Chapter 21: Consumer Protection

Mattress Company advertises a special sale—all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should - clearly and conspicuously disclose the shipping cost in its ads. - display the shipping cost in small print on ads displayed in stores. - include the shipping cost in small print on its receipts. - not reveal the shipping cost.

- clearly and conspicuously disclose the shipping cost in its ads.

According to the FTC, all ads, both online and offline, must be truthful. not misleading. substantiated All of the choices.

All of the choices.

An ad for Bagels, Inc., attracts buyers who would otherwise have made purchases from Croissant Company. To bring a successful claim against Bagels, Inc., under the federal Lanham Act for false advertising, Croissant must establish that the ad was false or deceptive. the buyers were deceived by the ad. the ad directly caused Croissant to lose sales. All of the choices.

All of the choices.

Products banned by the CPSC have included fireworks. cribs. toys. All of these choices.

All of these choices.

The FTC Mail, Internet, or Telephone Order Merchandise Rule protects consumers who purchase goods via the U.S. Postal Service. Internet. phone. All of these choices.

All of these choices.

The FTC's Telemarketing Sales Rule (TSR) requires a telemarketer to identify the seller's name. describe the product being sold. disclose all material facts related to the sale. All of these choices.

All of these choices.

The Truth-in-Lending Act (TILA) requirements apply only to persons who lends funds. sell on credit. arrange extensions of credit. All of these choices.

All of these choices.

An ad for Running Shoes, Inc., states that its footwear is "The Winner's Choice." Because of this ad, the Federal Trade Commission is most likely to issue a cease-and-desist order. a counter-advertising order. a settlement. None of the choices.

None of the choices.

Consumer Staples, Inc., includes in its advertising obvious exaggerations, vague generalities, and puffery about its products. The firm may be subject to sanctions for the obvious exaggerations. the vague generalities. the puffery. None of the choices.

None of the choices.

A set of rules issued by the Federal Reserve Board of Governors to implement the provisions of the Truth-in-Lending Act is known as Equal Credit Opportunity. Fair Credit Reporting. Regulation Z. the Truth-in-Lending Act.

Regulation Z.

Which does not come under the Truth-in-Lending Act (TILA)? Lending of funds. Selling on credit. Sales between two consumers. Arrangement extensions of credit.

Sales between two consumers.

The Truth-in-Lending Act (TILA) is basically statutory law. equal credit opportunity law. a disclosure law. intellectual property law.

a disclosure law.

Lawnscape Company and Mowers, Inc., make yard tools. Both companies use only steel produced in the United States. Lawnscape's ad claims, "We use only U.S. steel, while our competitor uses inferior foreign steel!" Under the advertising standards of the Federal Trade Commission Act, this statement is most likely an obvious exaggeration. puffery. a false claim about a competitor's product. a half-truth.

a false claim about a competitor's product.

The Telephone Consumer Protection Act (TCPA) prohibits telephone solicitation using an automatic telephone dialing system or a prerecorded voice. cold-calling techniques. telemarketing identifying the seller. puffery.

an automatic telephone dialing system or a prerecorded voice.

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is a cease-and-desist order. bait-and-switch advertising. counter-advertising. puffery

bait-and-switch advertising.

Power Hardware advertises new wireless chainsaws for 50% off on its store windows, but when interested customers come into the store and inquire about it, the employee states that the wireless chainsaws are not available because they're on backorder, but they have plenty of traditional chainsaws in stock. This is bait-and-switch advertising. counter-advertising. cease-and-desist order. puffery.

bait-and-switch advertising.

When a company's deceptive ad leads to wrongful charges to consumers, the FTC may seek other remedies, including cease-and-desist order. damages and restitution. counteradvertising. Regulation Z.

damages and restitution.

If a reasonable consumer would be misled by an advertising claim, this is Regulation Z. Truth-in-Lending Act. bait-and-switch advertising. deceptive adverting.

deceptive adverting.

Spicy Salsa, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Tangy Taco Sauce Company, Spicy's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to conduct negotiations between the competitors. draft a formal complaint. issue a cease-and-desist order. permit Spicy to broadcast similarly deceptive counter-advertising.

draft a formal complaint.

The FTC's Telemarketing Sales Rule (TSR) applies to any offer made to consumers in the United States except online offers. except offers in print and writing. even if the offer comes from a foreign firm. None of these choices.

even if the offer comes from a foreign firm.

The Federal Trade Commission (FTC) receives numerous complaints that a Renewal Subscriptions, Inc., ad is deceptive. The FTC's first step is to draft a formal complaint. investigate. issue a cease-and-desist order. refer the complaints to the U.S. Department of Justice.

investigate.

Faux Products, Inc., in its ads, makes false claims about its own products and about the products of its competitors. The firm may be subject to sanctions for the false claims about its products only. its competitors' products only. its products and its competitors' products. None of the choices.

its products and its competitors' products.

If your name is on the Do Not Call Registry, then telemarketers can send you a letter through the U.S. Postal Service instead. can email you instead. can call you and leave a voicemail. must refrain from calling you.

must refrain from calling you.

If a consumer requests to have her name to be removed from a marketing list, the telemarketer can ignore her. can remove her name and ask for her email address instead. can keep her name and make a follow up call. must remove her name.

must remove her name.

Maria, whose first language is Spanish, receives a call from a telemarketer and agrees to the sale. The telemarketer must notify Maria of the cooling-off law in an official letter. notify Maria of the cooling-off law in an email. notify Maria of the cooling-off law in English. notify Maria of the cooling-off law in Spanish.

notify Maria of the cooling-off law in Spanish.

The Consumer Product Safety Commission (CPSC) can ban the manufacture and sale of any product that the commission believes contains deceptive advertising. poses an unreasonable risk to consumers. is a scam. is overpriced.

poses an unreasonable risk to consumers.

The TRACED Act requires telephone providers to offer consumers more effective automatic telephone dialing systems. robocall-blocking options. prerecorded voicemails. puffery.

robocall-blocking options.

The Consumer Product Safety Act authorizes the Consumer Product Safety Commission (CPSC) to convict violators. adjudicate complex cases. set penalty fees. set safety standards for consumer products.

set safety standards for consumer products.

EZ Workout, Inc., advertises Fit Step, an exercise machine, online. In its ads, EZ claims that the use of Fit Step measurably enhances the attainability of fitness and weight loss goals and will contribute significantly to the length of its users' lives. In this context, the company's ads and claims must be hyperlinked. avoidable. substantiated. All of the choices.

substantiated.

The Truth-in-Lending Act (TILA) is administered by the state. the Federal Reserve Board. the Consumer Financial Protection Bureau. the Federal Trade Commission.

the Federal Reserve Board.

Looking to buy a new car, Eddie applies for a loan at a credit union since he's a member, but the loan officer doesn't tell him the loan terms. This violates no federal law. the Fair and Accurate Credit Transactions Act. the Fair Debt Collection Practices Act. the Truth-in-Lending Act.

the Truth-in-Lending Act.

Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to no federal law. the Consumer Leasing Act. the Consumer Product Safety Act. the Truth-in-Lending Act.

the Truth-in-Lending Act.

Many states and the FTC have "cooling-off" laws that permit buyers to cancel certain sales contracts within 24 hours. two business days. three business days. one week.

three business days.

The TSR makes it illegal for telemarketers to misrepresent their goods or services. identify the seller's name. describe the product being sold. disclose all material facts related to the sale.

to misrepresent their goods or services.

The CPSC frequently works with manufacturers to conduct accounting audits. deceptive advertising compliance regulations. voluntary recalls of defective products. None of these choices.

voluntary recalls of defective products.