Business Law Chapter 13
F
A credit collection agency may contact a debtor at any time. (T or F)
T
Ads must disclose relevant limitations underlying their claims. (T or F)
Bait-and-Switch Advertising
Advertising a product at an attractive price and then telling the consumer that the advertised product is not available or is of poor quality and encouraging her or him to purchase a more expensive item.
Cease-and-Desist Order
An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court has deemed illegal.
T
In a transaction subject to the Truth-in-Lending Act, the terms of a credit instrument must be fully disclosed.
F
A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost. (T or F)
F
A sanction known as bait-and-switch advertising requires a company to advertise the products of its competitor to counter its own false claims. (T or F)
Regulation Z
A set of rules issued by the Federal Reserve Board of Governors to implement the provisions of the Truth-in-Lending Act.
Deceptive Advertising
Advertising that misleads consumers, either by making unjustified claims regarding a product's composition, qualities, sponsorship, or performance or by omitting a material fact concerning the product's composition, qualities, sponsorship, or performance.
T
An information label must be attached to every new car to include the fuel economy estimate for the vehicle. (T or F)
Multiple Product Order
An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to all the firm's products.
the contents' net quantity
Bagels n' Pastries, Inc., makes and sells a variety of bread products. Bagels n' Pastries's product packages must include the company owner's identity. the contents' net quantity. the restaurants and stores in which the product is sold. the type of consumer most likely interested in the product.
clearly and conspicuously disclose the shipping cost in its ads.
Comfy's Bed Company advertises a special sale on mattresses on its website. The mattresses are normally sold for $1,000, but are advertised on the website for $499. The sale price does not, however, include shipping costs. Comfy's charges $250 for shipping any mattress. To avoid any claims of deceptive advertising, Comfy's should clearly and conspicuously disclose the shipping cost in its ads. display the shipping cost in small print on Mello's Web page. include the shipping cost on the last page of Mello's Web site. not reveal the shipping cost.
F
Credit can be denied solely on the basis of marital status. (T or F)
Creditworthy's credit terms.
Creditworthy Loan Company extends credit in the ordinary course of its busi-ness. Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of credit terms offered by other lenders. comparative prices for goods to be bought with the borrowed funds. Creditworthy's credit terms. the borrowers' credit scores.
investigate.
Elise and many other consumers complain to the Federal Trade Commission (FTC) that a Faux Diamonds Company ad is deceptive. The FTC's first step is to send a formal complaint. investigate. issue a cease-and-desist order. order restitution.
mislead a reasonable consumer.
In its ads, Crunchy Inc. makes various claims about its snack products. Crunchy's advertising claims would most likely be deemed deceptive if the claims mislead a reasonable consumer. contain vague generalities. consist of what is known as puffery. include obvious exaggerations.
"Cooling-Off" Laws
Laws that allow buyers of goods sold in certain transactions to cancel their contracts within three business days.
Fair Credit Reporting Act.
Logan's application to Metro Bank for a credit card is denied. Logan can obtain information on his credit history in a credit agency's files under no federal law. the Equal Credit Opportunity Act. the Fair Credit Reporting Act. the Fair Debt Collection Practices Act.
T
Manufacturers are required to report on any products intended for sale if the products have proved to be hazardous.
Counteradvertising
New advertising that is undertaken to correct earlier false claims that were made about a product.
remove the tool from the market.
Steel Tool Company makes and sells tools. One of the tools is believed to be hazardous. Steel may be required to export the tool and sell it only abroad. increase the price to cover the cost of any injuries or damage. reduce the price to indicate the hazard to consumers. remove the tool from the market.
the Truth-in-Lending Act
Teri borrows $10,000 from USA National 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.
F
The Federal Reserve Board of Governors has issued a regulation that governs credit provisions associated with sales contracts—Regulation Z.
T
The Food and Drug Administration must ensure the safety of new drugs.
a restaurant chain with twenty or more locations.
Under federal law, the calorie content of the food on a menu must be posted by Organic Mix, LLC, if Organic Mix is a restaurant chain with twenty or more locations. a food distributor with twenty or more customers. a food maker with twenty or more products. a food producer with twenty or more acres.
denying coverage for preexisting conditions.
Wellness Insurance Company offers health and medical insurance to consumers. Under current federal health-care laws, Wellness is prohibited from denying coverage for preexisting conditions. enabling more children to obtain health-insurance coverage. allowing adults under age twenty-six to remain on their parents' health insurance. ending lifetime and most annual limits on care.