Question 1

The FTC remedy of "affirmative disclosure" would require:

Accepted Answer

Affirmative disclosure requires providing certain information in a company's ad, not necessarily admitting that a previous ad was false or ceasing to deceive in all products marketed.

Question 2

The Credit Card Fraud Act prohibits which of the following practices?

Accepted Answer

The Credit Card Fraud Act prohibits all of the listed practices, including possessing unauthorized cards, counterfeiting or altering credit cards, using account numbers alone, and using cards obtained from a third party with their consent when the third party conspires to report the cards as stolen.

Question 3

Discuss the role of the state attorneys general in consumer protection.

Accepted Answer

The answer of Discuss the role of the state attorneys...

Question 4

Roscoe Braun, who lives in Cleveland, receives a mailing from Florida from the SwampLand and Reclamation Project. It states that the Brauns can purchase one-acre sites as part of a newly planned development located in Leon County, Florida. The Brauns contact the company and are given a purchase agreement but no additional information. They sign the purchase agreement and send it back. Then, a week later they decide they would prefer to winter in either New Zealand or Australia. Can the Brauns get out of the contract?

Accepted Answer

The answer of Roscoe Braun, who lives in Cleveland, receives...

Question 5

Sue has a Bloomingdale's credit card. On Monday she charged a $47.90 sweater and then lost the card. Myra found it Monday and charged a $100 scarf and $400 purse. Sue missed her card at 8 a.m. Tuesday and called the store. Myra then charged a coat for $4,000. Sue's bill was $4,547.90. Sue owes:

Accepted Answer

The answer of Sue has a Bloomingdale's credit card. On...

Question 6

The Federal Consumer Credit Protection Act:

Accepted Answer

The Federal Consumer Credit Protection Act sets limits on garnishment proceedings and also requires creditors to disclose finance charges. It does not require disclosure on credit extension charges.

Question 7

The Fair Credit Reporting Act has to do with:

Accepted Answer

The Fair Credit Reporting Act regulates both the reports made by credit agencies and the credit checks done by potential lenders. It does not specifically address bills that are incorrectly added, although it does provide provisions for disputing inaccurate information on credit reports. Therefore, the best choice is E, which covers both credit reports and credit checks.

Question 8

Congress outlawed the practice of redlining through what legislation?

Accepted Answer

The answer of Congress outlawed the practice of redlining through...

Question 9

Holly, who is married to Grant, applies for a credit card from Marlin's Department Store, but she is turned down because she is a married woman and the store's policy is to only issue cards in the name of the husband in such situations. What are her legal rights in this situation?

Accepted Answer

The answer of Holly, who is married to Grant, applies...

Question 10

Homemade Soup Co. has advertised their soup in certain magazines using photographs showing bowls of their soup with pebbles at the bottom of the bowl. The pebbles were used to displace the soup in the bowl, forcing the vegetables and meat to the surface. This photographer's trick made the soup appear heartier than it was. An FTC staffer is thumbing through the latest edition of her favorite magazine. She notices the Homemade Soup Co. ad and goes to her kitchen, opens up a bowl of Homemade's soup and decides that her bowl of soup looks nothing like the one in the ad. What are the steps the FTC would take to proceed against Homemade Soup Co.?

Accepted Answer

The answer of Homemade Soup Co. has advertised their soup...

Question 11

Under the Fair Credit Billing Act, if a consumer reports an error in the amount on his charge account bill, until the creditor responds, it cannot:

Accepted Answer

All of these options are correct under the Fair Credit Billing Act. The creditor cannot take any action to collect the disputed amount, restrict the use of the credit account, or report the disputed amount as delinquent until a response has been given to the consumer. This is to protect the consumer's rights and ensure that any errors or disputes are resolved fairly.

Question 12

If the FTC rules that a seller has made a false or deceptive advertising statement, the Commission can:

Accepted Answer

The FTC can require a seller to make corrective advertisements to address and rectify the false or deceptive statements made in their original advertising. This is a direct way to counteract the misinformation provided to consumers.

Question 13

In order for a full warranty to be given for a consumer product, the manufacturer must provide that:

Accepted Answer

The answer of In order for a full warranty to...

Question 14

What remedies are available for the Federal Trade Commission?

Accepted Answer

The Federal Trade Commission has the authority to issue corrective advertising and multiple product orders as a remedy for deceptive or unfair business practices. These orders require the company to change their advertising and marketing practices and often require them to offer refunds or other compensation to affected consumers. Impounding inventory and criminal penalties may be used in certain cases, but are not necessarily the most common or effective remedies. Affirmative exemption is not a remedy available to the FTC, but rather a pre-emptive measure that businesses can pursue to avoid future legal challenges.

Question 15

Which of the following best expresses the policy behind the Truth-in-Lending Act?

Accepted Answer

The Truth-in-Lending Act requires lenders to disclose certain information, such as the APR and total finance charges, to borrowers for personal, family, or household loans. This is to ensure that borrowers are informed and able to make a more informed decision about the credit they are receiving. Option A is incorrect because the Act does not set a "reasonable" rate of interest, rather it requires disclosure of the APR. Option B is incorrect because the Act does not address collateral for secured loans or small business lending. Option D is incorrect because the Act does not address libel laws or credit investigations.

Question 16

If a debtor defaults on a credit contract, the creditor may:

Accepted Answer

All of these options are possible actions a creditor may take if a debtor defaults on a credit contract. They may impose a late charge, garnish wages after obtaining a court judgment, and declare the entire balance of the debt immediately due and sue for the debt.

Question 17

a. What was the common law rule with respect to consumer transactions? How has this rule been changed by recent statutory enactments? 
b. 
Why do you think there were so many consumer protection statutes passed in the last fifty years?

Accepted Answer

The answer of a. What was the common law rule...

Question 18

The Fair Debt Collection Practices Act requires a debt collector to provide the consumer with a written notice. What information must be contained in this notice?

Accepted Answer

The Fair Debt Collection Practices Act requires a debt collector to provide the consumer with a written notice containing a statement telling the consumer that he can request verification of the alleged debt. This allows the consumer to dispute the debt and request proof of its validity. While the amount of the debt and the name and phone number of the current and former creditor may be included in the notice, they are not required by law. A copy of the original credit contract with the original creditor is also not required to be included in the notice.

Question 19

The Equal Credit Opportunity Act would not prohibit which of the following? First Bank refuses to extend credit to:

Accepted Answer

The Equal Credit Opportunity Act does not prohibit lenders from refusing to extend credit to borrowers based on their income level. However, it does prohibit discrimination based on gender, age (except for minors), race, color, religion, national origin, marital status or receipt of public assistance. Therefore, First Bank would be in violation of the law if they refused to extend credit to females or people from Italy, but not if they refused to extend credit to men over 70 or people with incomes below $10,000.

Question 20

A collection agency is prohibited from:

Accepted Answer

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from calling debtors between the hours of 9 p.m. and 8 a.m. without consent. Calling in the middle of the night would be a violation of this law.

Answer: B
 While there is no specific time of day that collectors are prohibited from calling, the FDCPA does state that collectors cannot call at a time or place that is known or should be known to be inconvenient to the debtor. Calling during dinner time could be considered inconvenient for many individuals.

Answer: C
 Debt collectors are not legally allowed to threaten a lawsuit unless they actually intend to pursue legal action. Making a false threat violates the FDCPA.

Answer: D
 Collectors can only contact third parties for the purpose of locating a debtor, but they cannot discuss the debt unless explicitly allowed by the debtor. Any attempt to harass or embarrass the debtor by contacting friends or family members would be a violation of the FDCPA.

Quiz 44: Consumer Protection