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Exam 45: Consumer Law

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Question 1

Multiple Choice

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The Equal Credit Opportunity Act makes it illegal for creditors to deny credit to individuals on the basis of ________.

A) Race, religion, national origin, color, sex, marital status, or age
B) Race, national origin, color, sex, marital status, or age
C) Race, religion, national origin, color, sex, or age
D) Race, religion, national origin, color, or sex
E) Race, religion, color, sex, marital status, or age

F) A) and B)
G) None of the above

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Question 2

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As soon as a complaint is filed against a company with the FTC, the FTC will issue a copy of the complaint to the company.

A) True
B) False

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Question 3

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[The Funeral Outlet] Owen operates a funeral home called Owen's Funeral Outlet. Owen likes to keep things simple. He generally has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Owen also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which there has been a recent death because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Owen also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. Sometimes, Owen varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. After many consumer complaints, the Federal Trade Commission and other federal agencies investigate Owen. He hires a good lawyer with his profits in an attempt to stay out of trouble. -Regarding Owen's tactic of offering one flat price for funeral services with no itemization, which of the following statements is true?

The Federal Food, Drug, and Cosmetic Act is enforced by which agency?

Which of the following is the fine that the Federal Trade Commission may impose if a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts is violated?

To combat deceptive advertisements and half-truths, the Federal Trade Commission mandates ________, which requires advertisers to have a reasonable basis for claims made in advertisements.

Pamela registered her new phone number on the Do Not Call Registry. How long will her number remain on the list?

What are the three elements of a deceptive claim?

Which of the following standard information does the Nutrition Labeling and Education Act of 1990 require to be provided on food labels?

If a company is found to have deceptively advertised, the FTC may require that the company engage in ________, an advertisement that specifically states that the formerly advertised claims are false.

[The Funeral Outlet] Owen operates a funeral home called Owen's Funeral Outlet. Owen likes to keep things simple. He generally has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Owen also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which there has been a recent death because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Owen also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. Sometimes, Owen varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. After many consumer complaints, the Federal Trade Commission and other federal agencies investigate Owen. He hires a good lawyer with his profits in an attempt to stay out of trouble. -Regarding Owen's practice of telling potential customers on the telephone costs in small increments without revealing the total price, which of the following statements is true?

[Convertibles] Oscar, a new car dealer, advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each. He had only three Wind vehicles, however; and when those were sold, he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000. Rosa, a customer who decided to purchase one of the more expensive vehicles, needed financing in order to do so. She had $10,000 to pay on the car and sought a loan from XYZ Bank for the remainder. She wanted the loan for a specific amount of time. XYZ Bank offered her the loan and she agreed. The only information she received from XYZ Bank was confirmation that she borrowed $15,000 at an 8 percent interest rate. After receiving several complaints, the Federal Trade Commission disapproved of Oscar's action in regard to the Wind vehicles. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Oscar's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he offered for sale. -Which of the following types of information should Rosa have received from XYZ Bank, according to the Truth-in-Lending Act?

[Miracle Pill] Julia advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and that for men would result in all those things, plus hair growth. Her television advertisement showed miracle results allegedly obtained by consumers. Julia cautioned, however, that ingestion of the pill for six months was required before results would be evident. The pill was wildly popular. The Federal Trade Commission, however, investigated and determined that Julia had no reasonable basis for the claims she made in advertisements. Julia claimed that she was merely involved in the use of generalities and clear exaggerations. The Commission disagreed and issued a formal administrative complaint against her. After a hearing, an order was issued requiring that Julia stop advertising and selling the pills. After losing all appeals, Julia continued selling the pills until she was fined by the Federal Trade Commission. She has since left the country and cannot be located. -The order issued by the Federal Trade Commission dictating that Julia stop advertising and selling the pills is known as which of the following?

All public signs and advertisements in Quebec must be solely in French.

After an FTC complaint, if the judge decides the company has violated the law, the FTC issues a consent order.

The Federal Trade Commission creates ________, interpretations of consumer laws, to help encourage business to stop unlawful behavior.

If a company wishes to claim that its products are "Made in the U.S.A.," which of the following does the Federal Trade Commission require?

Major credit reporting agencies are now required to provide consumers with a free copy of their credit reports every ________.

An advertisement in the paper states: "These cars are hybrid cars" which is true, but fails to indicate that the car must be plugged in every night would be an example of which of the following?

A judge has determined that Billy's Widgets has engaged in deceptive advertising. What is the FTC's next step?