Business Law Final - Ch 17
What are other remedies used by the FTC in certain circumstances?
1) recission of contracts (each party returns what they got form each other) 2) refund of money or return of property 3) payment of damages to consumers 4) public notification of trade practice violations
What are the political aspects of the FTCs enforcements?
The views of the FTC commissioner reflect the president who appointed them, commissioners are promoted for four year terms. congress annually approves FTC budget. congress can also cut budget if it disapproves of the rules made and the cases brought by the FTC.
What two alternatives are possible in a bankruptcy proceeding against one individual?
property will be liquidated under chapter 7 of bankruptcy law and debts discharges. or the debts will be adjusted under chapter 13
What are examples of consumer protection laws that protect consumer privacy?
provisions of the Fair Credit Reporting Act and the Electronic Fund Transfer Act
Readers digest sent out some 17 million sweepstakes promotions to consumers that featured "travel checks" and "cash convertible bonds" that the FTC claimed were deceptive and violated a previous consent order as well. what potnential fine did the digest face?
readers digest faced a potential fine of 10,000 per offense with each of the 17 million promotions being a separate offense. In actuality the the readers digest was fined $2 for some 4 million letters it mailed
Under the Truth in lending act what is a finance charge? What charges are and are not included as finance charges?
the finance charge includes all charges payable directly or indirectly by the debtor to the creditor as a condition of the extension of credit. Charges such as interest, service charges, loan fees, points, finders fees, fees for appraisals, credit reports and life or health insurance required as a condition of the loan are included as a part of finance charges. Recording fees, taxes, title insurance, notary fees and attorney fees for preparing deeds are not part of the finance charges.
Who is the trustee in bankruptcy?
the trustee is someone elected by the creditors to represent the debtor's estate in taking possession of and liquidating (selling off) the debtors property
The zenith credit bureau telephones dan and his family almost daily about payment of a 3500 dollar debt. the pone calls are causing stress for dans family. dan cannot afford to pay the debt at present, and he needs a listed telephone number for his business. is there anything dan can do legally to stop the calls from zenith?
yes, dan should write a registered letter to the credit bureau refusing to pay the debt and instructing the bureau not to contact him or his family again. If the credit bureau is contacting the family and telling them to pay the debt or admonishing them to have Dan pay the debt, the credit bureau will be liable to Dan.
What is the term used to describe when the amount of debt exceeds the amount of assets owned?
Bankruptcy
The ABC department store refuses credit to Mary Jane. Mary Jane has a good job and no debts. She cannot understand the refusal. What would you suggest Mary Jane do? Explain.
Mary jane should check her credit rating and should determine whether the department store refused her credit on the basis of a credit report. The store may be liable if it failed to identify that it had refused her credit on the basis of an ADVERSE credit report
What act was authorized by the federal reserve board to adopt regulations "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit?
The Truth- in - Lending act
What does the ECOA prevent?
(equal credit opportunity act) discrimination based on sex, marital status, race, color, age, religion, national orgin or receipt of welfare in consumer credit transaction. most focused on sex discrimination.
Discuss the concept of "discharge" as used in the bankruptcy law. What types of debts are not dischargeable? Explain.
Discharge if given means that the debtor is no longer legally required to pay the debts so discharged. Nondischargeable debts under bankruptcy include those arising from taxes, alimony and child support, intentional torts, breach of fiduciary duty, liabilities arising from drunken driving, government fines, debts not submitted because the creditor lacked knowledge of the proceedings, and educational loans that have become due within five years of the filing of the bankruptcy petition.
What is the FDCPA and who does it apply to?
Fair debt collection practices act. the act covers only consumer debt collections. it applies to agencies whose primary business is collecting consumer debts for others. also applies to IRS and attorneys who collect debts on behalf of clients.
Explain the difference between a cease and desist order and a consent order. which type of order is used most frequently at the FTC for fro consumer protection? Why do you suppose this type of order is most often used?
a cease and desist order comes from an administrative law judge and is mandatory. A consent order is legally binding but is agreed to between the FTC and a respondent (individual or company accused). The consent order is used most frequently at the FTC because it is too inefficient and time- consuming to take every case before an administrative law judge.
What are natural persons who incur debt "primarily for personal, family or household purposes"?
a consumer
What is redlining?
a refusal to make a loan which leads to discriminatory practice. ( refusing to make loans in certain areas where property values are low)
The FTC's consumer protection is further covered under what practices?
advisory opinions- furnished a good idea about how the FTC views the legality of a given trade practice. industry guides- FTC specifies its view of the legality of a particular industries trade practices.
What is the Magnusson- Moss Warranty act?
applies to all product warranties on customer products costing more than 15$ must be identified as "full" or "limited"
When do bankruptcy proceedings begin and are they subject to regulatory enforcement?
bankruptcy begins when upon the filing of either a voluntary or involuntary petition to the court. a voluntary petition is one filed by the debtor and and involuntary one is filed by one or more of the creditors of the debtor. no they are not subject to regulatory enforcement
FDPCA's restrictions on debt collection?
collector cannot: -physically threaten debtor -use obscene language -represent himself or herself as attorney unless it is true -threaten debtor w arrest unless collector can legally take that action -fail to disclose his or her identity as a collector -telephone before 8 am or after 9 pm -place collect calls to debtor -use any "unfair or unconscionable means" to collect the debt
What is a trade regulation rule?
it is an official interpretation of the FTC act by the Commission. It has the the force of law. it ensures fair competition by preventing those who would decieve consumers from diverting trade from those who compete honestly
What is the fair credit billing act?
limits liability on lost, stolen or misused credit cards to $50 within 100 miles of home
What are investigative consumer reports?
reports on consumers character, general reputation, mode of living, and so on, obtained by personal interviews in the consumers community.
Star automobile dealership buys a television set for its waiting room. Is star a consumer? explain.
star is not a consumer in most states because it did not buy the TV for personal, family, household or industrial purposes.
The mosquito No Company claims that its electronic mosquito device will "eliminate all mosquito problems within a one-half acre area" Actually, the device will only work if there is no standing water on the half acre. explain how the FTC will evaluate this advertising for deception.
the FTC will evaluate this advertising and likely determine it deceptive for failing to disclose that the claim only applies to areas where there is not standing water.
What is the consumer product safety act?
the act requires the commission to protect consumers against "unreasonable risk" of harm and applies to some 15,000 different consumer products.
What does the FTC look at to determine deception?
-point of view of the "reasonable customer" -both "expressed" and "implied" claims -what the ad does not say -whether or not the claim would be "material" -whether the advertiser has sufficient evidence to support the claims in the ad
The truth in lending act covers what transactions?
1) the lender is in the business of extending credit in connection with a loan of money, sale of property, or the furnishing of services 2) the debtor is a natural person, as distinguished from a corporation or business entity. 3) a finance charge may be imposed 4) the credit is obtained primarily for personal, family, household or agricultural processes. it imposes duty on all persons regularly extending credit to private individuals to to inform them fully of the cost of the credit
How much did american consumers owe at the end of 2007 discluding mortgage debt?
2.46 trillion dollars
The truth in lending act gives debtors the right to rescind or cancel certain transactions under what time period?
3 business days from the date of the transactions or from the date they are given the notice of their right to rescind whichever is later.
When a company has advertised deceptively, the FTC can require it to run ads that admit the prior errors and fix erroneous information, a concept known as what?
corrective advertising
What is the Federal Food, Drug and Cosmetic act?
establish that prescription drugs must be proven effective and safe by extensive testing before they can be sold.G
Jane Thomas applies for automobile financing at kenwood Cars inc. a used- car dealership. The dealership obtains a credit report on her. on the basis of this report, the dealership denies her credit. the manager informs her that she will have to get her husband to cosign he application if she wants dealership financing. she refuses, and sues Kenwood under the ECOA (equal credit opportunity act) What was the result and why?
jane will win under the ECOA because the manager informed her that she would have to get her husband to cosign. the proper thing for the manager to have done would have been to tell her she would have to get "someone else" to cosign with her.
What is the electronic fund transfer act?
limits liabilty on lost or stolen or misused automatic teller and check cards to 50$ if reported within two business days or learning
