Legal CH. 20 Mindtap

A credit-reporting agency that fails to comply with the Fair Credit Reporting Act is liable for actual damages, plus additional damages not to exceed _______ and attorney's fees.

$1000

The Telephone Consumer Protection Act gives consumers a right to sue for either ______ each violation of the act or for actual monetary losses.

$500

The FTC's Three Basic Requirements for Online Businesses to Help Them Comply With Existing Laws Prohibiting Deceptive Advertising

1. all ads-both online and offline-must be truthful and not misleading 2. the claims made in an ad must be substantiated -that is, advertisers must have evidence to back up their claims 3. ads cannot be unfair , which FTC defines as "likely to cause substantial consumer injury that consumers could not reasonably avoid and that is not outweighed by the benefit to consumers or competition"

The FTC's Telemarketing Sales Rules Requires a Telemarketer to

1. identify the seller's name 2. identify the product being sold 3.disclose all material facts related to the sale

The federal legislation that currently regulates food and drugs is the

Federal Food, Drug, and Cosmetic Act of 1938

Unwanted and unsolicited advertising sent via a fax machine may violate the

Telephone Consumer Protection Act

Which act requires automakers to include the Environmental Protection Agency's fuel economy estimate

The Energy Policy and Conservation Act

After the FTC files a formal complaint, the advertiser may agree either to settle the complaint or to proceed to

a hearing conducted by the FTC

Hady's Health Services is advertising hair growth miracle cures for baldness and numerous related miracle cures. The FTC has received numerous complaints and will decide to issue a __________ requiring Hady's to stop false advertising for all of its products.

a multiple-product order

The Equal Credit Opportunity Act (ECOA) prohibits lenders from denying credit solely on the basis of all of the following EXCEPT

disability

After it determines that an advertisement is deceptive or unfair, the Federal Trade Commission's first step is to

draft a formal complaint

The FTC Mail or Telephone Order Merchandise Rule does not apply to orders placed online via smartphones and tablet devices. t/f

false

The only action that the government has when there is evidence of tainted foods is to ask the manufacturer to recall the items t/f

false

Vague generalities and obvious exaggerations are permissible and are known as

puffery

Consumer protection laws regulate all of the following except

secured transactions

Advertising that appears to be based on factual evidence but is not reasonably supported by some evidence will be deemed deceptive. t/f

true

In an online ad, any disclosures should be placed as close as possible to the claim being qualified or be included within the claim itself. t/f

true

Some advertisements contain "half truths," meaning that the presented information is true but incomplete and therefore leads consumers to a false conclusion. t/f

true

Dom's Grill, Inc., borrows $10,000 to finance a new range and the payments will be made monthly over a two-year period. The bank: a. under the Truth-in-Lending Act must disclose to the president of Dom's Grill all of the credit terms and conditions of the loan. b. need not make any special disclosures. c. under the Fair Credit Reporting Act must disclose all of its credit terms, as well as those of two competing lenders.

b. need not make any special disclosures

How much time do distributors of consumer products have to notify the Consumer Product Safety Commission when they learn or a product defect that creates a substantial risk to the public? a. 10 days. b. Immediately. c. 3 days. d. 20 days.

b.immediately

State and federal laws relating to the ability to cancel sales contracts from door-to-door salespersons are called

cooling off laws

Who is NOT covered by the Food Safety Modernization Act requirement to pay a fee and register with the U.S. Department of Health and Human Services? a. Food packers b. Food processors c. Food distributors d. Food advertisers e. Food importers f. Food receivers g. Food holders h. Food manufacturers

d. food advertisers

Acme Products manufacturers and markets Grow Tall, claiming that the product will make users grow a minimum of six inches taller. The FTC will likely find that the ad is:

deceptive, and the FTC may issue a cease-and-desist order

As a general rule, labels must

use words that are easily understood by the ordinary consumer

The Fair Debt Collection Practices Act requires a collection agency to include a(n)_____ whenever it initially contacts a debtor for payment of a debt or within five days of that initial contact.

validation notice

The Authority of the Consumer Product Safety Commission

1. set safety standards for consumer products 2.ban the manufacture and sale of any product that the commission believes poses an "unbelievable risk" to customers 3.remove from the market any products it believes to be imminently hazardous 4. require manufactures to report on any products already sold or intended for sale if the products have proved to be hazardous 5. minister other product-safety legislation ,

The Fair Packaging and Labeling Act Requires That Food Product Labels Identify

1. the product 2. the net quantity of the contents 3.the manufacturer 4. the packager or distributer

Under Federal Trade Commission Guidelines, Bait-and-Switch Advertising Occurs When

1. the seller refused to show the advertised item 2. fails to have a reasonable quantity of the item in stock 3. fails to compromise to deliver the advertised item within a reasonable time 4. discourages employees from selling the item

five transactions subject to Regulation

1.installments land 2. retail and installment sales 3. car loans 4.home improvement loans 5.real estate loans for less than $25,000

Subsequent to health reforms enacted in 2010, all restaurant chains with______ or more locations are required to post the caloric content of the foods on their menus

20

A door-to-door salesperson convinces Janelle to buy a vacuum cleaner but the next day she learns that the same item is available at a local discount store for a third of the price. Generally, Janelle has ________ to cancel

3 days

Regulation Z applies to any transaction involving an installment sales contract that calls for payment to be made in more than_____ installments.

4

Which act was passed in an effort to combat identity theft? a. The Fair and Accurate Credit Transactions Act. b. The Federal Trade Commission Act. c. The Fair Credit Reporting Act

a. The Fair and Accurate Credit Transactions Act

Regulation Z governs: a. credit provisions associated with installment sales contracts. b. pyramid schemes and sales. c. complaints brought under the Federal Food, Drug, and Cosmetic Act. d. deceptive advertising.

a. credit provisions associated with installment sales contract

Under the Postal Reorganization Act, if you receive unsolicited merchandise set through the U.S. mails, you can: a. pay to return it. b. keep it, throw it away, or dispose of it in any manner you wish. c. attempt to resell it. d. pay for it even if you don't want it.

b. keep it, throw it away, or dispose of it in any manner you wish.

Joellen owns a general store and advertises cans of Super Brand tomatoes for 75 cents per can, but she never has any in stock. So when consumers arrive she tells them that the tomatoes have been sold and she cannot get more. She tells customers that she has Extra Brand tomatoes for $1.50 per can and that they are far superior to Super Brand tomatoes. Joellen is: a. employing good business tactics. b. engaging in counteradvertising. c. engaging in bait-and-switch advertising. d. committing a violation of regulation Z

c. engaging in bait-and-switch advertising.

Which agency is dedicated to overseeing the practices of banks, mortgage lenders, and credit-card companies? a. The Securities and Exchange Commission. b. The Federal Trade Commission. c. The Consumer Financial Protection Bureau. d. The Fair Credit Reporting Bureau.

c. the Consumer Financial Protection Bureau

Dairy Cheese Inc. manufactures a low-cost generic cheese alternative to which it adds filler that is not listed on its label. As such, these actions violate federal requirements for food labeling and these requirements are enforced by a. fair labeling Authority with the Commerce Department. b. Regulation Z. c. the U.S. Food and Drug Administration and the U.S. Department of Agriculture.

c. the U.S. Food and Drug Administration and the U.S. Department of Agriculture.

When a consumer is denied credit or insurance on the basis of his or her credit report, the consumer does not have to be notified of that fact. t/f

false

The Federal Trade Commission receives deceptive advertising complaints from many sources EXCEPT:

federal judges

the three government actions established by the Federal Food, Drug, and Cosmetic Act.

food standards, specification of safety levels of potentially hazardous food products, classifications of foods and food advertising

Ramona discovers that a credit reporting agency shows her having not paid a loan that she paid off last year. She writes to the credit-reporting agency and requests an investigation. The agency must:

investigate and delete any errors in Ramona's report

The Consumer Product Safety Commission (CPSC) determines that a Barbie Jeep is unsafe for children to ride in it. The CPSC has the power to

remove all barbie jeeps from the market

The penalty that will be imposed on a creditor who does not exactly follow the provisions of the Truth-in-Lending Act (TILA) is

rescission of the credit contract

Geraldo receives mechanized telemarketing calls for the of time-share homes even though he registered on the national "Do Not Call" registry. This registry was established by an amendment to the FTC's

telemarketing sales rule

Harold owes Soundstage Services for services rendered two years ago for which he hasn't paid. Soundstage's owner calls Harold at home once a week at four in the morning claiming that he is working for a collection agency and asks when payment will be made. The owner of Soundstage is in:

violations of the Fair Debt Collections Practices Act