169. In Telebrands v. FTC the FTC sued a company selling an electronic muscle simulation abdominal belt, which the
FTC claimed did nothing, but the good looking models in the ads implied that people using the product would
become slim. The appeals court held that:
a. Telebrand did nothing wrong because everyone knows that electronic muscle simulation is not a legitimate
way to lose weight
b. Telebrands’s compare and save strategy was not transferable to other products, which contributed to the
court’s decision to reverse the district court’s order against the company
c. Telebrands’s compare and save strategy was transferable to other products, which contributed to the court’s
decision to reverse the district court’s order against the company
d. Telebrands’s compare and save strategy was transferable to other products, which contributed to the court’s
decision to uphold the district court’s order against the company
e. Telebrands’s compare and save strategy was not transferable to other products, which contributed to the
court’s decision to uphold the district court’s order against the company
170. In Telebrands v. FTC the FTC sued a company selling an electronic muscle simulation abdominal belt, which the
FTC claimed did nothing, but the good looking models in the ads implied that people using the product would
become slim. The appeals court held that:
a. Telebrand did nothing wrong because everyone knows that electronic muscle simulation is not a legitimate
way to lose weight
b. Telebrands’s compare and save strategy was not transferable to other products, which contributed to the
court’s decision to reverse the district court’s order against the company
c. Telebrands’s compare and save strategy was transferable to other products, which contributed to the court’s
decision to reverse the district court’s order against the company
d. Telebrands’s compare and save strategy was not transferable to other products, which contributed to the
court’s decision to uphold the district court’s order against the company
e. none of the other choices are correct
171. Private parties may initiate civil actions for false advertising claims under:
a. the Moss-Magnuson Act
b. the Cooper-Dewitt Act
c. the Lanham Act
d. Article 2 of the Constitution
e. the Truth-in–Advertising Act
172. Private parties may initiate civil actions for false advertising claims under:
a. the Moss-Magnuson Act
b. the Cooper-Dewitt Act
c. the Truth-in–Advertising Act
d. Article 2 of the Constitution
e. none of the other choices
173. False advertising cases brought by private parties under the Lanham Act:
a. often yield far more expensive results than most FTC advertising cases
b. rarely yield more expensive results than most FTC advertising cases
c. are processed more quickly and cheaply than most FTC advertising cases
d. are rare in the United States
e. are held to a different standard than FTC cases
174. When private cases claiming misleading advertising are brought under the Lanham Act:
a. the courts generally consider the meaning of “deceptive” the same as does the FTC
b. the courts generally do not consider the meaning of “deceptive” the same as does the FTC
c. the courts are not as harsh in their consideration of the meaning of “deceptive” as the FTC
d. the courts are much harsher in their consideration of the meaning of “deceptive” compared to the FTC
e. none of the other choices are correct
175. U-Haul sued a competitor, Jartran, for making false claims about the two companies in its ads. The lawsuit, which
was successful, was brought under the:
a. FTC Act
b. Magnuson-Moss Act
c. Lanham Act
d. False Advertising Act
e. Advertising Substantiation Act
176. If company A engages in false advertising that lures customers away from company B, and company B sues, under
the Lanham Act it may collect:
a. the value of damage to its trademark reputation
b. the value of profits lost due to the false advertising
c. double the value of profits lost due to the false adverting
d. treble the value of profits lost due to false advertising
e. none of the other choices; the Lanham Act does not apply in such cases
177. If company A engages in false advertising that lures customers away from company B, and company B sues, under
the Lanham Act it may collect:
a. the value of damage to its trademark reputation
b. the cost of counter advertising needed to overcome the false advertising
c. treble the value of profits lost due to false advertising
d. nothing; the Lanham Act does not apply in such cases
e. none of the other choices
178. A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make
the chunky stuff in the soup be near the top. This ad was:
a. illegal in the U.S. and probably illegal in most advanced European nations and in Japan
b. legal in the U.S., but probably illegal as being deceptive in much of Europe and in Japan
c. illegal in the U.S., but would probably be legal in most of Europe and in Japan
d. legal in the U.S. and would probably be legal in most of Europe and in Japan since it does not injure
consumers
e. none of the other choices
179. A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make
the chunky stuff in the soup be near the top. This ad was:
a. illegal in the U.S. and probably illegal in most advanced European nations and in Japan
b. legal in the U.S., but probably illegal as being deceptive in much of Europe and in Japan
c. legal in the U.S. and would probably be legal in most of Europe and in Japan since it does not injure
consumers
d. legal everywhere if approved by the World Trade Organization
e. none of the other choices
180. A “trade regulation rule” issued by the FTC that applies to a specific business practice sets a standard:
a. that everyone in the industry must follow or be subject to criminal conviction
b. for certain practices that are thought to be especially susceptible to deceptive acts
c. after a violation is proven the FTC can close down the violator’s business
d. is voluntary but provides quality guidance for the industry
e. must be agreed upon by a majority of the members of the industry to become law
181. A “trade regulation rule” issued by the FTC that applies to a specific business practice sets a standard:
a. that everyone in the industry must follow or be subject to criminal conviction
b. must be agreed upon by a majority of the members of the industry to become law
c. after a violation is proven the FTC can close down the violator’s business
d. is voluntary but provides quality guidance for the industry
e. none of the other choices
182. Before a FTC trade regulation rule can be finalized it:
a. must be published in several national newspapers
b. must be registered with the World Trade Organization
c. must be published in the Federal Register
d. must be shown to the President
e. must be voted on by Congress
183. Before being finalized, a FTC trade regulation rule must be published in the Federal Register so that:
a. the President can read it
b. interested parties may comment on it
c. the House of Representatives can review it
d. the Supreme Court can make sure it is legal
e. none of the other specific choices are correct
184. When a FTC trade regulation rule is finalized it becomes part of the:
a. Federal Register
b. Code of Trade Regulations
c. Code of Federal Regulations
d. Code of State Regulations
e. Federal Trade Regulation Code
185. When a FTC trade regulation rule is finalized it becomes part of the:
a. Federal Register
b. Code of Trade Regulations
c. Federal Trade Regulation Code
d. Code of State Regulations
e. none of the other choices are correct
186. Which of the following is an example of an FTC trade regulation rule?
a. The Mail Order Rule
b. The R-value Rule
c. The Used-Car Rule
d. all of the other choices
e. none of the other choices
187. The R-value Rule is:
a. a FTC trade regulation rule regarding insulation
b. a FTC standard for measuring a business‘s profits
c. a FTC standard for advertising carpet thickness
d. a FTC standard regarding vitamin levels in cereals
e. none of the other choices are correct
188. Which of the following is an example of an FTC trade regulation rule?
a. The Deodorant Rule
b. The Office Furniture Rule
c. The Used-Car Rule
d. all of the other choices
e. none of the other choices
189. One of the best-known trade regulation rules is the:
a. the Deodorant Rule
b. the Office Furniture Rule
c. the Mail-Order Rule
d. the R-value Rule
e. none of the other choices
190. The “Mail Order Rule” states that if a company:
a. buys products through the mail it must use the U.S. Postal Service, and not a private courier system
b. buys products through the mail from a foreign country, it must register with the FTC
c. sells products through the mail it must have a reasonable basis for expecting to ship the products within the
time advertised
d. sells products through the mail is must provide toll-free 800 phone numbers for its customers to use so that
they do not spend additional money placing an order
e. none of the other choices are correct
191. The “Mail Order Rule” states that if a company:
a. buys products through the mail it must use the U.S. Postal Service, and not a private courier system
b. buys products through the mail from a foreign country, it must register with the FTC
c. sells products through the mail it must ship the product within 14 business days
d. sells products through the mail is must provide toll-free 800 phone numbers for its customers to use so that
they do not spend additional money placing an order
e. none of the other choices are correct
192. Under the FTC’s Mail-Order Rule:
a. shipping dates must be stated on offers
b. shipment date is entirely up to the seller
c. if goods cannot be shipped on time, the price must be lowered
d. if goods cannot be shipped on time, the company must pay the customer a fee
e. none of the other choices are correct
193. Under the FTC‘s Used Car Rule the Buyer’s Guide must contain:
a. a statement of the terms of any warranty offered with the car
b. prominent statement of whether the dealer is selling the car “as is” and, if so, that the consumer must pay for
any repairs needed after buying the car
c. warning that oral promises are difficult to enforce, with a suggestion to get all promises in writing
d. a suggestion that the consumer ask for an independent inspection of the car
e. all of the other choices are required
194. Under the FTC‘s Used Car Rule the Buyer’s Guide must contain:
a. a promise to pay for all repairs required in the next 30 days
b. the color of the car
c. warning that oral promises are difficult to enforce, with a suggestion to get all promises in writing
d. all of the other specific choices are required
e. none of the other specific choices are required
195. Under the FTC‘s Used Car Rule the Buyer’s Guide must contain:
a. a promise to pay for all repairs required in the next 30 days
b. the color of the car
c. a suggestion that the consumer ask for an independent inspection of the car
d. all of the other specific choices are required
e. none of the other specific choices are required
196. Under the FTC‘s Used Car Rule the Buyer’s Guide must contain:
a. prominent statement of whether the dealer is selling the car “as is” and, if so, that the consumer must pay for
any repairs needed after buying the car
b. the color of the car
c. a statement that the consumer need not ask for an independent inspection of the car
d. all of the other specific choices are required
e. none of the other specific choices are required
197. Under the FTC’s Used Car Rule the Buyer’s Guide need NOT contain:
a. a statement of the terms of any warranty offered with the car
b. prominent statement of whether the dealer is selling the car “as is” and, if so, that the consumer must pay for
any repairs needed after buying the car
c. warning that oral promises are difficult to enforce, with a suggestion to get all promises in writing
d. a suggestion that the consumer ask for an independent inspection of the car
e. all of the other choices are required
198. Under the FTC’s Used Car Rule the Buyer’s Guide need NOT contain:
a. a statement of the terms of any warranty offered with the car
b. prominent statement of whether the dealer is selling the car “as is” and, if so, that the consumer must pay for
any repairs needed after buying the car
c. warning that oral promises are difficult to enforce, with a suggestion to get all promises in writing
d. a suggestion that the consumer ask for an independent inspection of the car
e. the color of the car
199. The Used Car Rule requires dealers to give consumers the following information except:
a. a statement about any warranty terms offered with the vehicle
b. a statement about known defects with the vehicle
c. a warning that oral promises may not be enforceable
d. a suggestion that the consumer get an independent inspection of the vehicle
e. all of the other choices are required
200. The Used Car Rule requires dealers to give consumers the following information except:
a. a statement about any warranty terms offered with the vehicle
b. a notice that there is no warranty if that is the case
c. a warning that oral promises may not be enforceable
d. a suggestion that the consumer get an independent inspection of the vehicle
e. all of the other choices are required
201. When the FTC tried to sue a company for scams advertised on the Internet:
a. it was treated the same as other deceptive sales; fines were paid
b. the appeals court held that there could be no suit because of First Amendment rights
c. the appeals court held that there could be no suit because jurisdiction over the Internet belongs to the Federal
Communications Commission, not the FTC
d. the appeals court held that there could be no suit because this exceeded the powers of the agency; Congress
would have to amend the FTC Act
e. none of the other choices
202. When the FTC tried to sue a company for scams advertised on the Internet:
a. the appeals court held the FTC had no jurisdiction on Internet commerce
b. the appeals court held that there could be no suit because of First Amendment rights
c. the appeals court held that there could be no suit because jurisdiction over the Internet belongs to the Federal
Communications Commission, not the FTC
d. the appeals court held that there could be no suit because this exceeded the powers of the agency; Congress
would have to amend the FTC Act
e. none of the other choices
203. Most states have statutes that:
a. allow consumers or the attorney general to sue for deceptive business practices
b. allow consumers to sue for deceptive business practices
c. allow the attorney general to sue to deceptive business practices
d. automatically incorporate Trade Regulations Rules into state law
e. none of the other choices
204. In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with
a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive.
When the consumer sued, the courts held that:
a. the FTC acted against the company on behalf of similarly affected consumers and won warranty
enforcement for all such consumers
b. the company proved that its warranty was not “lifetime” as to ordinary maintenance, so the consumer’s claim
was rejected
c. the company violated the state deceptive practices act and was liable under that
d. the attorney general could sue on behalf of all similarly affected consumers in the state
e. none of the other choices
205. In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with
a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive.
When the consumer sued, the courts held that:
a. the FTC acted against the company on behalf of similarly affected consumers and won warranty
enforcement for all such consumers
b. the company proved that its warranty was not “lifetime” as to ordinary maintenance, so the consumer’s claim
was rejected
c. the company was losing money on the warranty so, to prevent bankruptcy, could limit its liability to five
year’s coverage
d. the attorney general could sue on behalf of all similarly affected consumers in the state
e. none of the other choices
206. In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with
a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive.
When the consumer sued, the courts held that:
a. since the Missouri Merchandising Practices Act does not supplement the definition of common law fraud
there was a need to prove an intent to defraud or reliance and the company was not liable
b. the defendant failed to prove an intent to defraud or reliance and so the company was not liable
c. since the Missouri Merchandising Practices Act supplements the definition of common law fraud there was
no need to prove an intent to defraud or reliance and the company was liable
d. the home owner did not maintain his air conditioning system properly, so the warranty was void and the
company not liable
e. none of the other choices are correct
207. Federal regulation of the relationship between consumers and creditors is based on an umbrella law that contains
many credit laws:
a. the Truth-in–Lending Act
b. the Consumer Credit Protection Act
c. the Equal Credit Opportunity Act
d. the Fair Consumer Credit Act
e. none of the other choices
208. Federal regulation of the relationship between consumers and creditors is based on an umbrella law that contains
many credit laws:
a. the Truth-in–Lending Act
b. the Fair Debt Collection Practices Act
c. the Equal Credit Opportunity Act
d. the Fair Consumer Credit Act
e. none of the other choices
209. The Consumer Credit Protection Act was passed in:
a. 1909
b. 1928
c. 1948
d. 1958
e. 1968
210. When the Consumer Credit Protection Act was passed in 1968 there was about $100 billion worth of consumer
credit outstanding; not the figure is about:
a. $200 billion
b. $300 billion
c. $1 trillion
d. $2.5 trillion
e. $5 trillion
211. When the Consumer Credit Protection Act was passed in 1968 there was about
outstanding.
a. $100 billion
b. $300 billion
c. $1 trillion
d. $2.5 trillion
e. $5 trillion
worth of consumer credit
212. What is not a feature of the Consumer Credit Protection Act:
a. abusive debt collection tactics are limited
b. credit reporting agencies must follow certain rules about accuracy in consumer reports
c. creditors must follow certain procedures for handling charges disputed by consumers
d. creditors may not charge interest rates that exceed the federal maximum rates
e. all of the other choices are features of the Act
213. What is not a feature of the Consumer Credit Protection Act:
a. abusive debt collection tactics are limited
b. credit reporting agencies must follow certain rules about accuracy in consumer reports
c. creditors must follow certain procedures for handling charges disputed by consumers
d. creditors must disclose all relevant terms in credit transactions
e. all of the other choices are features of the Act
214. Truth in lending refers to the requirement that creditors:
a. must disclose all relevant terms in credit transactions
b. must not use sex or race to determine a person’s creditworthiness
c. must not use abusive debt collection techniques
d. all of the other specific choices are correct
e. none of the other specific choices are correct
215. The first law under the Consumer Credit Protection Act was:
a. Truth-in-Lending Act (TILA)
b. Fair Credit Reporting Act
c. Equal Credit Opportunity Act
d. Electronic Funds Transfer Act
e. none of the other choices
216. The Truth-in–Lending Act:
a. is intended to help married women establish credit history
b. is intended to eliminate credit discrimination on the basis of sex, race, color, religion, and other characteristics
set forth in the Act
c. encourages competition in financing consumer credit
d. restricts interest rates creditors may charge consumers
e. all of the other choices
217. Which of the following statements about the Truth-in-Lending Act is (are) true?
a. it limits the interest rates that may be charged
b. it prohibits the use of appraisal fees
c. it does not apply to many loans over $25,000
d. it requires all consumers be offered identical credit terms
e. all of the other choices are true
218. The Truth-in-Lending Act covers only certain classes of consumer credit transactions. For example, the:
a. debtor must be a business organization
b. creditor may not be a business organization
c. creditor must be in the business of regularly granting credit
d. debtor must be a business organization and the creditor must be in the business of regularly granting credit
e. creditor may not be a business organization and the creditor must be in the business of regularly granting
credit
219. The Truth-in-Lending Act applies to which of the following transactions?
a. your friend loans you $4,000
b. you purchase a condo and get an $85,500 loan for that
c. your company, Shoes, Inc., borrows $10,000 to buy more inventory
d. all of the other specific choices
e. none of the other choices
220. The Truth-in-Lending Act applies to which of the following transactions?
a. a department store gives you $3,000 credit for furniture purchases
b. you purchase and get an $85,500 loan for a condo
c. your friend loans you $4,000
d. none of the other choices
e. all of the other specific choices
221. The Truth-in–Lending Act does NOT apply to which of the following:
a. a $5,000 loan to a friend
b. a $25,000 loan to a friend
c. a transaction with no finance charge and fewer than 4 installment payments
d. a consumer credit transaction of $30,000 that does not involve real estate
e. all of the other choices are correct
222. Which of the following items is not required to be disclosed by a creditor as a part of the statement given a debtor?
a. service, activity, carrying and transaction charges
b. loan fees and points
c. portion of interest charges to cover creditor expenses
d. charges for credit life and credit accident and health insurance
e. fees for credit reports and appraisals in non-real estate transactions