Chapter 19 Finance

The Used Car Rule requires dealers to give consumers the following information except:

A statement about known defects with the vehicle

The Food, Drug and Cosmetic Act of 1938 expanded the powers of the FDA to include:

All of the other choices

The Food and Drug Administration does not have which of the following powers:

All of the other choices are FDA powers

The Food and Drug Administration does not have which of the following powers:

All of the other choices are FDA powers or To prosecute physicians who violate the learned intermediary rule

Which of these does not violate the Fair Debt Collection Practices Act? The debt collector:

All of the other choices are illegal

The Fair Debt Collection Practices Act prohibits the following by debt collectors except:

All of the other choices are prohibited

The Fair Debt Collection Practices Act applies to:

Debt collection agencies

One reason foreign countries adopt FDA standards for drug production is that they want to:

Export their products to the U.S.

The Consumer Leasing Act does not apply to leases for

Furniture for a dentist's office

Which of the following statements about the Truth-in-Lending Act is (are) true?

It does not apply to many loans over $25,000 (not: all of the other choices are true)

A "trade regulation rule" issued by the FTC that applies to a specific business practice sets a standard:

None of the other choices

The Federal Reserve Board has written a regulation to implement the Equal Credit Opportunity Act, it is:

Regulation B

Private parties may initiate civil actions for false advertising claims under:

The Lanham Act

The FTC sued the company that produces "Hooked on Phonics." The company claimed its products could teach users, even learning disabled users, how to read. In this case:

The company had to stop making unsubstantiated claims

The Nutrition Labeling and Education Act applies:

To more than 250,000 products

Nutrition labeling does not require which of the following to be listed per serving portion:

All of the other choices must be listed

Most states have statutes that:

Allow consumers or the attorney general to sue for deceptive business practices

Under the Fair and Accurate Credit Transaction Act, credit reporting services must:

Allow consumers to see their credit reports annually for free

The Food, Drug, and Cosmetic Act as passed in 1938:

Allowed the FDA to approve drugs for sale as prescription or non-prescription drugs

A consumer buys furniture. The store gives the consumer $2,000 credit to be paid back over two years. The store fails to disclose the interest rate that it charges for credit. Under the Truth-in-Lending Act, the store is wrong for not listing the interest:

And may have to pay the consumer up to $1,000 (civil damages) plus attorney fees

The 1962 Kefauver Amendment to the Food and Drug Act gave the FDA authority for the first time to:

Approve drugs based on their proven effectiveness

FTC consent decrees agreed to by firms accused of illegal trade practices:

Contain the terms of a settlement and may include redress for consumers

What is not a feature of the Consumer Credit Protection Act:

Creditors may not charge interest rates that exceed the federal maximum rates

If company A engages in false advertising that lures customers away from company B, and company B sues, under the Lanham Act it may collect:

Double the value of profits lost due to the false advertising

The FTC test for unfairness does not include which of the following elements, as applied to business practice?

It causes substantial harm to consumers and consumers cannot reasonably avoid the injury and the injury is harmful in its net effects

Every year millions of children are vaccinated against polio. For reasons that are unclear, some children contract polio from the vaccine, even though their dose was no different than the others. Assume that child who contracts polio after receiving a vaccine sues the vaccine maker for damages. The likely result of the case will be that:

It is uncertain if liability will be imposed; FDA approval is not a shield against liability (not: no liability will be imposed because the FDA Act prohibits liability from being imposed on drug producers who sell FDA)

When the FTC tried to sue a company for scams advertised on the Internet:

It was treated the same as other deceptive sales; fines were paid

An art gallery sells fake "authorized" Vincent Van Gogh prints to clients for $50,000 each, telling buyers their purchases are good investments. If the FTC sues, the gallery will:

Lose because its actions meet the FTC test for deception

The Electronic Fund Transfer Act:

Makes financial institutions liable to the consumer for damages caused by its failure to make an electronic transfer of funds and limits liability of the erring financial institution to actual damages proved

A major enforcement agency of the Fair Credit Billing Act is:

None of the other choices

A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make the chunky stuff in the soup be near the top. This ad was:

None of the other choices

Federal regulation of the relationship between consumers and creditors is based on an umbrella law that contains many credit laws:

None of the other choices

The Consumer Leasing Act would apply to which of the following leases:

None of the other choices

The Electronic Fund Transfer Act concerns liability limits for stolen ATM cards. Which statement is correct about maximum consumer liability:

None of the other choices

The Food Quality Protection Act holds that a substance may be approved for use in food if:

None of the other choices

The Nutrition Labeling and Education Act applies:

None of the other choices

The Truth-in-Lending Act applies to which of the following transactions?

None of the other choices

The average cost of developing a new drug and clearing all FDA regulations to get the drug to market are about a billion dollars and are:

None of the other choices

Which of these is most likely to be attacked by the FTC as a deceptive business practice?

None of the other choices

A financial institution (such as a bank) that issues electronic fund-transfer cards must provide consumers:

None of the other choices (not: a bi-annual statement of account)

Under the Equal Credit Opportunity Act, a creditor is permitted to:

None of the other choices (not: request any information they think necessary to make a decision about a credit applicant)

A company advertises that test driving a car from New York to Los Angeles got 35 miles per gallon. That is true, but the mileage was achieved by carefully driving at the speed limit, which resulted in better mileage than the ordinary driver gets. Under the FTC deception policy, this ad is:

Not deceptive; because Mose consumers understand that test mileage is not the same as regular highway driving (not: none of the other choices)

A company advertises that test driving a car from New York to Los Angeles got 35 miles per gallon. That is true, but the mileage was achieved by carefully driving at the speed limit, which resulted in better mileage than the ordinary driver gets. Under the FTC deception policy, this ad is:

Not deceptive; because most consumers understand that test mileage is not the same as regular highway driving

If there is an error in a consumer's file at a consumer reporting agency, the person should:

Notify the consumer reporting agency, which changes the information or puts a statement from the consumer in the file

Comparing regulation of drugs to other countries, the U.S. is:

One of the strictest nations and has great impact on the world market

Which of the following items is not required to be disclosed by a creditor as a part of the statement given a debtor?

Portion of interest charges to cover creditor expenses

What regulation, written by the Federal Reserve Board to implement the Truth-in-Lending Act, specifies items that must be listed as part of consumer finance charges?

Regulation Z

In addition to having the power to decide when foods and drugs will be allowed to be marketed, the FDA can remove products from the market. An example of the FDA's use of its power to remove products from the market is the:

Removal of certain orange juice from the market

The Food, Drug and Cosmetic Act of 1938 did not expand the powers of the FDA to include:

Require nutrition labels on food

Which of the following is not a function of the Food and Drug Administration?

Restaurant sanitation inspections or All of the other choices are functions of the FDA

A company mails consumers cards telling them they have won valuable prizes. When a consumer attempts to collect her prize, she discovers that she must pay $500 to collect the goods. In this case the FTC is likely to:

Seek a consent decree to end the practice

Suppose a debt collector has been calling and sending notices of a debt you owe. If you wish to end further notification from the debt collector, you must:

Send the debt collector a letter requesting they stop contract

Under the Fair and Accurate Credit Transaction Act, the FTC has issued regulations:

That credit card receipts may not show more than the last five numbers of a card or all of the other choices

Gold Hair shampoo advertises that it is the best for bringing out golden highlights of people with blond hair. Gold Hair ads state: "Tests prove that our shampoo is superior to other shampoos in making blond hair shine like gold." What FTC program monitors such claims?

The advertising substantiation program

Under the Consumer Leasing Act, which of the following must be given before a consumer becomes obligated under a lease?

The identity of the party responsible for maintaining the property

Which of the following is part of the FTC policy statement for determining if a practice is deceptive?

There is a representation or omission of information in a communication to consumers and the deception is likely to mislead a reasonable consumer and the deception may cause physical harm to consumers (not: there is a representation or omission of information in a communication to consumers and the deception is likely to mislead a reasonable consumer)

An extermination company promised customers who had their houses treated for termites that they had a life-time guarantee for free re-treatment if they paid a small fixed annual fee. The company lost money on the guarantee and so it raised the fee. If the FTC sued the company, it would claim the practice was:

Unfair only

Before passage of the 1938 Food, Drug, and Cosmetic Act, drugs were:

either legal or illegal (not: completely unregulated, you could buy anything)