Question 1

Which of the following statements is true of the Children's Online Privacy Protection Act?

Accepted Answer

The Children's Online Privacy Protection Act prohibits the online collection of information on children under the age of 13 without a parent's consent. This law is enforced by the Federal Trade Commission.

Question 2

Which of the following statements is true of the Truth-in-Lending Simplification Act?

Accepted Answer

The Truth-in-Lending Simplification Act restricts statutory penalties to failures to disclose credit terms that are of material importance in credit comparisons. This act also requires the government to issue model disclosure forms.

Question 3

Which of the following statements is most likely to be true when the Federal Trade Commission (FTC)is very laissez-faire?

Accepted Answer

When the Federal Trade Commission (FTC) is very laissez-faire, it leaves alone or does not regulate most advertising. The FTC allows the market to regulate advertising under the theory that consumers will not buy again from a seller if they are unhappy with what they bought the first time.

Question 4

Which of the following statements is true of the Federal Trade Commission's (FTC's)penalties or remedies?

Accepted Answer

The Federal Trade Commission (FTC) Act states that in the case of a violation through continuing failure to obey an order, each day the violation continues is a separate offense. The courts may assess fines against those found to have committed trade practice violations upon request from the FTC. The exception is when companies agree to fines as part of a consent order.

Question 5

Which of the following is the limitation of the Electronic Communications Privacy Act?

Accepted Answer

A limitation of the Electronic Communications Privacy Act is that it permits the interception of broadcast radio communications. It also allows for interception of business communications on an employer's equipment.

Question 6

ECNAL Corp.manufactures bicycle parts.One of its new products,the Slipstream tire,is advertised to be 20 percent stronger than that of its competitors due to a new rubber compound used that makes the tires skid resistant.After receiving complaints of fraud,the Federal Trade Commission (FTC)determines that the tire is made from rubber similar to that found in most bicycle tires and is not skid resistant.The FTC orders ECNAL to run an ad admitting that its advertisements were misleading and remove the untrue information from its advertisements.In this scenario,which of the following remedies is used by the FTC?

Accepted Answer

In this scenario, the Federal Trade Commission (FTC) uses corrective advertising as a remedy. When a company has advertised deceptively, the FTC can require it to run ads that admit the prior errors and correct the erroneous information.

Question 7

The ______,passed by the European Parliament in 1995,mandates that companies may collect personal information only with consent,keep it only as long as necessary,and transfer to third parties only with permission.

Accepted Answer

The Data Protection Directive, passed by the European Parliament in 1995, mandates that companies may collect personal information only with consent, keep it only as long as necessary, and transfer to third parties only with permission. Such directives must be enacted into law in all of the European Union member states.

Question 8

The basic penalty for trade practice violations under the Federal Trade Commission Act is a civil fine of not more than ______.

Accepted Answer

The basic penalty for trade practice violations under the Federal Trade Commission (FTC) Act is a civil fine of not more than $16,000 per violation. The punishment function of finding violators is only an incidental one, as the FTC's main purpose is to prevent and deter trade practice violations.

Question 9

Which of the following act's purpose is to prevent discrimination in credit extension?

Accepted Answer

The Equal Credit Opportunity Act's purpose is to prevent discrimination in credit extension. This act prohibits discrimination based on sex, marital status, race, color, age, religion, national origin, or receipt of welfare in any aspect of a consumer credit transaction.

Question 10

To determine deception in advertising,the Federal Trade Commission

Accepted Answer

To determine deception in advertising, the Federal Trade Commission looks at both express and implied claims. An express claim is literally made in an ad. An implied claim is one made indirectly or by inference.

Question 11

The Equal Credit Opportunity Act is aimed especially at preventing ______.

Accepted Answer

The Equal Credit Opportunity Act (ECOA) is aimed especially at preventing sex discrimination. The ECOA applies to all businesses that regularly extend credit, including financial institutions, retail stores, and credit-card issuers.

Question 12

The ______ of 1974 places constraints on how certain kinds of information collected by the federal government can be used and limits those to whom the information may be released.

Accepted Answer

The Privacy Act of 1974 places constraints on how certain kinds of information collected by the federal government can be used and limits those to whom the information may be released. It also provides a tort cause of action against those who violate the act.

Question 13

The Video Privacy Protection Act prevents the disclosure of personally identifiable information concerning video rentals and includes a right of civil action with a minimum liquidated damages provision of ______.

Accepted Answer

The Video Privacy Protection Act (VPPA) prevents the disclosure of personally identifiable information concerning video rentals and includes a right of civil action with a minimum liquidated damages provision of $2,500. Enacted during a time of videocassette rentals, the law's application to streaming services like Netflix was unclear.

Question 14

Which of the following acts requires the government to issue model disclosure forms?

Accepted Answer

The Truth-in-Lending Simplification Act requires the government to issue model disclosure forms. This act also restricts statutory penalties to failures to disclose credit terms that are of material importance in credit comparisons.

Question 15

To obtain civil fines,either the Federal Trade Commission (FTC)or the Justice Department must ask the federal court to assess them.The exception to this rule is when companies

Accepted Answer

To obtain fines, either the Federal Trade Commission (FTC) or the Justice Department must ask the federal court to assess them. The exception is when companies agree to fines as part of a consent order. The basic penalty for trade practice violations under the FTC Act is a civil fine of not more than $16,000 per violation.

Question 16

Most cases brought by the Bureau of Consumer Protection are settled using ______.

Accepted Answer

Most cases brought by the Bureau of Consumer Protection are settled by the consent-order procedure. Under the consent-order procedure, a party consents to sign an order which restrains the promotional activity deemed offensive and agrees to whatever remedy, if any, the Bureau imposes.

Question 17

BrightCave is a local retail store that regularly extends credit to its customers.William,an African American,is denied credit by the store.He believes that the store has discriminated against him based on his race.In this scenario,BrightCave violates the ______.

Accepted Answer

In this scenario, BrightCave violates the Equal Credit Opportunity Act (ECOA) as it discriminates against its customers on the basis of race. The ECOA prohibits discrimination based on sex, marital status, race, color, age, religion, national origin, or receipt of welfare in any aspect of a consumer credit transaction.

Question 18

Big Prime Inc.is a leading investment bank.Big Prime lends money to more men than women as it believes men are more likely to pay back their loans.In this case, Big Prime violates the ______.

Accepted Answer

In this case, Big Prime Inc. violates the Equal Credit Opportunity Act (ECOA) as it discriminates its customers on the basis of sex. The ECOA prohibits discrimination based on sex, marital status, race, color, age, religion, national origin, or receipt of welfare in any aspect of a consumer credit transaction.

Question 19

In the context of false advertising laws,state law

Accepted Answer

In the context of false advertising laws, state law may allow for private lawsuits in addition to government enforcement, which is an option not available under the Federal Trade Commission Act. Often referred to as "little FTC Acts," state laws may look to federal law for guidance.

Question 20

Section 5 of the ______ prohibits unfair or deceptive acts or business practices.

Accepted Answer

Section 5 of the Federal Trade Commission (FTC) Act prohibits unfair or deceptive acts or business practices. Over the years, the FTC's administrative law judges and the commissioners who review decisions of the judges have derived a body of quasi-judicial interpretations as to what constitutes unfair and deceptive acts.

Quiz 18: Regulations Protecting Consumer Purchases, privacy, and Financial Activities