Question 1

Frosty's Appliance Store advertises freezers at a "Special Low Price of $299." When Garth tries to buy one of the freezers, Huey, the salesperson, tells him that they are all sold and no more are obtainable. Huey adds that Frosty's has other freezers for $2,299. This is

Accepted Answer

This is an example of bait-and-switch advertising, where the store advertises a low price to attract customers but then tries to upsell them on a higher-priced item. It is deceptive and unethical.

Question 2

Miracle Products, Inc., engages in de?ceptive advertising when it markets its product Weight-Off as able to help consumers lose weight in their sleep. Miracle is ordered to include in all future adver?tising of Weight-Off the statement, "Weight-Off will not cause anyone to lose weight in their sleep." This is

Accepted Answer

This is a counteradvertising order, as Miracle Products is being ordered to include a corrective statement in all future advertising to counteract their previous deceptive claims about the product.

Question 3

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

Accepted Answer

The Nutrition Labeling and Education Act requires standard nutrition facts on food labels in the United States. Therefore, option B is the correct choice as it aligns with the regulation mentioned in the question.

Question 4

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

Accepted Answer

A multiple product order is issued when a company is required to stop false advertising for not just one, but multiple products.

Question 5

Like other manufacturers and sellers, Peoples Products Corporation labels its goods. Federal labeling and packaging rules are enforced by the Federal Trade Commission and

Accepted Answer

Federal labeling and packaging rules are enforced by the Federal Trade Commission and the U.S. Department of Health and Human Services. Therefore, the best choice is B.

Question 6

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

Accepted Answer

The answer of Orange Company makes computers. The company's ad...

Question 7

Friendly Loan Company extends credit in the ordinary course of its busi?ness. Under the Truth-in-Lending Act, Friendly must inform potential borrowers of

Accepted Answer

Under the Truth-in-Lending Act, Friendly Loan Company is only required to inform potential borrowers of its own credit terms, not the terms offered by other lenders or any terms that would be considered misleading or coercive. The purpose of the Act is to ensure that consumers are provided with clear and accurate information about the cost and terms of credit, allowing them to make informed decisions when choosing a lender.

Question 8

To generate sales, Yakkity-Yak, Inc., uses phone solicitation. Under federal law and Federal Trade Commission regulations, in soliciting business, Yakkity-Yak's telemarketers must

Accepted Answer

Yakkity-Yak's telemarketers must disclose all material facts related to a sale under federal law and Federal Trade Commission regulations.

Question 9

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

Accepted Answer

The statement "the finest that money can buy" is considered puffery, which is a subjective claim that is not likely to be challenged by the FTC as it is not a factual claim that can be proven true or false.

Question 10

Consumer Products, Inc. (CPI), in its ads, makes claims about its prod?ucts that are obvious exaggerations and claims that are false but appear to be true. CPI may be subject to sanctions for

Accepted Answer

CPI may be subject to sanctions for the false claims because they can mislead consumers, whereas obvious exaggerations are typically considered "puffery" and not legally actionable.

Question 11

Travel Tours Company faxes ads to Uri and other individual consumers without the recipients' permission. This is subject to

Accepted Answer

The Federal Communications Commission (FCC) regulates communications by radio, television, wire, satellite, and cable, including unsolicited faxes, under the Telephone Consumer Protection Act (TCPA). Violations can result in fines.

Question 12

Through unfair trade practices, Super Sales Company induces Trey and other consumers to enter into one-sided deals. This may be subject to sanctions under

Accepted Answer

Unfair trade practices may be subject to both federal and state law. The Federal Trade Commission Act and various state consumer protection laws prohibit deceptive or unfair practices in trade and commerce. These laws provide remedies such as injunctive relief, restitution, and civil penalties for violations. The principle of freedom to contract does not protect parties engaging in unfair or unlawful practices.

Question 13

GR8 Fashion, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Hott Clothes Company, GR8's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to

Accepted Answer

The FTC's next step after concluding that an ad is deceptive is to draft a formal complaint against the company responsible for the ad.

Question 14

Penny Stock Company faxes ads to Quality Personnel Corporation and other businesses without the recipients' permission. This is

Accepted Answer

Faxing unsolicited advertisements without the recipient's permission is a violation of the Telephone Consumer Protection Act (TCPA) and is considered illegal.

Question 15

Like other manufacturers and sellers, Useful Products Company packages its products with labels. Under federal law, such labels must be

Accepted Answer

Under federal law, labels must be accurate and use easily understood words to inform consumers about the product and its contents. The other options (B, C, D) are not required by law and are more subjective factors that may vary depending on the company's marketing strategy.

Question 16

Through careless manufacturing practices, Insta-Market Company makes and sells unsafe products to Jess and other consumers. This may be subject to sanctions under

Accepted Answer

Both federal and state laws have regulations and sanctions in place to protect consumers from unsafe products. Therefore, Insta-Market Company may be subject to sanctions under both federal and state law. Option B and C are incorrect because federal law alone cannot govern all aspects of product safety and freedom to contract cannot override public safety concerns. Option D is incorrect because both federal and state laws apply in this situation.

Question 17

Brad borrows $20,000 from City Bank to repair his home and to buy a car. Brad buys a stereo from Delta Discount Store in a transaction financed by Delta. If these parties are subject to the Truth-in-Lending Act, Regulation Z ap?plies to

Accepted Answer

The Truth-in-Lending Act and Regulation Z apply to credit transactions, including loans and retail installment sales. Therefore, both Brad's car loan and home repair loan, as well as his retail installment sale for the stereo, would be subject to Regulation Z.

Question 18

Vanna and many other consumers complain to the Federal Trade Commission (FTC) that a Whoopie Wonders Company ad is deceptive. The FTC's first step is to

Accepted Answer

The FTC's first step when receiving consumer complaints about deceptive advertising is to investigate. This allows them to gather information and determine if the complaint has merit before taking further action such as drafting a formal complaint, issuing a cease-and-desist order, or requiring counteradvertising.

Question 19

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

Accepted Answer

Ron has up to three days to cancel the contract with Sam, as this is the length of the "cooling-off" period typically granted for door-to-door sales contracts.

Question 20

Special Roast Coffee, Inc., processes and sells a variety of coffee products. Special Roast's product packages must include

Accepted Answer

According to the Fair Packaging and Labeling Act (FPLA), all consumer products must show the contents' net quantity and the product's identity on their packages. Therefore, Special Roast Coffee, Inc. must include both of these on their coffee product packages.

Quiz 44: Consumer Law