Deck 33: Consumer Protection

Question 1

The aim of consumer protection legislation is to protect persons of limited means and limited knowledge.

Answer 1

True

Question 2

Consumer protection statutes apply only in situations in which the statute is intentionally violated.

Answer 2

False

Question 3

Dilatory lending is a practice on the part of the subprime lending market whereby lenders take advantage of less sophisticated consumers or those who are desperate for funds by using the lenders' superior bargaining positions to obtain credit terms that go well beyond compensating them for their risk.

Answer 3

False

Question 4

Consumer protection laws, which commonly regulate the form of consumer contracts, provide that back-page disclaimers are void if the front page of a contract does not call attention to the presence of the terms on the back page.

Question 5

The FTC requires advertisers to maintain records of the data used as support for statements made in the ads that deal with the safety, performance, efficacy, quality, or comparative price of an advertised product.

Question 6

Consumer protection legislation regulates the prices that sellers may charge consumers.

Question 7

A sale of goods or services for $25 or more made to a buyer at home may be set aside within five (5) business days.

Question 8

The types of provisions that make contracts unconscionable include clauses that award excessive damages or the application of credit payments across purchases over time so that the consumer is never able to pay off any goods.

Question 9

Corrective advertising required by the FTC also is called retroactive advertising.

Question 10

The FTC requires that only descriptive and non-ambiguous terms such as jumbo, giant, or full be used in product labeling.

Question 11

Violation of a consumer protection statute occurs even without proof that the wrongdoer intended to defraud or deceive anyone.

Question 12

The category of protected consumers has been expanded by the social forces of protecting the person and protecting from fraud, exploitation, and oppression.

Question 13

Those who are liable for violations of consumer protection situations are persons or enterprises that regularly enter into the type of transaction in which the injured consumer was involved.

Question 14

The subterranean lending market makes loans to consumers who have bankruptcies, no credit history, low-to-moderate incomes, or a poor credit history.

Question 15

Consumer protection even protects a consumer from the consumer's own negligence.

Question 16

To be found guilty of violating a consumer protection statute or a deceptive trade practices act, a defendant must be proven guilty of fraud.

Question 17

A consumer claiming that there has been a violation of a consumer protection statute has the burden of proving that the statutory definition of "consumer" has been satisfied.

Question 18

Labels on packages are regulated to provide information about the contents and warnings about the dangers involved in the use of the product.

Question 19

In order to recover under a fair business practices or deceptive trade practices act, a consumer is only required to show that the defendant is in breach of contract.

Question 20

Consumer protection law often requires those dealing with consumers to make certain mandated disclosures.

Question 21

When improper collection methods are used, it is no defense to the creditor that the improper acts were performed by an agent, an employee, or any other person acting on behalf of the creditor.

Question 22

Unreasonable methods of debt collection may be held by the courts to constitute an unreasonable invasion of privacy.

Question 23

A letter from a collection agency to a consumer that gives the impression a lawsuit is about to be brought against the consumer when in fact it will not be brought is not a violation of the Fair Debt Collection Practices Act.

Question 24

Pursuant to the Credit Repair Organization Act of 1996, credit repair organizations must be "non-profit."

Question 25

The policing of fraudulent advertising is entrusted to which of the following administrative agencies?

A)IRS
B)FTC
C)UCCC
D)FDA

Question 26

What is not a correct statement concerning consumer protection legislation?

A)It prohibits the consumer from suing in his or her own right and gives the right to sue solely to an agency or to the attorney general.
B)It recognizes that the theoretical right of the consumer to sue may be of little practical value.
C)It provides special remedies.
D)It provides certain agencies to police statutes passed to aid consumers.

Question 27

Under the Equal Credit Opportunity Act, it is unlawful to discriminate against an applicant because all or part of the applicant's income is obtained from a public assistance program.

Question 28

__________ lending is a practice on the part of the subprime lending market whereby lenders take advantage of less sophisticated consumers or those who are desperate for funds by using the lenders' superior bargaining positions to obtain credit terms that go well beyond compensating them for their risks.

A)Predatory
B)Dilatory
C)Confiscatory
D)None of the above

Question 29

A consumer may rescind a contract without liability when the contract is for:

A)the purchase of a new automobile.
B)the purchase of a used automobile.
C)a home-solicited sale of services for $50 that was made two (2) days earlier.
D)a home-solicited sale of goods for $25 that was made seven (7) days earlier.

Question 30

When an enterprise has made false and deceptive statements in advertising, the FTC may require new advertising to correct the former statement so that consumers are aware of the truth. This corrective advertising required by the FTC is also called __________ advertising.

A)retractive
B)redactive
C)retroactive
D)refractive

Question 31

Anyone promoting the sale of a real estate development that is divided into fifty (50) or more parcels of less than five (5) acres each must file a development statement with the secretary of Housing and Urban Development.

Question 32

The Fair Credit Reporting Act applies only to consumer credit.

Question 33

Which of the following parties would be the least appropriate defendant in a consumer protection lawsuit?

A)another consumer
B)a bank with a good reputation
C)a finance company
D)an enterprise that regularly enters into transactions with consumers

Question 34

A sale of goods or services for $25 or more made to a buyer at home may be set aside within __________ days.

A)three (3) business
B)three (3) calendar
C)five (5) business
D)five (5) calendar

Question 35

Who may bring an action for relief under consumer protection legislation?

A)the Federal Trade Commission
B)a state attorney general
C)the consumer
D)all of the above

Question 36

Consumer protection statutes and regulations do not protect against:

A)deceptive advertising.
B)the consumer's own negligence.
C)unsolicited credit cards sent to creditworthy consumers.
D)unreasonable methods of debt collection by debt collection agencies.

Question 37

Truth in advertising legislation is fundamentally designed to:

A)give the consumer an accurate description of the product.
B)punish sellers who knowingly make false statements about the product offered for sale.
C)punish sellers who state a false opinion about the product.
D)give the consumer information about other similar products that are available.

Question 38

A consumer may waive all defenses otherwise provided for by law.

Question 39

When a credit application is refused, it is sufficient that the lender give the applicant a written statement saying: "application refused."

Question 40

Automobile lemon laws protect only persons buying automobiles for personal, family, or household use.

Question 41

Anyone promoting the sale of a real estate development that is divided into fifty (50) or more parcels of less than five (5) acres each must file a(n) __________ statement with the secretary of Housing and Urban Development.

A)developmental impact
B)development
C)environmental impact
D)destructive impact

Question 42

It is lawful to refuse to extend credit to a consumer based on the consumer's:

A)race.
B)marital status.
C)credit history.
D)age.

Question 43

Peter applied for a loan at three banks. Peter's application was denied at the first two banks but finally was approved by the third institution. Peter believes that the first two banks denied his application because of his minority status. No explanation ever was provided by the banks denying Peter's request for funds. After obtaining the loan, Peter soon found himself unable to make the prescribed payments. Peter went into default, causing the bank to turn his case over to a collection agency. The collection agency called him "night and day" and were very abusive in their collection practices. Peter became quite distraught and unable to function at his job. As a result, Peter was soon fired. Peter asks for your advice regarding his legal rights. What is your response?

Question 44

Pursuant to the CARD Act of 2009, all credit card companies must have bills in consumers' hands not less than __________ before the bill is due.

A)seven (7) days
B)fourteen (14) days
C)twenty-one (21) days
D)one (1) month

Question 45

Sue Thompson received a home "cold-canvas" sales call from a representative of the Enlightened Encyclopedia Company. The salesperson, after a rather aggressive presentation, convinced Sue to order a $1,200 Deluxe Encyclopedia set for her two children. Sue was impressed with the quality of the books, but shortly after signing the contract, she realized that she could not really afford to make the required monthly payments. What rights, if any, does Sue have in this situation?

Question 46

What is not a correct statement concerning the Fair Debt Collection Practices Act?

A)It prohibits improper practices in the collection of consumer debts.
B)It applies to all persons who are collecting debts for others.
C)It imposes liability on debt collectors who violate the law.
D)Despite the fact that a debtor owed the money that the agency was trying to collect, the agency may violate the law.

Question 47

An unsolicited distribution of credit cards to persons who have not applied for them is:

A)allowed by most states.
B)voidable.
C)illegal.
D)authorized by nonuse.

Question 48

The Fair Credit Reporting Act applies to:

A)consumer credit.
B)commercial credit.
C)business credit.
D)consumer and commercial credit.

Question 49

The owner of a lost credit card is:

A)liable for all purchases made by its finder if the card was lost through negligence.
B)not liable for any purchases if the card was lost despite the exercise of reasonable care by the cardholder.
C)liable for all purchases if the card originally had been sent to the cardholder without any prior request and never was used by such holder.
D)not liable for more than $50 for the unauthorized use of the card.

Question 50

Samuel signed a contract to purchase furniture on credit. The contract clearly set forth in bold print all charges included in the cost of the credit, including the interest rate and annual percentage rate. The seller informed Samuel that the seller regularly sold these contracts to a finance company that paid it immediate cash and then collected from the debtors. The seller further advised that the finance company did not want "the headache" of determining the validity of consumer complaints and that therefore the contract provided that the consumer waived all defenses concerning the furniture against the finance company. The contract expressly provided that the seller would remain responsible for any non-conformities in the furniture or breaches of contract on its part. The furniture was defective, but the finance company is demanding that Samuel make the payments to it required by the contract and resolve its disputes with the seller of the furniture. Samuel consults you regarding his rights. What is your response?

Question 51

The __________ lending market makes loans to consumers who have bankruptcies, no credit history, low-to-moderate incomes, or a poor credit history.

A)subprime
B)subterranean
C)suboptimal
D)optimus prime

Question 52

A finance company may reject an applicant for a loan on the grounds that the applicant is:

A)married.
B)sixty-five or older.
C)divorced.
D)none of the above.