Deck 46: Consumer Protection Laws

Question 1

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.

Answer 1

A
Explanation: Under the Federal Trade Commission Act, the five-member Federal Trade Commission (FTC) has authority to decide whether specific marketing and sales practices are unfair or deceptive, and whether those practices may be harmful to competition among manufacturers, distributors, and sellers.

Question 2

The Fair Debt Collection Practices Act (FDCPA) applies to retail stores, banks and businesses that collect their own debts in their own names.

Answer 2

False

Question 3

According to the Fair Credit Billing Act (FCBA), if the credit card holder thinks that the card issuer has made an error on a statement, such as not crediting a payment or showing a charge that was not made by the customer, he has six (6) months from the time the statement was mailed to report, in writing, the error.

Answer 3

False

Question 4

The principal purpose of the Fair Credit Reporting Act (FCRA) is to ensure that information concerning a person's credit background supplied to her creditors is both up-to-date and accurate.

Question 5

In 2002, the United States Congress created the Consumer Financial Protection Bureau (CFPB) as part of the Sarbanes-Oxley Act.

Question 6

Products within the Consumer Product Safety Commission's (CPSC's) regulatory domain include motor vehicles and equipment, firearms, aircraft, boats drugs, and cosmetics.

Question 7

The Fair Debt Collection Practices Act (FDCPA) is enforced by the Interstate Commerce Commission (ICC).

Question 8

The Fair and Accurate Credit Transactions Act (FACTA) of 2003 entitles every consumer to a copy of his or her credit report free of charge each year.

Question 9

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.

Question 10

Imminently hazardous consumer products are products that pose a potential risk of even slight illness or injury.

Question 11

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 12

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 13

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 two years to use the cards.
C) A fee can only be assessed if the card has not been used within six months.
D) A fee can only be assessed on the card if a customer is first notified of the fees.

Question 14

Under the Federal Trade Commission Act, the seven-member Consumer Product Safety Commission (CPSC) has authority to decide whether specific marketing and sales practices are unfair or deceptive, and whether those practices may be harmful to competition among manufacturers, distributors, and sellers.

Question 15

The Truth in Lending Act (TILA) is intended to furnish the consumer with a better opportunity to shop for credit among merchants, finance companies, credit unions, and banks.

Question 16

The Truth in Lending Act (TILA) provides a cancellation right, technically called a "right of revocation," for five (5) business days after the buyer's (debtor's) purchase on credit or after such time as the creditor makes the required disclosure.

Question 17

Any private party may sue for an injunction to enforce any Consumer Product Safety Commission (CPSC) rule or order, even if at the time of the suit the CPSC or the attorney general has initiated an action based on the alleged violation.

Question 18

The United States Congress gave the Uniform Commerce Commission (UCC) oversight over the 2005 Fax Protection Act, which limits transmissions of unsolicited fax messages.

Question 19

The Consumer Product Safety Commission (CPSC) is empowered to issue product safety standards that may (1) involve the performance of consumer products or (2) require product warnings or instructions.

Question 20

The Federal Trade Commission (FTC) prohibits prerecorded telemarketing sales calls unless the consumer has expressly agreed, in writing, to receive them.

Question 21

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 22

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 23

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 24

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 25

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

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

Question 26

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 27

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 28

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 29

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 30

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 31

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 32

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 33

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 34

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

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

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

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 37

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 38

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 39

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 40

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 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

Describe the "right of rescission" established by the Truth in Lending Act (TILA).

Question 44

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 45

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

A) President
B) Chief Justice
C) Attorney General
D) Secretary of State

Question 46

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

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

Question 47

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 48

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 49

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.

Question 50

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