CH 44B

Unwanted and unsolicited advertising sent via a fax machine may violate the

Telephone Consumer Protection Act

Regulation Z governs:

credit provisions associated with installment sales contracts.

The Consumer Product Safety Commission (CPSC) determines that a Barbie Jeep is unsafe for children to ride in it. The CPSC has the power to

remove all Barbie jeeps from the market

The Consumer Product Safety Commission (CPSC) determines that a Barbie Jeep, a toy jeep in which children ride, is unsafe. The CPSC has the power to

remove the jeeps from the market.

A door-to-door salesperson convinces Janelle to buy a vacuum cleaner but the next day she learns that the same item is available at a local discount store for a third of the price. Generally, Janelle has ______ to cancel

3 days

Bait-and-switch advertising

Advertising a product at a very attractive price (the bait) and then informing the consumer, once he or she is in the store, that the advertised product is either not available or is of poor quality; the consumer is then urged to purchase (switched to) a more expensive item.

Deceptive advertising

Advertising that misleads consumers, either by making unjustified claims concerning a product's performance or by omitting a material fact concerning the product's composition or performance.

Consumer protection laws regulate all of the following except

secured transactions

A credit-reporting agency that fails to comply with the Fair Credit Reporting Act is liable for actual damages, plus additional damages not to exceed ______ and attorney's fees.

$1,000

The Telephone Consumer Protection Act gives consumers a right to sue for either ________ each violation of the act or for actual monetary losses.

$500

The FTC's Three Basic Requirements for Online Businesses to Help Them Comply With Existing Laws Prohibiting Deceptive Advertising:

1. all ads - both online and offline - must be truthful and not misleading 2. the claims made in an ad must be substantiated - that is, advertisers must have evidence to back up their claims 3. ads can't be unfair, which the FTC defines as "likely to cause substantial consumer injury that consumers could not reasonably avoid and that is not outweighed by the benefits to consumers or competition

2010 Amendments to the TILA's Credit Card Rules:

1. a company may not retroactively increase the interest rates on existing card balances unless the account is 60 days delinquent 2. a company must provide 45 days advance notice to consumers before changing its credit-card terms 3. monthly bills must be sent to cardholders 21 days before the due date 4. the interest rate charged on a customer's credit card balance may not be increased except in specific situations, such as when a promotional rate ends

Under the Fair Debt Collection Practices Act, a Collection Agency May Not Do Any of the Following:

1. contact the debtor at the debtor's place of employment if the debtor's employer objects 2. contact the debtor at inconvenient or unusual times or at any time, if the debtor is being represented by an attorney 3. contact 3rd parties other than the debtor's parents, spouse, or financial adviser about payment of a debt unless a court authorizes such action 4. harass or intimidate the debtor or make false or misleading statements 5. communicate with the debtor at any time after receiving notice that the debtor is refusing to pay the debt, except to advise the debtor of further action to be taken by the collection agency

what are the three government actions established by the Federal Food, Drug, and Cosmetic Act

1. food standards 2. specifications of safety levels of potentially hazardous food products 3. classifications of foods and food advertising

The FTC's Telemarketing Sales Rules Requires a Telemarketer to:

1. identify the seller's name 2. identify the product being sold 3. disclose all material facts related to the sale

five transactions subject to Regulation Z

1. installment loans 2. retail and installment sales 3. car loans 4. home improvement loans 5. real estate loans for less than $25,000

The Authority of the Consumer Product Safety Commission:

1. set safety standards for consumer products 2. ban the manufacture and sale of any product that the commission believes poses an unreasonable risk to consumers 3. remove from the market any products it believes to be imminently hazardous 4. require manufacturers to report on any products already sold or intended for sale if the products have proved to be hazardous 5. administer other product-safety legislation, including the Child Protection and Toy Safety Act of 1969 and the Federal Hazardous Substances act of 1960

The Fair Packaging and Labeling Act Requires That Food Product Labels Identify:

1. the product 2. the net quantity of the contents 3. the manufacturer 4. the packager or distributor

Under Federal Trade Commission Guidelines, Bait-and-Switch Advertising Occurs When:

1. the seller refuses to show the advertised item 2. fails to have reasonable quantity of the item in stock 3. fails to promise to deliver the advertised item within a reasonable time 4. discourages employees from selling the item

Subsequent to health reforms enacted in 2010, all restaurant chains with _____ or more locations are required to post the caloric content of the foods on their menus.

20

Regulation Z applies to any transaction involving an installment sales contract that calls for payment to be made in more than ____ installments.

4

Cease-and-desist order

An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court has deemed illegal.

Multiple-product order

An order issued by the Federal Trade Commission to a firm that has engaged in deceptive advertising by which the firm is required to cease and desist from false advertising not only in regard to the product that was the subject of the action but also in regard to all the firm's other products

Redcap Dairies sells yogurt to consumers that it knows to be contaminated by a harmful mold. Redcap Dairies would be held responsible under the

Federal Food, Drug, and Cosmetic Ac

The federal legislation that currently regulates food and drugs is the

Federal Food, Drug, and Cosmetic Art of 1938

Counteradvertising

New advertising that is undertaken pursuant to a Federal Trade Commission order for the purpose of correcting earlier false claims that were made about a product or service.

Geraldo receives mechanized telemarketing calls for the sale of vacation time-shares even though his name is on the national Do Not Call registry. This registry was established by an amendment to the Federal Trade Commission's

Telemarketing Sales Rule.

Which agency is dedicated to overseeing the practices of banks, mortgage lenders, and credit-card companies?

The Consumer Financial Protection Bureau.

Which act requires automakers to include the Environmental Protection Agency's fuel economy estimate?

The Energy Policy and Conservation Act

Which act was passed in an effort to combat identity theft?

The Fair and Accurate Credit Transactions Act

Consumer law

The body of statutes, agency rules, and judicial decisions protecting consumers of good and services from dangerous manufacturing techniques, mislabeling, unfair credit practices, deceptive advertising, and so on.

Hady's Health Services is advertising hair growth miracle cures for baldness and numerous related miracle cures. The FTC has received numerous complaints and will decide to issue a ______________ requiring Hady's to stop false advertising for all of its products.

a multiple-product order

After the FTC files a formal complaint, the advertiser may agree either to settle the complaint or to proceed to:

a hearing conducted by the FTC

Advertising that ________ to be based on factual evidence but is not reasonably supported by some evidence will be deemed deceptive.

appears

State and federal laws relating to the ability to cancel sales contracts from door-to-door salespersons are called

cooling off laws

Jasmine's General Store advertises cans of X-brand tomatoes for $.33 per can, although she does not have any in stock. When customers arrive to buy the tomatoes, Jasmine tells them that her stock of tomatoes has been sold and that she cannot get more at the lower price. She tells customers she has Y-brand tomatoes in stock for $.55 per can, and that the Y-brand tomatoes are far superior to the X-brand. Jasmine is

engaging in bait-and-switch advertising.

Acme Products manufacturers and markets Grow Tall, claiming that the product will make users grow a minimum of six inches taller. The FTC will likely find that the ad is:

deceptive, and the FTC may issue a cease-and-desist order

Ace Products manufactures and markets a product called Grow Tall. Ace claims in its advertising that Grow Tall will make its users grow a minimum of six inches taller than their current height. The Federal Trade Commission (FTC) will likely find that the ad is

deceptive, and the FTC may issue a cease-and-desist order.

The Equal Credit Opportunity Act (ECOA) prohibits lenders from denying credit solely on the basis of all of the following EXCEPT:

disability

After it determines that an advertisement is deceptive or unfair, the Federal Trade Commission's first step is to:

draft a formal complaint

Joellen owns a general store and advertises cans of Super Brand tomatoes for 75 cents per can, but she never has any in stock. So when consumers arrive she tells them that the tomatoes have been sold and she cannot get more. She tells customers that she has Extra Brand tomatoes for $1.50 per can and that they are far superior to Super Brand tomatoes. Joellen is:

engaging in bait-and-switch advertising.

T/F The FTC Mail or Telephone Order Merchandise Rule does not apply to orders placed online via smartphones and tablet devices.

false

T/F The only action that the government has when there is evidence of tainted foods is to ask the manufacturer to recall the items.

false

T/F When a consumer is denied credit or insurance on the basis of his or her credit report, the consumer does not have to be notified of that fact.

false

The Federal Trade Commission receives deceptive advertising complaints from many sources EXCEPT:

federal judges

Who is NOT covered by the Food Safety Modernization Act requirement to pay a fee and register with the U.S. Department of Health and Human Services?

food advertisers

How much time do distributors of consumer products have to notify the Consumer Product Safety Commission when they learn or a product defect that creates a substantial risk to the public?

immediately

Ramona discovers that a credit reporting agency shows her having not paid a loan that she paid off last year. She writes to the credit-reporting agency and requests an investigation. The agency must:

investigate and delete any errors in Ramona's report

Ramona checks her credit report through an online service and learns that a loan she paid off is still listed as unpaid. She writes to the agency that provided the report and requests an investigation. The agency must

investigate and delete any errors in Ramona's report.

Under the Postal Reorganization Act, if you receive unsolicited merchandise set through the U.S. mails, you can:

keep it, throw it away, or dispose of it in any manner you wish

Dom's Grill, Inc., borrows $10,000 to finance a new range and the payments will be made monthly over a two-year period. The bank:

need not make any special disclosures

Rico's Grill, Inc. is solely owned by Rico Vito. Rico's Grill borrows $10,000 from a local bank to finance the purchase of a new range. The payments are to be made monthly over a two-year period. The bank

need not make any special disclosures.

Some advertisements contain "half truths," meaning that the __________ information is true but incomplete and therefore leads consumers to a false conclusion.

presented

Vague generalities and obvious exaggerations are permissible and are known as

puffery

The penalty that will be imposed on a creditor who does not exactly follow the provisions of the Truth-in-Lending Act (TILA) is

rescission of the credit contract

Geraldo receives mechanized telemarketing calls for the of time-share homes even though he registered on the national "Do Not Call" registry. This registry was established by an amendment to the FTC's

telemarketing sales rule

Cowland, Inc. manufactures a low-cost generic cheese alternative. It adds a filler to the meat that it does not list on its label. Cowland's actions violate federal requirements relating to the labeling of food products. These requirements are enforced by

the U.S. Food and Drug Administration and the U.S. Department of Agriculture.

Dairy Cheese Inc. manufactures a low-cost generic cheese alternative to which it adds filler that is not listed on its label. As such, these actions violate federal requirements for food labeling and these requirements are enforced by:

the U.S. Food and Drug Administration and the U.S. Department of Agriculture.

A door-to-door salesperson convinces David and his wife, Sonia, to buy a vacuum cleaner. The next day, they learn that the same vacuum cleaner is available at a local discount store for one-third the price that they paid for it. In most states, David and Sonia have

three business days to cancel the transaction

T/F In an online ad, any disclosures should be placed as close as possible to the claim being qualified or be included within the claim itself.

true

As a general rule, labels must:

use words that are easily understood by the ordinary consumer

The Fair Debt Collection Practices Act requires a collection agency to include a ____________ whenever it initially contacts a debtor for payment of a debt or within five days of that initial contact.

validation notice

Community Theater Group, Inc. (CTG), a nonprofit organization, owes Stage Sound and Lighting (SSL) for services rendered two years ago. Ephraim, the owner of SSL, calls the treasurer of CTG at home once a week, at four A.M. When he calls, he states that he is working for a collection agency and asks when payment will be made. SSL's owner is in

violation of the Fair Debt Collection Practices Act.

Harold owes Soundstage Services for services rendered two years ago for which he hasn't paid. Soundstage's owner calls Harold at home once a week at four in the morning claiming that he is working for a collection agency and asks when payment will be made. The owner of Soundstage is in:

violation of the Fair Debt Collections Practices Act