Chapter 42

While reviewing and amending the Telemarketing Sales Rule in 2002, the FTC created the: ______.

"Do Not Call" registry

FACTA requires that financial institutions must work with the FTC to: _______.

"red-flag" suspicious transactions that might be a sign of identity theft

The Truth in Lending Act (TILA) includes three categories of loans. Identify them. (Check all that apply.)

- Closed-end credit - Credit card applications and solicitations - Open-end credit

Which of the following behaviors are prohibited by the Fair Debt Collection Practices Act (FDCPA)?

- Contacting a debtor who has notified the collection agency that he or she wants no contact with the agency - Using obscene or threatening language when communicating with the debtor - Contacting a debtor at work if the debtor's employer objects - Misrepresenting the collection agency as a lawyer or a police officer

Under FACTA, the major agencies required to provide credit reports are: ______. (Check all that apply.)

- Equifax - Experian - TransUnion

How does the FTC protect consumers? (Check all that apply.)

- Legal action - Consumer education

Identify the three key federal laws regulating the credit industry to protect consumers. (Check all that apply.)

- The Fair Credit Reporting Act - The Truth in Lending Act - The Fair Debt Collection Practices Act

Several federal laws regulate product labeling. Identify them. (Check all that apply.)

- The Flammable Fabrics Act of 1953 - The Wool Products Labeling Act of 1939

TILA stipulates that if three conditions are met, a consumer who unknowingly purchases damaged goods using a credit card will not be obligated to pay for the goods. Identify these conditions. (Check all that apply.)

- The consumer must purchase the item near his or her home. - The consumer must make a good-faith effort to resolve the dispute, such as asking the store for a refund. - The item must cost more than $50.

Identify the conditions under which a credit or loan is subject to the Truth in Lending Act (TILA). (Check all that apply.)

- The creditor must be making the loan to a natural person, not a legal entity. - The credit or loan must be subject to a finance charge or must have repayments of more than four installments. - TILA applies to those who lend money or arrange for credit through the ordinary course of business.

The requirements for the second provision of the CARD Act specifies that:_______. (Check all that apply.)

- creditors must inform consumers up front about the dates on which payments are considered to be late - all billing statements must conspicuously display if and when the interest rate will increase - creditors must notify consumers about payoff timing

The Equal Credit Opportunity Act amends the TILA and makes it illegal for creditors to deny credit on the basis of: ______. (Check all that apply.)

- marital status - color - race - age

The Telemarketing Sales Rule of 1995 requires telemarketers to: ______. (Check all that apply.)

- remove the consumer's name from the potential contact list if the consumer so requests - notify the listener or reader as to whether the sale is nonrefundable - tell the total cost of goods being sold

Consumers who must purchase goods and services for a funeral and burial are often vulnerable for several reasons, including that:______. (Check all that apply.)

- the consumer is usually preoccupied with his or her loss of a relative or friend and is unlikely to comparison shop - grieving consumers can be more readily persuaded to purchase unnecessary expensive items for this last tribute to their loved one

The Credit Card Fraud Act states that it is unlawful to: ______. (Check all that apply.)

- use account numbers of another's credit card to perpetuate fraud - possess an unauthorized credit card - counterfeit or alter a credit card

When the Federal Trade Commission (FTC) receives numerous complaints about a business, this results in an FTC action against the business. From first to last, arrange the steps involved in the FTC action.

1. The FTC starts a nonpublic investigation on the company. 2. If the FTC Believes that the company violated the law, the FTC sends a complaint to the alleged violator. 3. If the alleged violator refuses to enter a consent order, the FTC may decide to issue a formal administrative complaint. 4. There is a hearing before an administrative law judge. 5. If the judge finds the company guilty, the FTC issues a cease-and-desist order.

Under the 1975 Mail-Order Rule, as amended by the Mail or Telephone Order Merchandise Rule of 1993, sellers must ship items within the time promised and if they do not specify a time, the seller is limited to ______ days from receipt of the order.

30

Section ______ of the Federal Trade Commission Act prohibits deceptive and unfair acts in commercial settings, including consumer purchases.

5

An administrative rule has the effect of which of the following?

A law

Which of the following is the only authorized site for government-required free credit reports from the three major credit bureaus?

AnnualCreditReport.com

Creditors believing that unmarried women with children would be unlikely to pay their debits is an example of the discrimination that the Opportunity Act prohibits.

Blank 1: Equal Blank 2: Credit

The issuing of a(n) leads to a hearing where, if an administrative law judge decides the law has been broken, a cease-and-desist order will be issued.

Blank 1: complaint

Protecting the online will require additional protective legislation.

Blank 1: consumer or consumers

The two main statutes that address product safety are the Federal Food, Drug and Cosmetic Act and the Consumer Product Safety Act.

Blank 1: federal

The Federal Food, Drug, and Cosmetic Act and the Consumer Product Safety Act are the two main statutes that address safety.

Blank 1: product or products

The law that states that spammers may not send email messages containing false information is the: ______.

Can-Spam Act of 2003

The ______ amended the Truth in Lending Act to provide greater protection for people hiring automobiles and other goods.

Consumer Leasing Act

The ______ states that consumers have three days to cancel a purchase made during a door-to-door sale.

Cooling-Off Rule

Under ______, the three major credit reporting agencies are Experian, Equifax and TransUnion.

FACTA

The ______ is a federal agency that has classified certain types of deceptive or unfair advertising practices and created specific rules defining and prohibiting violations of these rules.

FTC

True or false: The Fair Lending Act is a key federal law regulating the credit industry.

False

The entity that has the power to govern credit provisions related to sales contracts through its Regulation Z is the: ______.

Federal Reserve Board of Governors

The Fair Credit Billing Act (FCBA) of 1986 is enforced by the: ______.

Federal Trade Commission (FTC)

Which of the following is correct regarding AnnualCreditReport.com?

It is the only authorized site for government-required free credit reports from Equifax, Experian, and TransUnion.

Which of the following is correct regarding TILA?

It protects consumers who unknowingly purchase damaged goods using a credit card.

Which of the following is probably the largest transaction a consumer will make, which is why there are special regulations regarding these transactions?

Real estate

The Federal Reserve Board of Governors has the power to govern credit provisions related to sales contracts through its ______.

Regulation Z

If the FTC finds that deception is pervasive in an industry, the FTC can recommend which of the following?

Rule making

Many forms of deceptive advertising are inadmissible under: ______.

Section 5 of the FTCA

Two major acts regulate advertising by telephone and fax. They are the Telephone Consumer Protection Act of 1991 and the: ______.

Telemarketing and Consumer Fraud and Abuse Prevention Act

The United States Congress created the Federal Trade Commission through which of the following?

The Federal Trade Commission Act of 1914

Which of the following prohibits radio and television cigarette advertisements?

The Public Health Cigarette Smoking Act

Which of the following was the first federal legislation regulating food and drugs?

The Pure Food and Drugs Act

Which of the following includes three categories of loans?

The TILA

Which of the following was passed in 1991 to regulate advertising by telephone and fax?

The Telephone Consumer Protection Act

Which of the following is correct regarding lemon laws?

They vary from state to state.

Technology is often a driving force of change in consumer law.

True

True or false: When businesses follow the FTC guidelines, they can cut potentially steep costs associated with violating consumer laws.

True

The reason the United States Congress passed several acts requiring sellers of real estate to disclose certain information about the property is because: ________.

a real estate purchase is probably one of the largest purchases a consumer will make

Section 5 of the FTCA specifically analyzes deceptive advertising -- in other words, those advertising claims that mislead or could mislead: ______.

a reasonable consumer

Bait-and-switch advertising occurs when sellers: _______.

advertise a low price for an item generally unavailable to the consumer and then push the consumer to buy a more expensive item

When consumers file complaints about a business with the FTC, those complaints trigger a chain of events leading to: ______.

an FTC action against the violator

The Consumer Leasing Act of 1988 amended the TILA to provide greater protection for people leasing: _______.

automobiles and other goods

When Sam, a laptop seller, advertises a low price for a specific range of laptops that are generally unavailable to the customer and then pushes the customer to buy a more expensive laptop, Sam is engaging in ______ advertising.

bait-and-switch

The Fair Credit Billing Act of 1986 was created to handle: _______.

billing errors in credit card statements

The 1984 Used Motor Vehicle Registration Rule requires that a dealer attach a(n): ______.

buyer's guide label to any used car he or she is attempting to sell

Under the TILA, if you notify your credit card company before unauthorized charges are made against your card, you: ______.

cannot be held liable for any of the charges

A(n) ______ is an FTC order that requires a company to stop its illegal behavior.

cease-and-desist order

The purpose of the "Do Not Call" registry is to give consumers a(n): ______.

choice regarding telemarketing calls

The United States Congress passed the Credit Card Fraud Act to: _______.

close existing loopholes in federal laws that allowed credit card fraud to be pervasive

The purpose of the Truth in Lending Act is to require that sellers disclose the terms of the credit or loan to help consumers: ______.

compare a variety of credit lines or loans

One problem with door-to-door sales is that the consumer does not have a chance to: _______.

compare products and services to find the best service for his or her money

The FTC educates businesses to help them: ______.

comply voluntarily with consumer laws

According to the 1984 Funeral Rule, funeral homes may not misrepresent legal or cemetery requirements or require that the customer buy certain funeral goods and services as a(n): _______.

condition for receiving other funeral goods and services

A(n) ______ order is a statement in which a company agrees to stop the disputed behavior but does not admit it broke the law.

consent

A statute or administrative rule serving to protect consumer interests is known as a(n) Blank______ law.

consumer

TILA applies to ______ loans only.

consumer

A consumer law is a statute or administrative rule serving to protect: ______.

consumer interests

If a person believes she is a victim of identity theft, she may: ______.

contact the FTC and an alert will be placed in her credit files

Advertising in which a company explicitly states that formerly advertised claims were untrue is known as ______ advertising.

corrective

Corrective advertising is also known as: ______.

counter advertising

A financial institution will access an individual's creditworthiness through a(n) ______ report.

credit

The TILA establishes certain consumer protection rules regarding unauthorized charges to a(n): ______.

credit card

Ad substantiation, which is mandated by the FTC, is used to combat: ______.

deceptive advertisements and half-truths

The Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 was created to require the FTC to: ______.

define deceptive and abusive telemarketing practices and enforce rules governing telemarketing that would prohibit such practices

The Cooling-Off Rule was made because consumers are particularly vulnerable: _______.

during a door-to-door sale

The Fair Credit Reporting Act of 1970 was passed to: _______.

ensure accurate credit reporting

The third provision of the CARD Act prohibits credit card companies from: _______.

extending credit offers to anyone under 21

The Real Estate Settlement Procedures Act of 1974 requires that the lender must give the buyer an estimate of costs for: ______.

finalizing the real estate purchase

The FTC is an independent federal agency with: ______.

five commissioners appointed by the United States president and confirmed by the U.S. Senate

The United States Food and Drug Administration (FDA) creates standards to regulate: ______.

food, drugs, cosmetics, and medical devices

Under FACTA, major credit reporting agencies are now required to provide consumers with a(n): _______.

free copy of their credit report every 12 months

Anyone who receives unsolicited merchandise may treat the item as a(n): _______.

gift

If a credit bureau issues a consumer credit report for a reason not specified by the FCRA, it may be: _______.

held liable for damages and additional fines

The Fair and Accurate Credit Transactions Act was passed in response to the growing number of: ______.

identity theft cases

According to the Mail or Telephone Order Merchandise Rule of 1993 and the 1975 Mail Order Rule, if a seller cannot ship an item within the promised time, the seller must notify the customer: _______.

in writing and offer the opportunity to cancel

The FTC issues documents which interpret the consumer laws and encourage businesses to stop unlawful behavior. These documents are known as: ______.

industry guides

Under the Interstate Land Sales Full Disclosure Act, anyone planning to sell or lease 100 or more lots of unimproved land through a common promotional plan must file a(n): _______.

initial statement with HUD's Office of Interstate Land Sales Registration

Under the 1984 Used Motor Vehicle Registration Rule, the label that a dealer must attach to a used-car vehicle must say that the vehicle: _______.

is being sold "as is"

One way the CPSC protects the public from injuries associated with consumer products is by: ______.

issuing and enforcing mandatory standards regarding product safety

If a consumer receives unsolicited merchandise, he or she may: _______.

keep or dispose of the merchandise

State consumer protection laws against used-car fraud are also known as ______ laws.

lemon

The essential purpose of a credit report is to allow the: _______.

lender to assess the borrower's creditworthiness

The Interstate Land Sales Full Disclosure Act requires disclosure of information to consumers so that they can: _______.

make informed choices about real estate purchases

The FTC created the 1975 Mail Order Rule and the Mail or Telephone Order Merchandise Rule of 1993 because telephone and mail-order purchases trigger: ______.

more complaints than do traditional retail or door-to-door sales

The Real Estate Settlement Procedures Act of 1974 and its 1976 amendments require the disclosure of information regarding: ______.

mortgage loans to the buyers

A(n) ______ order applies not only to the product that was the subject of the action, but also to other products of the same firm.

multiple-product

If the FTC takes action against a company and proves the advertising is deceptive, the FTC may issue a form of cease-and-desist order known as a(n): ______.

multiple-product order

The Can Spam Act of 2003 states that spammers may not send email messages containing false information or provide consumers with: _______.

no option concerning whether they receive messages in the future

In the Oliveira v. Amoco Oil Co. case, a claim was made against Amoco for deceptive advertisements. Damages were sought by the plaintiffs. The plaintiffs claimed that the false advertisements created a higher demand for Amoco gas, creating artificially high gas prices that hurt consumers. The court stated that a "market theory" of causation is: _______.

not enough to establish damages in an individual case

The second provision of the CARD Act covers: ______.

notification and information

To protect used-car buyers, the United States Congress passed the Odometer Act of 1973 which protects against: _______.

odometer fraud in used-car sales

Technological advances such as the Internet provide consumers with a host of benefits, but these developments are: ______.

often prone to abuses not covered by existing consumer law

The FTC decides whether an advertisement is deceptive: ______.

on a case-by-case basis

The Fair Debt Collection Practices Act applies to debt collectors who regularly attempt to collect debts: ______.

on behalf of others

The Consumer Product Safety Commission conducts research: _______.

on potentially hazardous products

Under Section 5 of the FTCA, "puffing" is: ______.

permissible

The Mail or Telephone Order Merchandise Rule of 1993 extended protections to consumers who purchase goods over: ______.

phone lines, including through computers and fax machines

The TCPA forbids phone solicitation using an automatic telephone dialing system or a(n): _______.

prerecorded voice

The CPSC educates consumers about: _______.

product safety

The Nutrition Labeling and Education Act of 1990 requires that standard nutrition information (calories and fat) be: ______.

provided on food labels

The CPSC can arrange for ______ of products in the market.

recalls

The TCPA makes it illegal to transmit advertisements via fax unless the: ______.

recipient agrees to the transmission

The court, in Oliveira v. Amoco Oil, stated that in order to show that damages are the result of deceptive advertising, there must be evidence that there was

reliance on the advertisement

The FTC has classified certain types of deceptive or unfair advertising practices and created: ______.

specific rules defining and prohibiting violations of these rules

A consent order is a statement in which a company agrees to: ______.

stop the disputed behavior but not admit it broke the law

The FTC mandates that advertisers have a reasonable basis for the claims made in advertisements. This is known as ad: ______.

substantiation

The reason that consumers need protection for online transactions is that the Internet facilitates: _______.

such a huge volume of commerce that additional focused protective legislation is needed

The Smokeless Tobacco Act prohibits _______ tobacco.

television and radio advertisements for smokeless

The question as to whether an advertisement is deceptive or not is generally decided by: _______.

the FTC

According to the Cooling-Off Rule, the consumer must be notified both verbally and in writing that: _______.

the sales transaction may be canceled

A difficulty with door-to-door sales is that the consumer finds it difficult to get away from: ______.

the salesperson

The Cooling-Off Rule gives consumers ______ to cancel purchases they make from salespeople who come to their homes.

three days

The Truth in Lending Act requires that sellers disclose the terms of the credit or loan and, more importantly, consumers must: ______.

understand the disclosure of terms

The CPSC was created to protect the public against: ______.

unreasonable risks of injuries and deaths associated with consumer products

The United States Congress passed the Odometer Act of 1973 to protect ______ buyers.

used-car