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315. If you lose the bank card you use to withdraw cash from your bank by machine, and you report it to the bank within
two days, you are liable for how much in losses?
a. $0
b. $500
c. $5,000
d. however much is in your account
e. none of the other choices
316. Katherine loses her ATM card while visiting her boyfriend in Boston. She doesn't realize it until she gets home to
New Jersey after a week in Boston. She immediately notifies the bank that she lost her card 7 days ago. How
much is Katherine liable for in losses?
a. $0 b.
$50 c.
$500
d. $1000
e. $10,000
317. The Electronic Fund Transfer Act concerns liability limits for stolen ATM cards. Which statement is correct about
maximum consumer liability:
a. $50 if the financial institution is notified within 2 days
b. $100 if the financial institution is notified within 3 business days
c. $250 if the financial institution is notified within 5 days
d. $500 if the financial institution is notified within 7 business days
e. none of the other choices
318. The Electronic Fund Transfer Act concerns liability limits for stolen ATM cards. Which statement is correct about
maximum consumer liability:
a. $100 if the financial institution is notified within 3 business days
b. $250 if the financial institution is notified within 3 business days
c. $250 if the financial institution is notified within 5 business days
d. $500 if the financial institution is notified within 7 business days
e. none of the other choices
319. The Electronic Fund Transfer Act:
a. makes financial institutions liable to the consumer for damages caused by its failure to make an electronic
transfer of funds
b. limits liability of the erring financial institution to actual damages proved
c. limits liability of an erring financial institution to the lesser of $500 or the amount of the incorrect transfer
d. makes financial institutions liable to the consumer for damages caused by its failure to make an electronic
transfer of funds and limits liability of the erring financial institution to actual damages proved
e. makes financial institutions liable to the consumer for damages caused by its failure to make an electronic
transfer of funds and limits liability of an erring financial institution to the lesser of $500 or the amount of the
incorrect transfer
320. Under the Electronic Fund Transfer Act, consumers have
financial institutions.
a. 7 days b.
30 days c.
60 days d.
120 days
e. 6 months
to report errors in their monthly statements from
321. Under the Electronic Fund Transfer Act, financial institutions have
statements.
a. 7 days b.
30 days c.
45 days d.
120 days
e. 6 months
to resolve disputes in customers' monthly
322. A financial institution (such as a bank) that issues electronic fund-transfer cards must provide consumers:
a. a yearly statement of account
b. a weekly statement of account
c. a monthly statement of account
d. a bi-annual statement of account
e. the institution is under no obligation to provide consumers with statements of account
323. A financial institution (such as a bank) that issues electronic fund-transfer cards must provide consumers:
a. a yearly statement of account
b. a weekly statement of account
c. a bi-annual statement of account
d. the institution is under no obligation to provide consumers with statements of account
e. none of the other choices
324. Congress enacted a major financial reform bill in 2010, popularly known as:
a. the Dodd-Frank Act
b. the Wall Street Act
c. the Financial Crisis Act
d. the Business Regulation Act
e. the Patriot Act
325. The part of the Dodd-Frank Act, a major financial reform bill passed in 2010, that has the largest impact on
consumer credit markets is its:
a. establishment of the Bank Regulation Bureau
b. establishment of the Consumer Financial Protection Bureau
c. establishment of new laws that make it harder for college students to get credit cards
d. establishment of the Consumer Financial Regulation Bureau
e. none of the other choices are correct
326. The part of the Dodd-Frank Act, a major financial reform bill passed in 2010, that has the largest impact on
consumer credit markets is its:
a. establishment of the Bank Regulation Bureau
b. establishment of new laws prohibiting credit discrimination based on sexual orientation
c. establishment of new laws that make it harder for college students to get credit cards
d. establishment of the Consumer Financial Regulation Bureau
e. none of the other choices are correct
327. The Consumer Financial Protection Bureau has been instructed by Congress to focus on which of the following
areas:
a. cracking down on financial scams aimed at ordinary consumers
b. ensuring that the terms of financial documents are transparent
c. focusing on the practices of non-bank institutions to limit practices deemed particularly unfair
d. all of the other specific choices are correct
e. none of the other specific choices are correct
328. Refer to Fact Pattern 19-1. When Reduceo was submitted for FDA approval, what other standard did the FDA
apply in its approval process besides the one listed in the last question?
a. a de minimis risk standard
b. a proven effectiveness standard
c. a safe for its intended use standard
d. a non-negligent standard
e. a strict liability standard
329. Refer to Fact Pattern 19-1. When Drugs-R-Us submitted Reduceo for FDA approval, what standard would the
agency have applied in it approval process? Drugs-R-Us would:
a. have to submit evidence that Reduceo was produced in a non-negligent manner
b. have to submit evidence that Reduceo would never cause an injury to any consumer
c. have to submit evidence that Reduceo presented only a de minimis risk of harm
d. have to submit evidence that Reduceo was safe for its intended use
e. not have to submit any evidence to the FDA because the 1938 Act did not require such a submission
330. Refer to Fact Pattern 19-1. What would be the most likely outcome of Frank's suit against Drugs-R-Us if the
company argued that prior FDA approval shielded it from tort liability?
a. the company's argument would not be accepted
b. the company would win because FDA approval implies that a product is safe
c. the company would win because FDA approval of Reduceo for sale indicates a high level of care, so a
negligence case would be impossible
d. Frank would lose because weight-loss drugs are covered by the Delaney Clause, which restricts such
lawsuits
e. none of the other choices
Fact Pattern 19-1
In 1999, the Drugs-R-Us began testing its new drug, Reduceo, a medicine to help people lose weight. Tests looked
promising and, in 2006, the company applied to the FDA for approval to market Reduceo as a prescription drug. In
March 2009, the FDA granted Drug-R-Us approval to market Reduceo. Reduceo was sold with some "diet
enhancing" cookies that contained no drugs but were claimed to help dieting with Reduceo.
Frank saw an ad for the new drug. The Reduceo ad stated that it was a "wonder drug" and "tests prove it is the
safest weight reduction drug on the market today!" Frank was interested and made an appointment to see his
doctor.
Frank's physician prescribed the new drug for his patient. Frank had no success using other weight-loss drugs, and
dieting and exercise seemed ineffective. Frank took Reduceo from June until the end of August and lost 25 lbs. He
also ate Reduceo's cookies. He was delighted with his weight loss, but was concerned because dots appeared
before his eyes, causing disorientation. One day, the dots appeared before Frank's eyes while he was driving. He
became disoriented and hit a tree and was seriously injured. He sued Drugs-R-Us, alleging negligence in
manufacturing and inadequate warning of possible effects, as well as for deceptive advertising.
331. Refer to Fact Pattern 19-1. After Frank had his accident, other people who were taking Reduceo reported seeing
spots and becoming disoriented. If many people taking experience this side effect, what enforcement activities
could the FDA use?
a. the agency may order the drug off the market
b. the agency may sue the manufacturer for breach of contract
c. the agency may seize shipments of the drug
d. the agency may order the drug off the market and seize shipments of it
e. none of the other choices
332. Refer to Fact Pattern 19-1. If Frank wants to have the claims made by Drugs-R-Us that their cookies are supposed
to help lose weight is deceptive, which agency would he contact?
a. the FCC
b. the FTC
c. the FAA
d. the CAB
e. the ICC
333. Refer to Fact Pattern 19-1. Drugs-R-Us claims in its advertising that "tests prove" the cookies help lose weight. To
avoid a charge of deceptive advertising, Drugs-R-Us must show that:
a. the cookies were safer than any other weight loss drug now used
b. the cookies were more effective than any other weight loss cookie
c. the company has evidence that provides a reasonable basis for its claims
d. the government can substantiate its claims
e. the public is aware that such claims are meaningless
334. Refer to Fact Pattern 19-1. If it turns out that Frank had a vision problem before he started taking Reduceo, and the
instructions with the drug told doctors not to prescribe it in such cases, Drugs-R-Us:
a. would still be likely to be liable to Frank for his injuries as strict liability applies
b. would still be liable to Frank for his injuries if it could be shown that the firm was negligent in the way it
prepared the warning statement
c. would probably not be liable due to the learned intermediary doctrine
d. would not be liable due to FDA approval which shields the drug maker
e. none of the other choices
335. Refer to Fact Pattern 19-1. If Drugs-R-Us agrees to settle a complaint that the company engaged in deceptive
advertising, what is the agreement called?
a. a cease and resist order
b. a consent decree
c. an ad litem decree
d. a deceptive policy statement
e. none of the other choices
Fact Pattern 19-2
Jayme's Best produced a new line of pasta sauce (Herbal Health), intending for it to have extra nutritional benefits.
Using the freshest ingredients, Jayme's added special herbs to the tomato paste and spices, as the herbs are
believed by some Tibetan monks to have the power to prevent cancer. Jayme's marketed the sauce in grocery
stores and health food stores. Jayme's advertisements said that Herbal Health may help prevent cancer and taste a
lot better than the competition. Based on these facts, answer the following questions.
336. Refer to Fact Pattern 19-2. The Nutrition Labeling and Education Act does not require Jayme's to list:
a. calories per serving size.
b. how much the risk of cancer is reduced by consuming the sauce.
c. nutrients, such as vitamins and minerals, per serving size.
d. total and saturated fat per serving size.
e. all such information must be provided.
337. Refer to Fact Pattern 19-2. If Herbal Health contains food additives it must meet certain safety standards. These
standards call for:
a. zero risk from additives (no chance of cancer).
b. reasonable certainty of no harm (one in a million lifetime chance of cancer).
c. de minimus level of harm (one in ten-thousand lifetime chance of cancer).
d. acceptable risk of harm (one in one-thousand lifetime chance of cancer).
e. natural substances, such as herbs, are not regulated food additives.
338. Refer to Fact Pattern 19-2. If Jayme's production plant is found to be contaminated with viruses and bacteria due to
poor sanitation on several inspections, then, even if no one can be shown to have been made ill by the problem:
a. consumers have a cause of action for damages under tort law
b. consumers have a cause of action for damages under the Food, Drug and Cosmetic Act
c. the head of Jayme's could be convicted of a criminal offense
d. all of the other specific choices
e. none of the other choices
339. Refer to Fact Pattern 19-2. If Jayme's sauce is found to contain a contaminant that makes people sick, the most the
Food and Drug Administration can do to try to protect the public is:
a. nothing; such matters are for consumers to resolve in tort law.
b. report the matter to the media to spread the word not the eat the sauce.
c. file a motion in federal court requesting that the agency be allowed to inspect the plants immediately.
d. seize the sauce to stop it from being sold.
e. impose heavy fines on Jayme's for violating safety standards.
340. Refer to Fact Pattern 19-2. If the herbs put in Jayme's sauce are determined to be a drug that should be regulated,
then before the sauce can be sold, the FDA will have to be sure that the herbs, which are supposed to stop cancer,
are:
a. safe for human consumption
b. effective at preventing cancer
c. something that should be sold over the counter or by prescription only
d. safe for human consumption and something that should be sold over the counter or by prescription only
e. safe for human consumption and something that should be sold over the counter or by prescription only and
effective at preventing cancer
341. Refer to Fact Pattern 19-2. Suppose the herbs end up being allowed to be sold as a cancer preventative, because
the FDA determines that they do have such a beneficial effect. Bob, who eats the sauce every day, gets cancer.
He believes the cancer was caused by the sauce and its herbs and sues Jayme in tort. It is up to the jury to decide
if Jayme is liable:
a. regardless of whether the sauce was FDA approved or not.
b. only if the sauce was sold without FDA approval.
c. but if the sauce is FDA approved, Jayme can be sued only if it can be shown that the sauce was intentionally
sold in a defective condition.
d. but if the sauce is FDA approved, Jayme can be sued only if it can be shown that Jayme's was negligent in
the preparation and sale of the sauce.
e. but if the sauce is FDA approved, Jayme has a complete defense against this charge.
342. Refer to Fact Pattern 19-2. If the advertising for the supposed health benefits of Jayme's sauce is believed by the
Federal Trade Commission not to be truthful, the FTC may:
a. not oppose the advertising if the product has been approved by the FDA.
b. warn the public that the advertising may not be truthful, but do no more.
c. order Jayme's to provide evidence to back up the health claims, but no more.
d. sue to block more deceptive advertisements, but no more.
e. sue to block deceptive advertisements and seek a court order for Jayme's to pay for corrective ads.
343. Refer to Fact Pattern 19-2. Jayme's ads, when attacked as deceptive by the FTC, must be shown to do all of the
following except:
a. be a misrepresentation of information to consumers.
b. cause health injury to consumers.
c. mislead a reasonable consumer.
d. the deception must be material.
e. all of the other choices must be shown to be held to be deceptive.
344. Refer to Fact Pattern 19-2. If Jayme's ads contend that it is a healthy product and the competitor products are not
healthy, and indeed could make you sick, the competitors may:
a. file a complaint with the FDA requesting that the approval for Jayme's product be suspended.
b. appeal to the Department of Justice for a grand jury investigation of Jayme's.
c. determine if a Trade Regulation Rule has been violated that would required the FTC to file suit against
Jayme's to cease sales.
d. sue Jayme's for double damages for the value of profits lost due to Jayme's campaign.
e. none of the other choices; action must be taken directly by the FTC or FDA against Jayme's.
