Question 1

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

Accepted Answer

This is an unethical business practice known as bait and switch, where customers are lured in with an attractive offer but then are pressured into purchasing a different, often inferior, product. It is illegal in many countries.

Question 2

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

Accepted Answer

The Federal Trade Commission (FTC) is primarily responsible for enforcing consumer protection laws and can seek remedies such as injunctions, fines, and consumer redress, but it does not typically provide damages to individual customers on a case-by-case basis.

Question 3

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, if you receive an unsolicited product in the mail, you may treat it as a gift and are under no obligation to pay for it or return it. This is known as the "Unsolicited Merchandise Statute" and is covered under the FTC's regulations implementing the Mail or Telephone Order Merchandise Rule. However, if the sender later demands payment or asks for the product to be returned, you must comply with their instructions.

Question 4

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 not have the right to sue under Section 5 of the Federal Trade Commission Act. Section 5 is enforced exclusively by the Federal Trade Commission. Private parties may only bring lawsuits under Sections 1 and 2 of the Sherman Act and Section 7 of the Clayton Act.

Question 5

_____ refers to saying defamatory things about a competitor's service offering.

Accepted Answer

Product disparagement is the act of saying defamatory things about a competitor's service offering. Bait-and-switch advertising refers to advertising a product at a lower price to attract customers, but then redirecting them to a more expensive product once they show interest. Horizontal integration refers to a strategy where a company expands its operations by merging with or acquiring other companies in the same industry. Vertical integration refers to a strategy where a company expands its operations by acquiring companies that are part of its supply chain. Sweepstake marketing refers to using contests or giveaways to promote a product or service.

Question 6

The Wheeler-Lea Act restricted the scope of the FTC's jurisdiction.

Accepted Answer

The Wheeler-Lea Act expanded the scope of the FTC's jurisdiction by allowing it to monitor and prohibit unfair or deceptive acts or practices in commerce.

Question 7

The FTC Act was probably not needed, since plaintiffs could sue deceptive advertisers under common law.

Accepted Answer

The FTC Act was necessary because common law remedies for deceptive advertising were inadequate, and the Act gave the Federal Trade Commission authority to enforce the law more efficiently.

Question 8

The Federal Trade Commission gauges deceptive acts and practices as interpreted by the general public, not just by the most sophisticated consumers.

Accepted Answer

The Federal Trade Commission does indeed gauge deceptive acts and practices based on the interpretation of the general public, not just the most sophisticated consumers. This is because deceptive practices can harm any consumer, regardless of their level of knowledge or experience.

Question 9

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

This tactic is known as "bait and switch," not a negative-option plan. A negative-option plan involves automatically renewing a service unless the customer opts out.

Question 10

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), a federal agency that is responsible for investigating and preventing unfair methods of competition and deceptive practices in commerce. It was the first time a federal agency was given the power to investigate and deter acts of unfair competition. The other options (A, B, D, E) either did not exist at the time or were not related to unfair competition.

Question 11

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

Accepted Answer

If a material fact that would have affected a consumer's purchasing decision is deliberately not disclosed, it may be considered deceptive under consumer protection laws.

Question 12

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

Accepted Answer

The Federal Trade Commission has the power to stop and order companies to change or remove any deceptive trade name or practice.

Question 13

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

Accepted Answer

Disparagement means making false or misleading statements about a competitor's products or services. Withholding details about an additional cost is not an act of disparagement.

Question 14

_____, 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 in 1966, standardized quantity descriptions and enabled shoppers to compare the value of competing goods in the stores by mandating that consumer products in interstate commerce be honestly and informatively labeled with contents, place of business and manufacturer.

Question 15

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

Accepted Answer

The correct answer is A) Wheeler-Lea Amendments. The Wheeler-Lea Amendments, passed in 1938, added the words "unfair or deceptive acts or practices in commerce" and gave the Federal Trade Commission the authority to regulate such practices.

Question 16

The little Federal Trade Commission (FTC) acts are often user friendly than the federal unfair trade rules to consumers who believe themselves to be victims of unfair or deceptive trade practices.

Accepted Answer

The statement is true, as the FTC provides easier access and simpler procedures for consumers to file complaints and seek redress for unfair or deceptive trade practices. The FTC Act also empowers the agency to issue cease and desist orders, impose civil penalties, and seek injunctions against violators of consumer protection laws.

Question 17

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

According to the Federal Trade Commission's Guides against Deceptive Pricing, a product cannot be advertised as being sold at a former price unless it was offered for sale at that price for a substantial period of time, or unless the product actually sold in substantial numbers at that price. In this case, because the product never actually sold for $50, it would be deceptive to advertise it as being sold at a former price of $50.

Question 18

The Trademark Law Revision Act of 1988 enabled competitors damaged by false comparative advertising claims to bring lawsuits in federal courts.

Accepted Answer

The Trademark Law Revision Act of 1988 did indeed allow competitors who were harmed by false comparative advertising claims to file lawsuits in federal courts.

Question 19

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 a retailer lures customers with an attractive offer but then tries to push them towards a more expensive product as the original advertised product is not available.

Question 20

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

Accepted Answer

The practice of saying defamatory things about a competitor's product is not a blue sky violation. Blue sky violations refer to fraudulent activities that involve selling securities without proper registration or disclosure.

Quiz 49: Unfair Trade Practices and the Federal Trade Commission