Deck 49: Unfair Trade Practices and the Federal Trade Commission

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

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.

Answer 3

True

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.

Question 5

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

A) Bait-and-switch advertising
B) Horizontal integration
C) Product disparagement
D) Vertical integration
E) Sweepstake marketing

Question 6

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

Question 7

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

Question 8

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

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.

Question 10

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

A) Federal Protective Service
B) Federal Emergency Management
C) Federal Trade Commission
D) Federal Law Enforcement Training
E) Federal Housing Administration

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.

Question 12

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

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 ______________

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.

A) The Bait and Switch Act
B) The Fair Packaging and Labeling Act
C) The Food, Drug, and Cosmetic Act
D) The Worker Adjustment and Retraining Notification Act
E) The Age Discrimination in Employment Act

Question 15

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

A) Wheeler-Lea Amendments
B) Landrum-Griffin Amendments
C) Taft-Hartley Amendments
D) Goldberg Variations
E) Chandler Amendments

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.

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".

Question 18

The Trademark Law Revision Act of 1988 enabled competitors damaged by false comparative advertising claims to bring 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 _____.

A) bait-and-switch advertising
B) vertical integration advertising
C) sweepstakes marketing
D) product diversification
E) negative option marketing

Question 20

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

Question 21

It is not a deceptive trade practice:

A) if a well-known personality endorses a product without disclosing that he or she is being paid to do so.
B) if a well-known retailer baits a prospective customer by dangling an alluring offer and removes the offer once the customer arrives.
C) for a well-known personality to endorse two competing products at the same time.
D) if a well-known seller conducts a "contest" to promote its product, but never awards any prizes.
E) if a well-known seller fails to stock enough of the advertised product to meet anticipated demand.

Question 22

Hot Squares, a weekly business magazine, promised each reader that the person who will return the numbered ticket included in each magazine will be eligible to enter into a "lucky draw." This scenario is an example of a(n) _____.

A) sweepstake
B) escrow
C) disparagement
D) abatement
E) escheat exception

Question 23

_____ requires a company to pay for further promotions that admits to the deception in its previous promotions and makes further statements to the public that are not misleading.

A) Hot cargo agreement
B) Corrective advertising
C) Product disparagement
D) Runaway shop agreement
E) Sequestration

Question 24

What is the significance of the Federal Trade Commission improvement act of 1975?

A) The act ensured that businesses with 100 or more employees gave their local bargaining unit, along with the local city or county government, at least sixty days' notice whenever a shutdown would require long-term layoffs of 500 employees.
B) This act made preferential hiring agreements between a company and its labor unions lawful.
C) This act made closed shop agreements between a company and its labor unions lawful.
D) This act authorized the commission to seek injunctions and collect monetary damages on behalf of injured consumers in cases involving violations of trade regulation rules.
E) This act ensured that organizations or companies eradicated sexual discrimination and discrimination of handicapped workers in employment.

Question 25

State the Federal Trade Commission's (FTC's) three-part-test for determining unfairness.

Question 26

Shalom subscribed to a monthly book club. In the context of a negative-option plan, which of the following would you advise Shalom, who has a pile of unread books over the past four months that he never really meant to order?

A) Shalom has the right to return the books and get a refund.
B) Shalom could read all the books he has "ordered," cancel his membership, and give the books to you to sell on eBay, give them away, or sell them himself.
C) Shalom should not cancel his provision, but can keep the books since he did not expressly tell the book club to send them. Then, he can sell the books himself on eBay.
D) Shalom could leave town with no forwarding address so that the book club will stop billing him.
E) Shalom could transfer his membership to someone he doesn't like very much.

Question 27

The _____ is a marketing device through which the consumer responds to the seller only if he or she wishes not to receive the product.

A) open shop
B) closed shop
C) negative option
D) garnishment action
E) usury tool

Question 28

State a few unfair practices listed by the Federal Trade Commission (FTC) in its Guides Against Bait Advertising.

Question 29

Which of these are unfair trade practices that the FTC is likely to challenge?

A) failing to substantiate material representations in advertisements before publishing them or putting them on the air,
B) making a direct comparison (even if true) about your product's qualities versus a competitor's product.
C) taking unconscionable advantage of certain consumers or exploiting their service offering.
D) a and c
E) a, b, and c