Question 1

Equity Lending Company extends credit to consumers. Equity applies a variety of requirements to determine applicants' qualifications for credit, the amount, the interest rate, and other terms. Under the Equal Credit Opportunity Act, the lender cannot base its credit decisions on an applicant's

Accepted Answer

Under the Equal Credit Opportunity Act, lenders cannot discriminate against applicants based on their gender, race, color, religion, national origin, marital status, or age. Therefore, the lender cannot base its credit decisions on an applicant's gender.

Question 2

Cutting Edge Inc. makes and sells tools. One of the tools is believed to be hazardous. The firm may be required to

Accepted Answer

The best choice is to remove the tool from the market as it poses a hazard to consumers. Exporting the tool and selling it only abroad does not address the safety concerns and may lead to harm to foreign consumers. Increasing the price to cover the cost of injuries or damage is not a responsible or ethical solution. Reducing the price to indicate the hazard to consumers is also not a responsible or ethical solution as it suggests that Cutting Edge Inc. is willing to put consumers at risk for profit.

Question 3

Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule, the firm may be liable for failing to

Accepted Answer

Direct Sales Corporation may be liable for failing to ship orders within the time promised in its ads under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule.

Question 4

Regional Disposal Center operates a recycling plant. Stan and other citizens file a suit, alleging injuries from the plant. To succeed, they must show that the defendant failed to use reasonable care if the suit is based on

Accepted Answer

Negligence requires a showing that the defendant failed to exercise reasonable care, which directly applies to the allegations made by the plaintiffs in this case. Nuisance is based on the unreasonable interference with the use and enjoyment of one's property, and may not necessarily require a showing of negligence. Strict liability imposes liability without fault, and may not be applicable in a case where negligence is the main issue. Therefore, the best choice is A) a negligence theory.

Question 5

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

Accepted Answer

The Truth-in-Lending Act (TILA), also known as Regulation Z, applies to consumer credit transactions. In this scenario, Bea borrows funds for both home repair and car purchase from Credit Union, which qualifies as a consumer credit transaction subject to TILA. Additionally, she purchases a laptop through a retail installment sale with Discount Store, which is also subject to TILA. Therefore, TILA applies to all three transactions: the car loan, the home repair loan, and the retail installment sale.

Question 6

Auto & Life Insurance Company fails to notify its new customers when they are charged higher premium rates as a result of their credit scores. This is a willful violation of

Accepted Answer

The Fair Credit Reporting Act (FCRA) requires that consumers be notified when adverse actions are taken against them based on information in their credit reports, which includes being charged higher insurance premiums.

Question 7

Credit Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Credit Loan must inform potential borrowers of

Accepted Answer

Under the Truth-in-Lending Act, Credit Loan is required to inform potential borrowers of its own credit terms, not those offered by other lenders or the comparative prices for goods to be bought with the borrowed funds. Credit Loan is also not required to disclose the borrower's credit score.

Question 8

EZ Workout Inc. advertises Fit Step, an exercise machine, online. In its ads, EZ claims that the use of Fit Step measurably enhances the attainability of fitness and weight loss goals, and will contribute significantly to the length of its users' lives. In this context, the company's ads and claims must be

Accepted Answer

In order to avoid false advertising, EZ Workout Inc. must substantiate their claims in their ads for the Fit Step exercise machine. This means they must provide evidence and data to support their claims of enhanced fitness and weight loss goals and increased life expectancy.

Question 9

Clean Wash Inc. operates a chain of car washes throughout the United States. The government entity that is most likely to be involved in regulating the chain's environmental impact is

Accepted Answer

Federal and state regulatory agencies are responsible for enforcing environmental laws and regulations, including those related to water and air pollution. As a car wash chain, Clean Wash Inc. may have to comply with guidelines for wastewater discharge and emissions, which would fall under the purview of these agencies. Congress is responsible for enacting laws, but day-to-day regulation is carried out by federal and state agencies. Local chambers of commerce and police departments are not typically involved in environmental regulation.

Question 10

Leo's application to Metro Bank for a credit card is denied on the basis of what Leo believes is an inaccurate credit report. Leo should

Accepted Answer

The best course of action for Leo is to obtain a copy of his credit report and notify the reporting agency of any inaccuracies. This will give him the opportunity to correct any errors that may be affecting his credit score and may increase his chances of being approved for a credit card in the future. Appealing to a federal or state agency or filing a lawsuit may be options, but they are more time-consuming and may not necessarily resolve the issue at hand. Applying for a credit card with a different financial institution may also be an option, but it is important for Leo to address any inaccuracies on his credit report to ensure that he is not unfairly denied credit in the future.

Question 11

Retail Properties, Inc., wants to build a parking ramp to connect to its Shoppers Mall, both of which are on private land. For this action, an environmental impact statement is

Accepted Answer

The answer of Retail Properties, Inc., wants to build a...

Question 12

Consumer Finance Corporation (CFC) extends credit to consumers. CFC applies several criteria to decide customers' "suitability" for credit. Under the Equal Credit Opportunity Act, CFC cannot base its decision on a customer's

Accepted Answer

The Equal Credit Opportunity Act prohibits discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age, or whether they receive public assistance. Therefore, CFC cannot base its decision on a customer's race.

Question 13

Smelter Inc. operates a plant-a "major source"-that emits hazardous air pollutants for which the Environmental Protection Agency has set maximum levels of emission. The plant does not use equipment to reduce its emissions. Under the Clean Air Act, this is most likely

Accepted Answer

Under the Clean Air Act, operating a major source that emits hazardous air pollutants without using equipment to reduce those emissions is considered a violation. The Environmental Protection Agency has set maximum levels of emission for such pollutants, and failure to comply with those limits is illegal.

Question 14

ChemCo Inc. makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is

Accepted Answer

The Consumer Product Safety Commission (CPSC) has the authority to order a recall of a hazardous product to protect consumers from injury, illness, or death. Therefore, in the given scenario, the CPSC would be the appropriate government agency to order ChemCo to remove a product from the market.

Question 15

Ski Resorts, Inc., wants to add a new run to its facility in a national park on federal land. For this action, an environmental impact statement is

Accepted Answer

When making modifications or developments on a national park on federal land, an environmental impact statement is required in accordance with the National Environmental Policy Act (NEPA). This ensures that the impact on the environment, both positive and negative, is considered and evaluated before any action is taken.

Question 16

Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is

Accepted Answer

The Food and Drug Administration (FDA) is responsible for preventing unsafe food and drugs from being sold in the United States. Corner Market and Deli & Drug have a responsibility to ensure that the products they sell are safe, but ultimately it is the FDA that has the chief responsibility for preventing unsafe products from being sold. The Federal Trade Commission (FTC) is primarily responsible for protecting consumers from fraudulent or deceptive business practices.

Question 17

Fried Food, Inc., operates a commercial frying plant, discharging pollutants into the air. Greta reports the violations to the Environmental Protection Agency. Greta

Accepted Answer

The answer of Fried Food, Inc., operates a commercial frying...

Question 18

The credit department of Mega-Mart often calls Nora at work about an overdue bill over the objection of Nora's employer. This is a violation of

Accepted Answer

The Fair Debt Collection Practices Act prohibits debt collectors from contacting debtors at their place of employment if the debtor's employer prohibits such communication. Therefore, Mega-Mart's credit department's calls to Nora at work over her employer's objection would be a violation of this law.

Question 19

Mary receives an unsolicited credit card in the mail and tosses it on her desk. Without Mary's permission, her roommate Nan uses the card to buy a new laptop for $1,800. Mary is liable for

Accepted Answer

Mary is not liable for any charges made on an unsolicited credit card that she did not authorize or use. Under the Fair Credit Billing Act, she is not responsible for unauthorized use of a credit card.

Question 20

Ultrahazard Corporation transports radioactive materials. Vince, an Ultrahazard employee, is diagnosed with radiation sickness after exposure to the materials. Vince's suit against Ultrahazard to recover for the injury is

Accepted Answer

Vince's suit against Ultrahazard is a toxic tort, which is a civil lawsuit filed by someone who has been harmed by exposure to a dangerous substance, such as radiation. The suit would seek compensation for damages, such as medical expenses and lost wages, as well as punitive damages to punish Ultrahazard for their role in causing the harm.

Quiz 39: Consumer and Environmental Law