65. In Federal Trade Commission v. John Beck Amazing Profits, where Beck was sued by the FTC for
deception in the sale of his “wealth creation” products, the court held that Beck’s operation provided false
materials but there was no evidence any consumers were misled by the information.
a. True
b. False
66. The FTC‘s advertising substantiation program allows the FTC to ensure that retailers have a reasonable basis for
claims made about products they are selling.
a. True
b. False
67. The FTC‘s advertising substantiation program requires media ads to be registered with the FTC for review before
being used to prevent deception.
a. True
b. False
68. The FTC has held that if an automobile is advertised to get 35 miles per gallon in highway driving, that must be the
average mileage that ordinary drivers will get in ordinary driving, otherwise it is deceptive advertising.
a. True
b. False
69. Under the FTC’s advertising substantiation program, if any consumers will be misled by an advertisement, it must
be modified.
a. True
b. False
70. Under the FTC’s advertising substantiation program, if the FTC attacks an ad the usual result is that the advertiser
agrees to stop running the ad.
a. True
b. False
71. In Telebrands v. FTC, where the company marketed electronic muscle simulation abdominal belts, and the FTC
sued for deceptive practices, the appeals court held the product may have been nearly useless, but there was no
deception.
a. True
b. False
72. In Telebrands v. FTC, where the company marketed electronic muscle simulation abdominal belts, and the FTC
sued for deceptive practices, the appeals court held the product was a medical device subject to FDA regulation,
not FTC control.
a. True
b. False
73. In Telebrands v. FTC, where the company marketed electronic muscle simulation abdominal belts, and the FTC
sued for deceptive practices, the appeals court held the advertising campaign was deceptive.
a. True
b. False
74. Under the Lanham Act, the FTC may sue advertisers for damages for deceptive ads.
a. True
b. False
75. Under the Lanham Act, a private party injured by the false ads of a competitor may sue the competitor for double
value of lost profits.
a. True
b. False
76. Under the Lanham Act, Ford was able to sue General Motors for false advertising that hurt Ford pickup sales, and
collected over $100 million in damages.
a. True
b. False
77. Under the Lanham Act, U-Haul was able to sue a competitor for false advertising and was awarded $40 million in
damages.
a. True
b. False
78. Advertising controls are extremely strict in Europe compared to in the U.S.
a. True
b. False
79. The British Office of Fair Trading operates somewhat like the FTC in the U.S.
a. True
b. False
80. When the FTC proposes a trade regulation rule, it must be published in the Federal Register for public inspection
before it becomes effective.
a. True
b. False
81. The FTC has the authority to attack deceptive sales practices via the Internet just like any other sale.
a. True
b. False
82. Trade regulation rules tend to be issued in areas where the FTC thinks there are particular problems with
deception.
a. True
b. False
83. The “R-value Rule” states that refrigerator makers must clearly explain to consumers what kind of insulation is used
in their products.
a. True
b. False
84. The Mail Order Rule attempts to reduce the incidence of deceptive practices in the first-class postal business.
a. True
b. False
85. The Mail Order Rule requires goods to be delivered by mail to arrive within clearly set time or allow the customer
out of the deal.
a. True
b. False
86. The Used-Car rule issued by the FTC requires used car sellers to give consumers clear warranty information.
a. True
b. False
87. The Used-Car rule issued by the FTC has increased the price of used cars about five percent.
a. True
b. False
88. States have laws similar to the FTC’s powers to attack deceptive business practices.
a. True
b. False
89. State attorneys general usually have the authority to attack deceptive business practices.
a. True
b. False
90. In Schuchmann v. Air Services Heating and Air Conditioning, where a company refused to provide air
conditioning service after five years on a product with a “lifetime warranty,” the court held that lifetime does not
mean that; it is commonly understood to mean a “reasonable” length of time.
a. True
b. False
91. In Schuchmann v. Air Services Heating and Air Conditioning, where a company refused to provide air
conditioning service after five years on a product with a “lifetime warranty,” the court held that the warranty was
not part of the purchase contract, so was not enforceable.
a. True
b. False
92. In Schuchmann v. Air Services Heating and Air Conditioning, where a company refused to provide air
conditioning service after five years on a product with a “lifetime warranty,” the court held that the company
violated the state’s business practices act.
a. True
b. False
93. The Consumer Credit Protection Act was the first major federal legislation on consumer credit.
a. True
b. False
94. The primary purpose of the Truth-in–Lending Act is to provide disclosure of basic information about the cost and
terms of credit to consumer-borrowers.
a. True
b. False
95. For the Truth-in–Lending Act to apply, the debtor must be a business organization.
a. True
b. False
96. The Truth–in–Lending Act does not apply to consumer credit transactions over $25,000; except for real estate.
a. True
b. False
97. The Truth-in–Lending Act does not apply to consumer real estate purchases financed by a mortgage.
a. True
b. False
98. The primary purpose of the Truth–in–Lending Act is to disclose to consumers the reason(s) why they are denied
credit when applied for in credit transactions.
a. True
b. False
99. The Truth-in-Lending Act requires itemization of charges for such items as credit life insurance.
a. True
b. False
100. The Truth-in-Lending Act requires lenders to disclose the annual percentage rate of interest (APR) the same way
for all transactions.
a. True
b. False
101. The specific finance charges that must be provided to a debtor by a creditor under Truth-in-Lending are detailed by
the Federal Trade Commission in Regulation Z.
a. True
b. False
102. Under the Truth-in-Lending Act, if a creditor violates disclosure requirements, liability will be imposed only if
monetary damages to the consumer can be shown.
a. True
b. False
103. The Truth-in–Lending Act allows a creditor to avoid liability for improper disclosure if the violation is corrected
within fifteen days from the time it is discovered by the creditor and before the consumer gives written notification
of the error.
a. True
b. False
104. Under the Truth-in–Lending Act, a creditor who violates disclosure rules may have to pay the consumer double the
finance charged owed by the consumer (up to $1,000) plus attorney fees and court costs.
a. True
b. False
105. Creditors who knowingly fail to make proper disclosures to consumers may face criminal penalties.
a. True
b. False
106. The Consumer Leasing Act does for consumer leases what the Fair Credit Billing Act does for consumer credit.
a. True
b. False
107. The Consumer Leasing Act applies to leases of personal property to be used for personal or household purposes.
a. True
b. False
108. The Consumer Leasing Act would apply to a lease of furniture for an apartment for a year.
a. True
b. False
109. The Consumer Leasing Act would not apply to the rental of a car for a week while on vacation.
a. True
b. False
110. Leases paid by the Consumer Leasing Act must be for six months or longer and must have a contractual obligation
of less than $10,000.
a. True
b. False
111. The Fair Credit Billing Act makes it illegal for credit card companies to send cards to people who do not request
them.
a. True
b. False