Question 1

The Federal Trade Commission (FTC) learns that Chuck's Automotive Stores engages in deceptive advertising practices. What actions can the FTC take against Chuck's?

Accepted Answer

The answer of The Federal Trade Commission (FTC) learns that...

Question 2

Credit Agency Corporation issues consumer credit reports. The company generally does not delete unverifiable or erroneous information from the reports. Under the Fair Credit Reporting Act, this firm may be subject to
A) finance charges .
B) monetary damages.
C) a cease-and-desist order.
D) no sanctions.

Accepted Answer

Under the Fair Credit Reporting Act, if a credit reporting agency fails to delete unverifiable or erroneous information, it may be liable for monetary damages to the consumer affected by the incorrect report.

Question 3

Dian takes out a loan from Equity Bank. When she fails to make the scheduled payments, Equity advises her of further action that it will take. This violates
A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Accepted Answer

Equity Bank advising Dian of further action for failing to make payments does not violate any federal law, as creditors are allowed to inform debtors of potential consequences for non-payment. The Fair Debt Collection Practices Act applies to third-party debt collectors, not original creditors like banks.

Question 4

Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics, Inc., wants to advertise its sweaters as having "That Wool Feel" but does not want to specify on labels that the sweaters are 100 percent polyester. Can these firms market their products as they would like? If not, why not?

Accepted Answer

The answer of Mouth-Waterin' Treats Company wants to sell its...

Question 5

QT Collection Agency calls Rob several times a day, and in the middle of the night, about an overdue bill that Standard Credit Company turned over to QT for collection. This is a violation of
A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Accepted Answer

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from engaging in harassing or abusive behavior, including excessive and unreasonable phone calls, and specifies when and how debt collectors may contact debtors.

Question 6

Logan's application to Metro Bank for a credit card is denied. Logan can obtain information on his credit history in a credit agency's files under
A) no federal law.
B) the Equal Credit Opportunity Act.
C) the Fair Credit Reporting Act.
D) the Fair Debt Collection Practices Act.

Accepted Answer

The Fair Credit Reporting Act entitles individuals to access their credit reports from credit reporting agencies and dispute any errors or inaccuracies. This information may be used to analyze why Logan's credit card application was denied and take steps to improve his credit history in the future. The other laws listed do not specifically address an individual's rights to obtain their credit report.

Question 7

Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to monitor and enforce laws designed to protect consumers from unsafe food and drugs being sold is
A) Corner Market and Deli & Drug.
B) Deli & Drug only.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Accepted Answer

The Food and Drug Administration (FDA) is the federal agency responsible for protecting public health by ensuring the safety and efficacy of food, drugs, and other consumer products.

Question 8

Kip opens an account at Lotsa Goodies, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, a Lotsa Goodies representative contacts Kip's parents. This violates
A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Accepted Answer

The answer of Kip opens an account at Lotsa Goodies,...

Question 9

The credit department of Mega-Mart often calls Nora at work about an overdue bill. Nora's employer objects, but the credit department continues to call her at work. This violates
A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Accepted Answer

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from contacting a debtor at their place of employment if they know or have reason to know that the employer prohibits such communication.

Question 10

Bob has a credit card from Credible Cards, Inc. Credible Cards wants to change the terms. Credible
A) must give Bob at least thirty days' notice.
B) must give Phil at least forty-five days' notice.
C) need not give Phil any notice.
D) cannot change the terms.

Accepted Answer

Credible Cards must give Bob at least forty-five days' notice before changing the terms of his credit card agreement, as required by the Credit CARD Act of 2009.

Question 11

The government agency that has the authority to order a company to remove a product from the market that poses an unreasonable risk of harm is
A) the Consumer Product Safety Commission.
B) the Product Manufacturing Standards Board.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Accepted Answer

The Consumer Product Safety Commission (CPSC) is the government agency responsible for protecting the public from unreasonable risks of injury or death associated with the use of consumer products. They have the authority to order recalls and remove products from the market.

Question 12

Cutting Edge Inc. makes and sells tools. One of the tools is believed to be hazardous. The firm may be required to
A) export the tool and sell it only abroad.
B) increase the price to cover the cost of any injuries or damage.
C) reduce the price to indicate the hazard to consumers.
D) remove the tool from the market.

Accepted Answer

The best choice is to remove the hazardous tool from the market as it poses a risk to consumer safety. The company should prioritize consumer safety over profits and find an alternative way to make up for the potential loss in revenue.

Quiz 21: Consumer Protection

The Federal Trade Commission (FTC) learns that Chuck's Automotive Stores engages in deceptive advertising practices. What actions can the FTC take against Chuck's?

Credit Agency Corporation issues consumer credit reports. The company generally does not delete unverifiable or erroneous information from the reports. Under the Fair Credit Reporting Act, this firm may be subject to

Dian takes out a loan from Equity Bank. When she fails to make the scheduled payments, Equity advises her of further action that it will take. This violates

QT Collection Agency calls Rob several times a day, and in the middle of the night, about an overdue bill that Standard Credit Company turned over to QT for collection. This is a violation of

Logan's application to Metro Bank for a credit card is denied. Logan can obtain information on his credit history in a credit agency's files under

Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to monitor and enforce laws designed to protect consumers from unsafe food and drugs being sold is

Kip opens an account at Lotsa Goodies, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, a Lotsa Goodies representative contacts Kip's parents. This violates

The credit department of Mega-Mart often calls Nora at work about an overdue bill. Nora's employer objects, but the credit department continues to call her at work. This violates

Bob has a credit card from Credible Cards, Inc. Credible Cards wants to change the terms. Credible

The government agency that has the authority to order a company to remove a product from the market that poses an unreasonable risk of harm is

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