Question 1

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

The answer of When an enterprise has made false and...

Question 2

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

Accepted Answer

The courts may recognize unreasonable methods of debt collection as a violation of privacy rights under the Fair Debt Collection Practices Act (FDCPA) and similar state laws. Debt collectors must follow strict guidelines and may not use abusive, harassing, or deceptive practices when collecting debts. Any violation of these rules may lead to legal action against the collector.

Question 3

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 in accordance with the Interstate Land Sales Full Disclosure Act (ILSA) which requires developers to file a statement with HUD before offering or selling subdivisions of 50 or more lots of less than five acres each to the public.

Question 4

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

Accepted Answer

All of the above may bring an action for relief under consumer protection legislation. The Federal Trade Commission, state attorneys general, and consumers themselves are all authorized to bring legal action under various consumer protection laws.

Question 5

Consumer protection statutes and regulations do not protect against:

Accepted Answer

Consumer protection laws do not protect consumers from their own negligence or misuse of products. The other choices (A, C, and D) are all situations that consumer protection laws are designed to address and protect consumers from.

Question 6

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 7

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 8

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

Accepted Answer

The Federal Trade Commission (FTC) is responsible for enforcing laws related to fraudulent advertising and unfair trade practices. The IRS is responsible for collecting taxes, the UCCC (Uniform Consumer Credit Code) regulates credit practices, and the FDA regulates food, drugs, and medical devices.

Question 9

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 specifically prohibits discrimination based on an applicant's source of income, including public assistance programs.

Question 10

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

Accepted Answer

Another consumer is not a suitable defendant in a consumer protection lawsuit because they do not hold any professional or legal obligation towards the plaintiff. Their actions as a consumer, while it may have caused a problem, are not illegal or inappropriate. The other options (B, C, and D) involve organizations or entities that have some degree of responsibility towards consumers and may be held liable in a consumer protection lawsuit if they violate consumer protection laws or engage in deceptive practices.

Question 11

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

Accepted Answer

When a credit application is refused, the lender is required to provide the applicant with a written statement that includes the specific reasons why the application was declined.

Question 12

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

Accepted Answer

Automobile lemon laws are intended to protect individuals who purchase a car primarily for personal use rather than for commercial purposes. Commercial buyers, such as businesses purchasing fleet vehicles, are generally not covered by lemon laws.

Question 13

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

The Fair Debt Collection Practices Act prohibits debt collectors from threatening legal action that is not actually intended or cannot be legally taken. Therefore, a letter that gives a false impression of an impending lawsuit is a violation of the Act.

Question 14

Truth in advertising legislation is fundamentally designed to:

Accepted Answer

Truth in advertising legislation is aimed to give consumers an accurate understanding of the product they are purchasing. This legislation prohibits false or misleading statements about a product's characteristics, benefits, or price. The primary objective is to ensure that consumers can make informed decisions about the products they buy.

Question 15

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. They can be for-profit businesses, but they are subject to specific regulations and requirements under the law.

Question 16

What is not a correct statement concerning consumer protection legislation?

Accepted Answer

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

Question 17

The Fair Credit Reporting Act applies only to consumer credit.

Accepted Answer

The Fair Credit Reporting Act is a federal law that applies to consumer credit reporting agencies, consumer reporting agencies that collect and share information on individuals, and entities that use or furnish consumer credit reports. It does not apply to business credit reports.

Question 18

__________ 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 a practice where lenders use inconsiderate, unethical, or even illegal tactics to persuade borrowers to take loans with unjust and unfavorable terms, such as a high-interest rate, hidden fees, and penalties, that they cannot afford to payback. The lenders take undue advantage of the borrowers' vulnerability, financial illiteracy, or lack of access to credit from traditional sources. This practice has been mostly observed in the subprime lending market that targets borrowers with poor credit scores or no credit history.

Question 19

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 responsible for ensuring that proper collection methods are used, regardless of who performs the acts on their behalf.

Question 20

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.

Quiz 33: Consumer Protection