyone promoting the sale of a real estate development that is divided into fifty (50) or more parcels of less than five (5) acres each must file a development statement with the secretary of Housing and Urban Development.

Accepted Answer

This is required under the Interstate Land Sales Full Disclosure Act (ILSFDA) of 1968.

Question 12

The Fair Credit Reporting Act applies only to consumer credit.

Accepted Answer

The Fair Credit Reporting Act (FCRA) applies to consumer credit and governs how consumer reporting agencies use and disclose credit report information. It does not apply to commercial credit.

Question 13

Which of the following parties would be the least appropriate defendant in a consumer protection lawsuit?

Accepted Answer

Another consumer would not be an appropriate defendant in a consumer protection lawsuit as they would not have the power, authority or resources to engage in unfair or deceptive business practices towards other consumers. The other options (banks, finance companies, and enterprises) are all potential defendants in consumer protection lawsuits as they have the ability to engage in unfair or deceptive business practices towards consumers.

Question 14

A sale of goods or services for $25 or more made to a buyer at home may be set aside within __________ days.

Accepted Answer

Under the Federal Trade Commission's Cooling-Off Rule, sales made at a buyer's home, workplace, or dormitory, or at a seller's temporary location, like a hotel or motel room, convention center, fairground, or restaurant, can generally be canceled by the buyer within three business days.

Question 15

Who may bring an action for relief under consumer protection legislation?

Accepted Answer

All of the given entities may bring an action for relief under consumer protection legislation. The Federal Trade Commission and state attorneys general have the authority to enforce such laws, but consumers themselves may also file lawsuits or submit complaints to these agencies for investigation.

Question 16

Consumer protection statutes and regulations do not protect against:

Accepted Answer

Consumer protection statutes and regulations do not protect against the consumer's own negligence. They are in place to protect against deceptive advertising, unsolicited credit cards sent to creditworthy consumers, and unreasonable methods of debt collection by debt collection agencies.

Question 17

Truth in advertising legislation is fundamentally designed to:

Accepted Answer

Truth in advertising legislation is meant to provide the consumer with accurate information about the product they are purchasing. This includes information about the product's features, benefits, and potential drawbacks. The goal is to ensure that consumers are able to make informed decisions and not be misled by false or deceptive advertising. Punishing sellers who knowingly make false statements about their product is only one aspect of this legislation. The primary goal is to provide the consumer with truthful and accurate information.

Question 18

A consumer may waive all defenses otherwise provided for by law.

Accepted Answer

A consumer cannot waive all defenses as consumer protection laws often include provisions that prevent consumers from waiving certain rights or defenses, ensuring they retain protection against unfair or deceptive practices.

Question 19

When a credit application is refused, it is sufficient that the lender give the applicant a written statement saying: "application refused."

Accepted Answer

According to the Fair Credit Reporting Act, if a credit application is refused, the lender must provide the applicant with a written adverse action notice that includes specific information such as the reasons for the denial and the applicant's right to obtain a free credit report. "Application refused" is not a sufficient explanation.

Question 20

Automobile lemon laws protect only persons buying automobiles for personal, family, or household use.

Accepted Answer

This is stated clearly in most automobile lemon law statutes. Commercial or business purchases generally are not covered under lemon laws.

Quiz 33: Consumer Protection