Chapter 25: Business Law

According to the Truth in Lending Act, if your credit card is stolen and someone makes unauthorized purchases on your account, your liability for those charges cannot exceed ______ per card if prompt notification of the theft is made to the credit card company.

$50

Jose loses his credit card at a crowded city park. He notifies his credit card company immediately. Five days later, $4,507 is charged on the card. How much of those charges is Jose liable for?

$50

In which year was the Public Health Cigarette Smoking Act passed?

1970

Which of the following is an accurate statement regarding the Federal Trade Commission (FTC) and the consumer protection laws related to funeral home services?

Funeral homes may not require customers to buy certain funeral goods and services as a condition for receiving other funeral goods and services.

Federal laws regulating the credit industry to protect consumers include all but which of the following?

The Federal Hazardous Substances Act

According to the Truth in Lending Act, if a consumer unknowingly purchases a damaged good using a credit card, the consumer is not obligated to pay for the good if all but which of the following requirements are met?

The item was purchased for commercial purposes.

A consumer law is ______.

either a statute or an administrative rule

Bait-and-switch advertising is a deceptive practice in which a seller advertises a ______ price for an item, generally ______ to the consumer, and then pushes the consumer to buy a ______ expensive item.

low; unavailable; more

An advertisement for a fast-food burger restaurant that states "World's Best Burgers" is an example of which of the following according to U.S. standards?

puffery

______ is the use of generalities and clear exaggerations in advertising.

puffing

The Public Health Cigarette Smoking Act prohibits ______ and ______ cigarette advertisements.

radio; television

Each commissioner on the Federal Trade Commission serves a ______-year term.

seven

Which of the following is one of the primary federal statutes that address product safety?

the Consumer Product Safety Act

Which law simplifies the Food and Drug Administration's process of approving generic drugs?

the Drug-Price Competition and Patent-Term Restoration Act

Claire purchases a $125 suit on her credit card from a local clothing store in her hometown. When she takes it home, she realizes it is damaged. She tries to take the product back for a full refund or store credit, but the store refuses. In this situation, ____________________.

the credit card company cannot bill Claire for the damaged item

Punjab is a 20-year-old student who emigrated here from India but now is a U.S. citizen. When he tries to get a credit card, the worker on the phone tells him that they will not give him a credit card because he was born in India and he is too young. In this situation, _________________.

the credit card company is violating the ECOA

The Federal Trade Commission (FTC) has created rules that govern specific types of sales in which the consumer is in a more vulnerable position compared to a consumer who walks into a traditional retail setting. Types of sales with special FTC rules include all but which of the following?

yard

Pursuant to the Interstate Land Sales Full Disclosure Act, anyone planning to sell or lease ______ or more lots of unimproved land through a common ______ must file an initial statement of record with ______ Office of Interstate Land Sales Registration.

100; promotional plan; Department of Housing and Urban Development's

With ______ advertising, a company explicitly states that formerly advertised claims were untrue.

corrective

Puffing is ______.

permissible

According to the Fair and Accurate Credit Transactions Act, major credit reporting agencies are required to provide consumers with a free copy of their credit reports every ______.

12 months

In ______, Congress passed the Equal Credit Opportunity Act as an amendment to the ______.

1974; Truth in Lending Act

In which year was the Telemarketing and Consumer Fraud and Abuse Prevention Act passed?

1994

In which year was the Can-Spam Act passed?

2003

According to the Mail or Telephone Order Merchandise Rule of 1993, if a seller does not specify a time for shipping an order, the seller is limited to ______ from receipt of the order.

30 days

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

5

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

Accurate; identity-theft

A consumer owes $3,000 on his credit card and has not made monthly payments for six months. The case is referred to a collection agency. Next, the agency contacts the consumer's acquaintances, telling them about the consumer's debt in an effort to pressure the consumer into paying the debt. This type of debt-collecting behavior is prohibited by the ______.

Fair Debt Collection Practices Act

In his first 100 days, President Donald Trump signed a bill that repealed Internet privacy rules established by the _____ in 2016.

Federal Communications Commission

A cease-and-desist order is a ______ order requiring that a company stop its illegal behavior.

Federal Trade Commission

If the ______ finds that deception is pervasive in an industry, it can recommend rule-making.

Federal Trade Commission

Which of the following are true about the impact of the repealing of Internet privacy rules established by the Federal Communications Commission in 2016?

Internet service providers may continue to collect data like geolocation, browsing history, and other important personal information. Internet service providers can sell data to online advertising agencies.

The ______ forbids phone solicitation using an automatic telephone dialing system or a prerecorded voice and also makes it illegal to transmit advertisements by fax unless the recipient agrees to the fax transmission.

Telephone Consumer Protection Act

Which of the following is an inaccurate statement regarding the Fair Credit Billing Act (FCBA)?

The FCBA is enforced by the Interstate Commerce Commission.

Which statement regarding the Federal Trade Commission (FTC) and the consumer protection laws related to funeral home services is inaccurate?

The FTC does not regulate the funeral home industry as it does not perceive this area of commerce as being ripe for consumer manipulation and abuse.

____________ prohibits radio and television cigarette advertisements.

The Public Health Cigarette Smoking Act

The Mail or Telephone Order Merchandise Rule of 1993 established all but which of the following key guidelines regarding mail and telephone orders?

The seller must pay the total cost of shipping and handling associated with a mail or telephone order.

Which of the following is not an element that must be proven to show an advertisement has a deceptive claim?

The statement was said with the intention of misleading.

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

Z

The Fair Debt Collection Practices Act applies to ______.

a debt collector who regularly attempts to collect debts on behalf of others

The Fair Credit Reporting Act imposes a duty on credit reporting agencies to ensure ______.

accurate credit reporting

The Credit Card Fraud Act states that it is unlawful to possess ______ credit card.

an unauthorized

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, they are engaging in ______ advertising.

bait-and-switch

When a seller advertises a low price for an item generally unavailable to the consumer and then pushes the consumer to buy a more expensive item, they are engaging in __________________.

bait-and-switch advertising

According to the Cooling-Off Rule, how must a salesperson notify the consumer that a sales transaction may be canceled?

both verbally and in writing

The ______ Act states that spammers may not send e-mail messages containing false information or provide consumers with no option concerning whether they receive messages in the future.

can-spam

If an administrative law judge decides that a company has violated the law, the Federal Trade Commission issues a(n) ______ requiring the company to stop the illegal behavior.

cease-and-desist order

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

consent order

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

consumer

Corrective advertising is also known as ______.

counteradvertising

The wool Products Labeling Act of 1939 is a ______ law.

federal

The U.S. Congress amended the Pure Food and Drugs Act when it created the Federal ______ Act in 1938.

food, drug, and cosmetic act

In response to ______ discrimination, Congress passed the Equal Credit Opportunity Act.

gender

Hilda owes a significant amount of debt to a doctor's office, and they hired a collection agency to take up those claims. The collection agency calls frequently, sometimes as late as 1 a.m. or 2 a.m. on weekdays. In this case, the collection agency ____________________.

is violating the Fair Debt Collection Practices Act

An administrative rule has the effect of ______.

law

The Real Estate Settlement Procedures Act requires the disclosure of information regarding ______ loans to buyers.

mortgage

The Federal Trade Commission is an independent federal agency with five commissioners appointed by the ______ and confirmed by the ______.

president; senate

Deceptive advertising is the practice of advertising with claims that mislead or could mislead a(n) ______ consumer.

reasonable

Which federal administrative agency enforces the Telephone Consumer Protection Act?

the Federal Communications Commission

Which law amended the Pure Food and Drugs Act?

the Federal Food, Drug, and Cosmetic Act

Which federal administrative agency enforces the Fair Credit Billing Act?

the Federal Trade Commission

Which federal administrative agency is responsible for administering the Federal Food, Drug, and Cosmetic Act?

the U.S. Food and Drug Administration

By virtue of the Telemarketing and Consumer Fraud and Abuse Prevention Act, Congress asked which federal administrative agency to define "deceptive and abusive" telemarketing practices and required the agency to create and enforce rules governing telemarketing that would prohibit such practices?

the federal trade commission

With regard to door-to-door sales, the Federal Trade Commission created the Cooling-Off Rule, giving consumers ______ days to cancel purchases they make from salespeople who come to their homes.

three

The Credit Card Fraud Act states that it is unlawful to use the account number of another's credit card ______.

to perpetrate fraud

The three major credit reporting agencies are Experian, Equifax and ________.

transunion

Which of the following laws requires that sellers disclose the terms of the credit or loan so that consumers can better compare a variety of credit lines or loans?

truth in lending act