Question 1

Spicy Salsa, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Tangy Taco Sauce Company, Spicy Salsa's competitor.The FTC investigates and concludes that the ad is deceptive.The FTC's next step is to

Accepted Answer

The answer of Spicy Salsa, Inc., complains to the Federal...

Question 2

The Fair Debt Collection Practices Act generally applies only to debt-collection agencies that regularly attempt to collect debts on someone else's behalf.

Accepted Answer

The Fair Debt Collection Practices Act (FDCPA) defines debt collectors as entities that regularly collect debts owed to others, which includes debt collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them. The provisions of the FDCPA generally do not apply to original creditors who are attempting to collect their own debts.

Question 3

Medi-Insurance Company faxes ads to Nancy and other individual consumers without the recipients' permission.This is subject to

Accepted Answer

The answer of Medi-Insurance Company faxes ads to Nancy and...

Question 4

Credit can be denied solely on the basis of race.

Accepted Answer

It is illegal for credit to be denied solely on the basis of race under the Equal Credit Opportunity Act.

Question 5

SmartPhone Company's ad states that its product is "The Best that Money Can Buy." Because of this ad, the Federal Trade Commission is most likely to issue

Accepted Answer

The answer of SmartPhone Company's ad states that its product...

Question 6

Insurance companies must spend at least 85 percent of all premium dollars from large employers on benefits and quality improvements.

Accepted Answer

This is known as the "85% Rule" or Medical Loss Ratio (MLR) provision, as mandated by the Affordable Care Act (ACA). It applies to large group health insurance plans and requires that at least 85% of premium dollars go towards reimbursing clinical services and improving healthcare quality, while the remaining 15% can go towards administrative costs and profits for insurance companies.

Question 7

A collection agency must include a validation notice whenever a debtor pays a debt.

Accepted Answer

A validation notice is not required when a debtor pays a debt. A validation notice is only required when a collection agency initially contacts a debtor about a debt. The notice informs the debtor of their right to dispute the debt and request verification from the collection agency.

Question 8

The Food and Drug Administration does not have the authority to directly recall any food products that it suspects are tainted but must rely on the producers to recall items.

Accepted Answer

The answer of The Food and Drug Administration does not...

Question 9

Credit can be denied solely on the basis of marital status.

Accepted Answer

It is illegal in the United States to deny credit solely based on marital status according to the Equal Credit Opportunity Act (ECOA).

Question 10

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Accepted Answer

The answer of A credit-cardholder is liable for all unauthorized...

Question 11

A collection agency has the right to contact a debtor at the debtor's place of employment whether or not the debtor's employer objects.

Accepted Answer

A collection agency cannot contact a debtor at their place of employment if the employer prohibits such communication, according to the Fair Debt Collection Practices Act (FDCPA).

Question 12

Manufacturers are required to report on any products intended for sale if the products have proved to be hazardous.

Accepted Answer

This is required under product safety regulations to ensure the safety of consumers. Manufacturers must report any hazards associated with their products to the relevant authorities.

Question 13

Drugs can be test-marketed to the public before they are ensured to be safe and effective.

Accepted Answer

Drugs must go through rigorous testing and approval processes by regulatory agencies before they can be marketed to the public to ensure their safety and effectiveness. Testing on the general public before approval would be unethical and violate standard procedures for drug development.

Question 14

The Consumer Product Safety Commission conducts research on the safety of individual consumer products and maintains a clearinghouse on the risks associated with various products.

Accepted Answer

The statement accurately describes the role of the Consumer Product Safety Commission in conducting research and maintaining a clearinghouse on product risks.

Question 15

Any time a consumer is denied credit or insurance on the basis of his or her credit report, the consumer must be notified of that fact.

Accepted Answer

This is a requirement under the Fair Credit Reporting Act (FCRA). The applicant must be provided with a notice and given the opportunity to request a free credit report from the credit reporting agency.

Question 16

Major credit reporting agencies must provide consumers with free copies of their own credit reports every six months.

Accepted Answer

While consumers are entitled to one free copy of their credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months, there is no requirement for them to provide free copies every six months. Consumers can request additional copies, but there may be a fee involved.

Question 17

Slow-Brew Coffee Company sells coffee and related beverages.The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!'" The Federal Trade Commission would consider this ad to be

Accepted Answer

The answer of Slow-Brew Coffee Company sells coffee and related...

Question 18

A credit-card company must send monthly bills to cardholders twenty-one days before the due date.

Accepted Answer

This is mandated by the Truth in Lending Act (TILA) and Regulation Z of the Consumer Financial Protection Bureau.

Question 19

The Food and Drug Administration must ensure the safety of new medications.

Accepted Answer

The FDA is responsible for ensuring the safety and efficacy of drugs before they can be approved and sold to the public.

Question 20

Mouth & Gums, Inc.(CSI), engages in deceptive advertising when it markets its product Oral Rinse as able to kill germs over long periods of time.In an action against Mouth & Gums, the firm is ordered to stop its false advertising of Oral Rinse and other products.This is

Accepted Answer

The answer of Mouth & Gums, Inc.(CSI), engages in deceptive...

Quiz 20: Consumer Protection