Question 1

The first principle of Federal Trade Commission action is that it gauges deceptive acts and practices as interpreted by the general public,not by the more sophisticated.

Accepted Answer

This principle, known as the "reasonable consumer" standard, means that the FTC focuses on how an average consumer would interpret a claim or representation, rather than relying on the understanding of experts or industry insiders.

Question 2

Though private parties have rights under the antitrust statutes,they have no right to sue under Section 5 of the Federal Trade Commission Act.

Accepted Answer

Private parties do have the right to sue under the antitrust statutes, but they do not have the right to sue under Section 5 of the Federal Trade Commission Act. Section 5 can only be enforced by the Federal Trade Commission itself.

Question 3

The little Federal Trade Commission FTC)acts are often more liberal than the federal unfair trade rules.

Accepted Answer

The little FTC acts, which are state-specific consumer protection laws, are often more protective of consumers than the federal unfair trade rules enforced by the Federal Trade Commission.

Question 4

The practice of saying defamatory things about a competitor's product is termed as blue sky violation.

Accepted Answer

The practice of saying defamatory things about a competitor's product is actually known as trade libel or product disparagement. Blue sky violation refers to fraudulent investment schemes.

Question 5

In the _____ Act of 1912,Congress for the first time empowered a federal agency to investigate and deter acts of unfair competition.

Accepted Answer

The Federal Trade Commission Act of 1912 established the Federal Trade Commission (FTC), which is responsible for investigating and preventing unfair methods of competition in commerce. The other options listed do not pertain to the regulation of competition or consumer protection.

Question 6

The federal Trade Commission is limited to proving damages to individual customers case by case.

Accepted Answer

The Federal Trade Commission (FTC) can take action on behalf of consumers at large, not just on a case-by-case basis, to address unfair or deceptive business practices and enforce federal consumer protection laws.

Question 7

A manufacturer withholds the details of an additional servicing cost attached to a product being offered.This is an example of disparaging a service.

Accepted Answer

Withholding information about a cost is not necessarily disparaging a service. Disparaging a service typically involves making negative or critical remarks about it in order to undermine its reputation or value.

Question 8

Suppose Reuben sees this advertisement about a guitar offered in a store: "Gibson Acoustic Guitar-only $50." But when he arrives at the store,he finds that the advertised guitar was "sold out." The retailer then tries to sell Reuben a higher priced guitar.The above scenario is an example of _____.

Accepted Answer

This scenario is an example of bait-and-switch advertising, where the store falsely advertises a product at a low price to lure customers in, but then tries to sell them a more expensive product once they arrive.

Question 9

The _____ added the words "unfair or deceptive acts or practices in commerce" to the Federal Trade Commission Act.

Accepted Answer

The Wheeler-Lea Amendments added the words "unfair or deceptive acts or practices in commerce" to the Federal Trade Commission Act in 1938.

Question 10

_____,enacted by the Congress in 1966,helped in standardizing quantity descriptions and enabled shoppers to compare the value of competing goods in the stores.

Accepted Answer

The Fair Packaging and Labeling Act, enacted by the Congress in 1966, helped in standardizing quantity descriptions and enabled shoppers to compare the value of competing goods in the stores. This Act mandated that all consumer goods should carry labels that give information about the net quantity of the product, the manufacturer's identity, and the packager or distributor of the product.

Question 11

According to the Federal Trade Commission's Guides against Deceptive Pricing,a product that once had a price tag of $50,but that never actually sold for more than $40,cannot be hawked at "the former price of $50".

Accepted Answer

The FTC's Guides against Deceptive Pricing prohibit advertising a former price that was not actually charged to consumers, in order to mislead customers into believing they are getting a better deal. In this scenario, since the product never actually sold for $50, it would be deceptive to advertise it at that price.

Question 12

Under the Federal Trade Commission FTC)Act,if you receive an unsolicited product in the mail,you may treat it as a gift and use it.

Accepted Answer

According to the FTC's "Unordered Merchandise" rule, if you receive merchandise that you did not order, you are under no obligation to pay for it, and the sender cannot legally demand payment or take any action to collect the merchandise. You may choose to keep the merchandise as a gift, donate it, or dispose of it as you wish.

Question 13

The Trademark Law Revision Act of 1988 amended the original Warner Act that protected trademarks as intellectual property.

Accepted Answer

The Trademark Law Revision Act of 1988 did not amend the "Warner Act" but rather the Lanham Act of 1946, which is the primary federal statute that governs trademarks, service marks, and unfair competition in the United States.

Question 14

A sales pitch where the retailer traps the prospective customer by dangling a very attractive offer that is disparaged once the customer arrives in the store is known as a negative-option plan.

Accepted Answer

A negative-option plan refers to a business practice where goods or services are provided automatically, and the customer must either pay for the service or specifically decline it before it is provided. The scenario described is known as "bait and switch."

Question 15

Which of the following is true of a Trade Regulation Rule?

Accepted Answer

The answer of Which of the following is true of...

Question 16

A sales promotion campaign shows an expensive car but the dealer does not stock these cars.This is an example of product disparagement.

Accepted Answer

This is actually an example of false advertising, not product disparagement. Product disparagement would involve making negative or defamatory statements about a competitor's product.

Question 17

G&Y Ltd,a yoghurt distributor,was found guilty of not disclosing the artificial flavor used in its yoghurts.From this scenario,it is clear that G&Y violated the norms of the Norris-La Guardia Act.

Accepted Answer

The Norris-La Guardia Act relates to labor laws and has no relation to the disclosure of artificial flavors in food products. The violation, if any, would be under food labeling laws or consumer protection laws.

Question 18

The Federal Trade Commission can order a company to remove or modify a deceptive trade name.

Accepted Answer

The FTC has the authority to order companies to stop using deceptive trade names or modify them to ensure they are not false or misleading to consumers. This falls under the FTC's authority to prevent unfair or deceptive acts or practices.

Question 19

Guides against Deceptive Pricing are laws constituted in the Federal Trade Commission Act.

Accepted Answer

The answer of Guides against Deceptive Pricing are laws constituted...

Question 20

If a fact not disclosed has a bearing on a consumer's decision whether to purchase the product,its omission might be tantamount to deception.

Accepted Answer

The statement suggests that an undisclosed fact that could impact a consumer's purchasing decision being left out might be considered deceptive. Therefore, the answer is true.

Quiz 27: Unfair Trade Practices and the Federal Trade Commission