Deck 46: Consumer Protection Laws

Question 1

"Imminently hazardous consumer products" are those that pose an immediate and unreasonable risk of death,serious illness,or severe personal injury.

Answer 1

True

Question 2

The Federal Trade Commission does not prohibit prerecorded telemarketing sales calls.

Answer 2

False

Question 3

The Telemarketing and Consumer Fraud and Abuse Prevention Act:

A) prohibits calling between 8:00 p.m. and 8:00 a.m.
B) requires that all disclosures must be made before the customer pays for the goods or services.
C) prohibits customers from demanding disclosure if the solicitation pertains to a prize promotion.
D) allows telemarketers and sellers to deny a person the right to be placed on the do-not-call registry.

Answer 3

B
Explanation: Under the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Federal Trade Commission (FTC) established the Telemarketing Sales Rules in 1995 to prevent deceptive and abusive telemarketing practices. The rules require that telemarketers disclose to customers the total cost of the goods or services offered, any material restrictions or conditions on the use or purchase of the goods or services, and the terms of any refund or exchange policies mentioned in the solicitation. These disclosures must be made before the customer pays for the goods or services.

Question 4

The Credit Card Accountability and Disclosure Act (CARD)regulates credit card billing cycles by:

A) allowing a maximum of $30 penalty fee for late payment of credit card debts.
B) allowing penalties to exceed the minimum balance due.
C) prohibiting double-cycle billing.
D) issuing cards to applicants under 21 years without a cosigner.

Question 5

The Holder in Due Course rule creates a defense where the product is sold "as is."

Question 6

The Federal Trade Commission requires used car dealers to display a "Buyer's Guide" on each car that tells whether the car is covered by a warranty.

Question 7

Which of the following statements is true for gift cards?

A) The cards are subject to Truth in Lending Act (TILA) regulations.
B) Recipients have 2 years to use the cards.
C) A fee can only be assessed if the card has not been used within 6 months.
D) A fee can only be assessed on the card if a customer is first notified of the fees.

Question 8

Only civil penalties are imposed on those who knowingly and willfully violate such provisions and rules after Consumer Product Safety Commission's notification of their failure to comply.

Question 9

The Federal Trade Commission has legal authority to assist overseas investigations to track down Internet scammers using devices such as spam and spyware.

Question 10

The Equal Credit Opportunity Act prohibits discrimination in credit transactions based on wealth.

Question 11

The rules of the Federal Trade Commission prohibit a telemarketer or a seller from initiating an outbound call to a person whose telephone number is listed on a national do-not-call registry.

Question 12

The Federal Trade Commission (FTC):

A) has authority to decide whether specific marketing and sales practices are unfair or deceptive.
B) does not have power to regulate unfair and deceptive practices in cyberspace.
C) can find that a seller engaged in unfair trade practices only if the seller violated one of the federal laws the FTC is empowered to enforce.
D) cannot order federal courts to award redress.

Question 13

The Consumer Product Safety Commission (CPSC)'s authority is limited to cosmetics and food products.

Question 14

The Truth in Lending Act (TILA)fixes interest rates.

Question 15

Under the Truth in Lending Act,the term "finance charge":

A) includes all costs related to the extension of credit.
B) includes all costs related to the extension of credit except for fees for credit reports.
C) includes only interest rates but not any other credit charges.
D) does not include loan fees and fees for credit reports.

Question 16

One of the purposes of the Truth in Lending Act (TILA)is to enable the consumer to understand all the charges made in connection with credit.

Question 17

The Fair Credit and Charge Card Disclosure Act requires detailed and uniform disclosure by credit and charge card issuers at the time of application by the consumers.

Question 18

Under the Fair Credit Billing Act,if the credit card holder thinks that the card issuer has made an error on the statement,he or she has 45 days to report the error.

Question 19

Shawn is a car dealer in Austin,Texas.His financial dealings with customers come directly under the jurisdiction of the Consumer Financial Protection Bureau.

Question 20

The Fair Debt Collection Practices Act affects only the practices of debt collection agencies that collect consumer bills for creditors other than themselves.

Question 21

Which of the following statements is true for the Consumer Product Safety Act (CPSA)of 1972?

A) It can regulate consumer products but does not have the power to ban any products.
B) It established the Consumer Product Safety Commission (CPSC), an independent regulatory agency which is the main federal agency concerned with product safety.
C) Its authority covers products such as motor vehicles and equipment, firearms, aircraft, boats, drugs, cosmetics, and food products.
D) It cannot be used by the CPSC to bring suit in federal district court to eliminate the dangers presented by imminently hazardous consumer products.

Question 22

Isaac applied for a loan from Livingstone Bank and was denied the loan two weeks later.He discovered that the reason behind the denial was that the bank considered him a huge credit risk because a credit report stated that he was an alcoholic.Isaac claimed that this information was not true.Which of the following acts will allow Isaac to approach Livingstone Bank for reconsideration of his loan application?

A) Equal Credit Opportunity Act
B) Fair Debt Collection Practices Act
C) Fair Credit Billing Act
D) Fair Credit Reporting Act

Question 23

According to Truth in Lending Act (TILA),charges on a stolen credit card that exceed $50 would generally:

A) have to be paid by the cardholder.
B) have to be recovered by the bank.
C) not have to be paid by the cardholder.
D) have to be recovered from the person who stole the card.

Question 24

Which of the following acts has provisions for combating identity theft?

A) The Fair Credit Billing Act
B) The Fair Credit and Charge Card Disclosure Act
C) The Fair and Accurate Credit Transactions Act
D) The Gramm-Leach-Bliley Act

Question 25

The Holder in Due Course rule:

A) alters statutes of limitations or other state-created limitations on the consumer's enforcement of claims and defenses.
B) states that all defenses available to the purchaser against the seller are also available against the holder in due course.
C) eliminates rights that the consumer may have as a matter of federal, state, or local law.
D) creates a warranty claim or defense where the product is sold "as is."

Question 26

The Fair Debt Collection Practices Act:

A) covers all retail stores, banks, or businesses that collect their own debts in their own name.
B) prohibits harassment by debt collectors, including late-night phone calls and threats of violence.
C) protects applicants from being discriminated on grounds of sex, marital status, race, color, religion, national origin, and age.
D) ensures that information concerning a person's credit background supplied to his or her creditors is both up-to-date and accurate.

Question 27

According to the Fair Credit Billing Act (FCBA),if the credit card holder thinks that the card issuer has made an error on the statement,he has _____.

A) 90 days from the time the card was issued to report, in writing, the error
B) 30 days from the time the statement was mailed to report the error
C) 120 days from the time the statement was mailed to report, in writing or orally, the error
D) 60 days from the time the statement was mailed to report, in writing, the error

Question 28

The Consumer Product Safety Commission's authority is applicable for _____.

A) firearms
B) drugs
C) cosmetics
D) lawn mowers

Question 29

Manjur and Fatima are both 63 years old and have a flourishing business.They decide to purchase a beach house and seek a 15-year mortgage.In this scenario,the lender _____.

A) may deny them credit based on their age and possibility of loss of income at retirement
B) cannot deny them credit based on the Equal Credit Opportunity Act
C) may deny them credit based on the Equal Credit Opportunity Act because their application, when compared to more youthful applicants, is not "equal"
D) can grant them credit only for 5 years as the Equal Credit Opportunity Act applies only for 5-year transactions

Question 30

According to Congress,the Fair Credit and Charge Card Disclosure Act would:

A) enable consumers to shop around for the best cards.
B) allow lesser detailed disclosure by credit and charge card issuers.
C) challenge the authority of the Federal Trade Commission.
D) allow late disclosure by credit and charge card issuers.

Question 31

Which of the following best describes the "right of rescission"?

A) Correction of outdated or wrong information and its notification to credit information recipients
B) Cancellation right of a buyer for three business days after the purchase on credit or after the creditor makes the required disclosure
C) Right to the creditor to accept or reject consumer applications within 30 days
D) A cardholder's right to limited liability for unauthorized use of a credit card

Question 32

_____ is defined as use by a person who lacks express,implied,or apparent authority to use a credit or debit card.

A) Authorized use
B) Rescissionary use
C) Undisclosed use
D) Unauthorized use

Question 33

A debtor may rescind a contract under the Truth in Lending Act:

A) only if the debtor's home is used as collateral.
B) only in the instance of a first mortgage on a home.
C) by way of oral notification to the creditor.
D) within 30 days after the purchase on credit.

Question 34

The Equal Credit Opportunity Act:

A) is designed to protect consumers from inaccurate credit reporting.
B) requires online ads for free credit reports to disclose whether the consumer must buy credit monitoring or other products or services to get the report.
C) prohibits discrimination in credit transactions on grounds of sex, marital status, race, color, religion, national origin, and age.
D) sets forth basic privacy protections that must be provided by financial institutions and requires them to respect the privacy of their customers' nonpublic personal information.

Question 35

The Fair Credit Reporting Act (FCRA)covers credit information supplied to potential _____ of a person.

A) dealers
B) employers
C) debtors
D) brokers

Question 36

Under the Fair Credit Reporting Act,a consumer who has been denied credit:

A) cannot compel the credit reporting agency to delete any inaccurate or obsolete information from the file.
B) is entitled to disclosure of the name and address of the credit reporting agency that made the report.
C) can compel the credit reporting agency to delete disputed information without an investigation.
D) is not entitled to a reinvestigation of the disputed information in the report made by the credit reporting agency.

Question 37

Ben entered into a contract with Clooney Construction Inc.under which Clooney agreed to do $40,000 worth of remodeling of his home.Clooney agreed that the contract price could be paid in installments,and that to secure these payments,Clooney would take out a second mortgage on Ben's home.The day after signing the contract,Ben had second thoughts and immediately hand-delivered a written notice to Clooney stating that he wanted to rescind the contract.Which of the following statements is true of this case?

A) Ben can rescind the contract under the rescission right of the Truth in Lending Act.
B) Ben cannot rescind the contract because the transaction involved more than $25,000 and was, therefore, not covered by the rescission right in the Truth in Lending Act.
C) Ben cannot rescind because the rescission right in the Truth in Lending Act does not apply to transactions in which the creditor takes a mortgage to secure the loan.
D) Ben can rescind the contract under the seller's right to cancel the right provided by the Truth in Lending Act as their house was not used as collateral.

Question 38

Under the Fair Credit Billing Act (FCBA),_____.

A) a card issuer may report a cardholder's delinquency to a credit reporting agency at any time deemed reasonable by it
B) a card issuer must inform the cardholder of the reporting agency to which the issuer sends its reports
C) the seller cannot offer discounts if the buyer pays cash for a purchase rather than using a credit card
D) the consumer has the right to have a credit report withheld from anyone not having a legitimate business need for the information

Question 39

The Consumer Product Safety Commission:

A) can file suit in federal court against manufacturers of imminently hazardous consumer products in an effort to eliminate the danger posed by such products.
B) was established by the Consumer Leasing Act.
C) provides the consumer with important credit information involving leases of consumer goods for more than four months.
D) is not entitled to issue product safety standards when the product in question presents an unreasonable risk of injury.

Question 40

The Consumer Leasing Act:

A) requires the creditor to disclose the aggregate costs of leasing consumer goods.
B) does not require the lease agreement to define the consumer's liability.
C) applies to leases of consumer goods only if the leases are for more than three months.
D) applies to leases of consumer goods if the total contractual obligation exceeds $25,000.

Question 41

What are the main goals of the Fair Credit Reporting Act (FCRA)? Under what conditions is this act not applicable?

Question 42

What is the main idea behind the Holder in Due Course rule?

Question 43

Arbitration of disputes under the purview of "lemon laws" under state statute is:

A) not required by most statutes.
B) usually binding on the consumer, not the manufacturer.
C) usually binding on the manufacturer, not the consumer.
D) not binding on either the manufacturer or the consumer.

Question 44

Generally,remedies under "lemon laws" include:

A) suing for injunctive relief or the seizure of products to enforce various provisions of the law.
B) provision of warranty regarding repairing of defects.
C) return of the purchase price or a new product.
D) offering extra credit benefits for the purchase of a new product from the same manufacturer.

Question 45

Describe the Gramm-Leach-Bliley Act of 1999 (GLBA).

Question 46

The Consumer Product Safety Commission (CPSC)and the _____ may sue for injunctive relief or the seizure of products to enforce various provisions of the Consumer Product Safety Act (CPSA).

A) U.S. President
B) U.S. Chief Justice
C) U.S. attorney general
D) U.S. Secretary of State

Question 47

How do the new rules of the Credit Card Accountability and Disclosure Act (CARD)help consumers deal with credit card debt?

Question 48

_____ were passed to provide some relief to customers having complaints against auto dealers.

A) Credit laws
B) Equal opportunity laws
C) Fair credit laws
D) Lemon laws

Question 49

Discuss the product safety standards issued by the Consumer Product Safety Act (CPSA).Also,list at least three products which,although consumer goods,do not come under the authority of CPSA.

Question 50

The Consumer Product Safety Act (CPSA):

A) provides civil penalties against those who knowingly and willfully violate rules of Consumer Product Safety Commission even after being issued notification by it.
B) allows only the U.S. attorney general to sue for injunctive relief or the seizure of products to enforce various provisions of the act.
C) permits any private party to sue for an injunction to enforce any rule of Consumer Product Safety Commission rule or order, if, at the time of the suit, the commission or the attorney general has begun an action based on the alleged violation.
D) allows those injured because of a knowing and willful violation of a Consumer Product Safety Commission rule or order to sue for damages if the amount in controversy exceeds $10,000.