BUS 404: Chapter 15 - Consumer Protection

Which of the following is true of substantive unconscionability? A) It primarily arises from lack of knowledge or lack of choice B) It occurs when a clause or contract does not provide a remedy from a breach C) It primarily arises when the parties to a contract have equal bargaining power D) It occurs when one party in a contract is spectacularly clever and the other is not

B) It occurs when a clause or contract does not provide a remedy from a breach

Which of the following credit reporting protections is offered by the federal Fair Credit Reporting Act? A. In all cases, negative information more than seven years old must be reported in a consumer's credit report B. All inaccurate information must be corrected or removed from a consumer's credit files usually within 30 days C. Consumers cannot sue a credit reporting agency or bank for damages even if their rights under the act have been violated D. Anyone using information from a credit reporting agency to deny a consumer credit cannot reveal the source of information to the consumer

B. All inaccurate information must be corrected or removed from a consumer's credit files usually within 30 days

The _________, authorized by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, is charged with writing and enforcing rules covering consumer financial products and series including mortgages, credit cards, payday loans, loan servicing, check cashing, debt collection, and others. A. Consumer Product Safety Commission B. Consumer Financial Protection Bureau C. American Federation of Labor D. Bureau of Public Debt

B. Consumer Financial Protection Bureau

Which of the following consumer protection agencies in the United States is charged with providing financial education, thereby promoting Americans' financial literacy? A. Consumer Product Safety Commission B. Consumer Financial Protection Bureau C. The Education Resources Information Center D. The Chief Financial Officers Council

B. Consumer Financial Protection Bureau

Under the ____________, liability for misuse of missing cards is capped at $50 if the consumer provides notice within two business days after learning of the loss A. Fair Debt Collection Practices Act B. Electronic Fund Transfer Act C. Fair Credit Billing Act D. Equal Credit Opportunity Act

B. Electronic Fund Transfer Act

Under the Fair Credit Billing Act (FCBA), a creditor must acknowledge receipt of a consumer compliant regarding an erroneous bill within 90 days (T/F)

False

Which of the following is true of procedural unconscionability in the context of contracts? A) It usually arises from lack of knowledge or a lack of choice B) It is a situation where the clause is so clearly unfair as to "shock the conscience of the court" C) It is a situation in which both the parties of a contract have equal bargaining power D) It occurs when one party in a contract is spectacularly clever and the other is not

A) It usually arises from lack of knowledge or a lack of choice

Which of the following is a primary fear associated with the Consumer Financial Protection Bureau's role in the finance market? A. Increased government regulation is likely to reduce the availability of credit B. Increased government regulation is key to reduce the cost of credit C. Increased government interference will increase the money supply in the market D. Increased government interference will increase consumer spending

A. Increased government regulation is likely to reduce the availability of credit

Which of the following is the federal agency charged with protecting consumers from "unreasonable risks of injury and death" from products such as toys, lawn mowers, washing machines, bicycles, fireworks, pools, portable heaters, and household chemicals? A. The Consumer Product Safety Commission B. The Consumer Goods Forum C. The Consumer Financial Protection Bureau D. The Federal Trade Commission

A. The Consumer Product Safety Commission

Under Chapter 13 of the Bankruptcy Act, individual debtors are prohibited from voluntarily seeking the protection of a court to arrange a debt adjustment plan (T/F)

False

Which of the following is true of credit reporting protections provided to consumers under the federal Fair Credit Reporting Act (FCRA)? A. In case of inaccurate information in a credit file, the concerned credit reporting agency must make the correction ,usually within 90 days B. If a person makes a request, the concerned credit reporting agency must give the person a list of all those who have recently sought information about him or her C. Credit reporting agencies do not need a written consent fro a person to provide information to the person's employer or prospective employer D. Negative information more than two years old must not be reported in a consumer's credit file

B. If a person makes a request, the concerned credit reporting agency must give the person a list of all those who have recently sought information about him or her

Which of the following is one of the key provisions of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009? A. Lenders can issue credit cards to those under age 21 without any objections B. Interest rates, with some exceptions, cannot be raised in the first year C. Credit card issuers can charge interest on bills paid on time D. Credit card companies can increase the annual percentage rate on al existing account balances

B. Interest rates, with some exceptions, cannot be raised in the first year

Which of the following is true of the Federal Trade Commission? A. It has the authority to impose criminal sanctions on those found guilty os soon as a citizen complaint is filed B. It operates as a miniature government with powerful quasi-legislative (rule-making) and quasi-judicial (adjudications) roles C.It does not have the authority to enforce privacy provisions in laws addressing the use of consumer credit reports D. It is solely responsible for enforcing many finance laws, including the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, and the Fair Credit Billing Act

B. It operates as a miniature government with powerful quasi-legislative (rule-making) and quasi-judicial (adjudications) roles

Which of the following best states the purpose of the Federal Trade Commission (FTC) A. It was created to ensure that the American economy imports more than it exports B. It was created to prevent "unfair methods of competition and unfair or deceptive acts or practices in and affecting commerce" C. It provides a mechanism to deal with the billing errors that accompany credit card and certain other "open-end" credit transactions D. It was designed to shield debtors from unfair debt collection tactics by collection agencies and attorneys who routinely operate as debt collectors

B. It was created to prevent "unfair methods of competition and unfair or deceptive atop of practices in and affecting commerce"

In the context of lemon laws, a new vehicle would be considered a lemon if it has been: A. Damage due to negligence on the part of a consumer B. Returned to the manufacturer or dealer three or four times to repair the same defect C. Sold by a dealer who his not registered in the state where the vehicle was purchased D. Stolen and resold to a new buyer

B. Returned to the manufacturer or dealer three or four times to repair the same defect

Which of the following is true of lemon laws? A.Very few states protect consumers through lemons laws B. The determination about whether a car is a lemon is usually handled by an arbitration panel C. They typically cover used cars for ten years or up to 100,00 miles after purchase D. Lemon laws are the same in every state

B. The determination about whether a car is a lemon is usually handled by an arbitration panel

Lucy uses her credit card to make purchases for her new house. She bills a sum of $2000 and repays $1200 dollars within a month. However, she is not able to repay the remaining $800 dollars for about a year. The debt collection partner of her bank repeatedly calls her during odd hours and threatens to seize her property if she fails to repay the outstanding amount along with an unreasonable late fee in a weeks time. In the context of the federal Fair Debt Collection Practices Act (FDCPA), which of the following statements holds true in this scenario? A. The act extends only to creditors who are themselves trying to recover money owed to them B. Lucy is not protected under the act unless the debt collection agency uses physical force on her C. Lucy is protected under the act as it prohibits creditor from making contact with a debtor during inconvenient hours D. The act allows debt collection agencies to employ any tactic to recover the outstanding debt from a consumer

C. Lucy is protected under the act as it prohibits creditor from making contact with a debtor during inconvenient hours

Which of the following federal agencies is primarily responsible for enforcing the finance laws such as the Electronic Fund Transfer Act and the Fair Credit Billing Act? A. The Chief Financial Officers Council B. The American Federation of Labor C. The Consumer Financial Protection Bureau D. The Consumer Product Safety Commission

C. The Consumer Financial Protection Bureau

Which of the following Acts was passed mostly as a response to anger over discriminating treatment of women in the financial marketplace? A. The Fair Debt Collection Practices Act B. The Social Security Act C. The Equal Credit Opportunity Act D. The Mortgage Financie Act

C. The Equal Credit Opportunity Act

When is a contract unconscionable? A. When foolishness exists on the part of one of the parties to the contract B. When one party is spectacularly clever and the other is not C. When some contracts are so unfair or oppressive as to demand court intervention D. When a want of knowledge exists on the part of one of the parties to the contract

C. When some contracts are so unfair or oppressive as to demand court intervention

Jones sold a wooden chair to Amy, claiming it to be an antique. However, Jones recently acquired the chair from a carpenter who specializes in reproducing antique furniture. When Amy showed the chair to an antique collector, he pointed out that it was a fake. Thus, Amy was a victim of ________________. A) Innocent misrepresentation B) Libel C) Slander D) Fraud

D) Fraud

Which of the following elements must be proved to judge a situation as fraud A) The injured party suffered a loss of at least $25,000 B) The misrepresentation was unintentional C) The injured party ignored the misrepresentation D) The misrepresented facts resulted in injury

D) The misrepresented facts resulted in injury

In the context of the Bankruptcy Act, a ________ can be voluntarily filed in federal court by a debtor, or creditors can seek an involuntary bankruptcy judgment A. Chapter 11 reorganization lawsuit B. Chapter 15 class action lawsuit C. Chapter 13 adjustment of debts petition D. Chapter 7 liquidation petition

D. Chapter 7 liquidation petition

Which of the following debt collection practices would be legal under the federal Fair Debt Collection Practices Act? A. Using physical force on a debtor to recover debt B. Making repeated phone calls to a debtor with the intent to harass C. Contacting a debtor in an unfair, abusive, or deceptive manner D. Contacting third parties for the purpose of locating a debtor

D. Contacting third parties for the purpose of locating a debtor

Catalina buys a car on loan from Elko Automobiles. She pays the car loan over four years in monthly installments. Yet, her bank sends inaccurate information to Citizen Safe, a local credit reporting agency (CRA), claiming that the installments were not made on time. As a result, Catalina is denied a home loan by another bank. In the context of the Fair Credit Reporting Act, which of the following can be concluded from this scenario? A. Catalina has no right to find out the information in her credit report B. If Catalina files a complaint against Citizen Safe, the agency will have up to 90 days to correct and remove the inaccurate information from Catalina's credit report C. Citizen Safe must change Catalina's credit report immediately upon her request D. If Catalina informs Citizen Safe about the inaccurate information, the agency must investigate her complaint and give her a written report

D. If Catalina informs Citizen Safe about the inaccurate information, the agency must investigate her complaint and give her a written report

Which of the following standards determines the Truth in Lending Act's applicability? A. The debtor must be an organization B. The amount secured as credit must be above $25,000 C. The purpose of the credit must not be personal D. The credit must be subject to a finance charge

D. The credit must be subject to a finance charge

Banning a product from the market is usually the first remedy sought by the Consumer Product Safety Commission (CPSC) (T/F)

False

Based on Julia's credit history, TrueMoney Bank denies her a loan In this case, the bank need not notify Julia and tell her where it secured her credit information (T/F)

False

For a debtor to be protected under the Truth in Lending Act (TILA), the credit obtained must be above $25,000 (T/F)

False

If a consumer claims that his or her credit file contains inaccurate informant the concerned credit reporting agency (CRA) merely has to verify that it took the information accurately from the original source and has no duty to investigate further (T/F)

False

Innocent misrepresentation differs from fraud only in that the falsehood was intentional in the former (T/F)

False

Lemon laws govern the export and sale of agricultural produce (T/F)

False

Mere foolishness or want of knowledge constitutes the grounds for unconscionably of contracts (T/F)

False

The Federal Trade Commission (FTC) has the authority to impose criminal sanctions on businesses that engage in unfair and deceptive trade practices (T/F)

False

The federal Fair Debt Collection Practices Act (FDCPA) extends to creditor who are themselves trying to recover money owed to them (T/F)

False

Chapter 11 of the Bankruptcy Act keeps creditors from a debtor's assets while the debtor, under the supervision of the court, works out a financial reorganization plan and continues to pay creditors (T/F)

True

Chapter 13 of the Bankruptcy Act permits only voluntary bankruptcies and is restricted to those with steady incomes and somewhat limited debts (T/F)

True

The Equal Credit Opportunity Act (ECOA) is designed to combat bias in lending (T/F)

True

The Federal Trade Commission's primary legislative direction is in issuing trade regulation rules to enforce the intent of broadly drawn congressional legislation (T/F)

True

The federal Fair Debt Collection Practices Act forbids debt collectors from contacting debtors during "inconvenient" hours (T/F)

True

The heart of the Truth in Lending Act (TILA) is the required conspicuous disclosure of the amount financed, the finance charge, the annual percentage rate, and the number of payments (T/F)

True

To enforce its policies and decisions, the Consumer Product Safety Commission (CPSC) holds both compliance and enforcement powers (T/F)

True

Under the Fair Credit Billing Act (FCBA) , a credit card holder who receives an erroneous bill must complain in writing to the creditor within 60 days of the time the bill was mailed (T/F)

True