54) Which of the following statements is true with regard to the Federal Trade Commission
(FTC) staff proving deceptive advertising under Section 5 of the FTC Act?
A) They need not prove that the consumers are acting reasonably under the circumstances.
B) They need to show that the misrepresentation or omission is material.
C) They need not show that there is a misrepresentation or omission likely to mislead consumers.
D) They need to show the intent of an advertiser to deceive a consumer.
55) Puffery involves ________.
A) offering a free item to a customer who buys an item at a regular price
B) advertising one product at a low price to entice customers into the store and then switching
their attention to a higher-priced product
C) making an exaggerated recommendation in a sales talk to promote the product
D) using factually wrong statements to promote a product
56) Which of the following is an example of puffery?
A) an advertisement stating that a car can run 50,000 miles without an oil change
B) an advertisement stating that 13 out of 15 dentists use a particular toothpaste
C) an advertisement stating that an anti-aging cream reduces wrinkles in exactly a week
D) an advertisement stating that a fast food chain sells the world’s finest chicken
57) Which of the following could be an example of deception?
A) an advertisement stating that 14 out of 15 dentists use a particular toothpaste
B) an advertisement stating that a fast food chain sells the world’s finest chicken
C) an advertisement stating that a particular deodorant is the world’s best
D) an advertisement stating that a retail chain sells the freshest vegetables
58) A professional basketball player states in an advertisement that a particular brand of sports
gear will improve one’s performance on the court. Which of the following methods of deceptive
advertising does this example depict?
A) testimonial
B) puffery
C) black marketing
D) unfair advertising
59) A company can sue a competitor under the ________, which forbids “false description or
representation.”
A) Wheeler-Lea Act of 1938
B) Lanham Act of 1947
C) Nutrition Labeling and Education Act of 1990
D) Franchising Rule of 1979
60) Under the Fair Packaging and Labeling Act, which of the following governmental units
promulgates rules governing the labeling and packaging of products?
A) the Federal Trade Commission
B) the Occupational Safety and Health Administration
C) the Interstate Commerce Commission
D) the Department of Health and Human Services
61) Which of the following is a purpose of the Fair Packaging and Labeling Act?
A) It forces manufacturers to package goods in the most efficient manner.
B) It gives competitors of manufacturers a private right of action in cases of deceptive
advertising.
C) It allows consumers to compare prices on the basis of uniform measures of content.
D) It expands the Federal Trade Commission’s jurisdiction over manufactured goods in interstate
commerce.
62) The Federal Trade Commission can have no more than three commissioners from the same
political party.
63) All written warranties of consumer products that cost less than $10 must be designated as
“full” or “limited.”
64) The Magnuson-Moss Warranty Act gives an individual consumer, or a class of consumers,
the right to bring a private action for a breach of an oral warranty.
65) State the prohibited practices under the Telephone Consumer Protection Act of 1991.
66) The ________ Act seeks to make creditors disclose all terms of a credit arrangement before
they enter into an agreement with a consumer-debtor.
A) Dodd-Frank
B) Sherman
C) Truth-in-Lending
D) Securities Exchange
67) Which of the following regulations of the Truth-in-Lending Act requires lenders to disclose
certain information to borrowers?
A) Regulation W
B) Regulation X
C) Regulation Y
D) Regulation Z
68) Which of the following refers to the effective annual rate of interest being charged by a
creditor, which depends on the compounding period used by the creditor?
A) annual compound rate
B) annual percentage rate
C) annual interest rate
D) annual creditor rate
69) Which of the following is true of an open-end credit transaction?
A) An open-end transaction gives a debtor the option to pay in installments.
B) An open-end transaction includes a personal customer loan or a student loan.
C) An open-end transaction is for a limited time period.
D) An open-end transaction must be in writing.
70) Bob’s debit card was stolen on Wednesday. He notifies his bank of the theft the following
morning. Meanwhile, the thief has used his card to purchase $800 worth of goods and services.
Based on this scenario, which of the following is true of the Electronic Fund Transfer Act?
A) Bob is liable for $50 of the $800.
B) Bob is liable for $300 of the $800.
C) Bob is liable for $500 of the $800.
D) Bob is liable for the whole amount.
71) The Fair Debt Collection Practices Act is designed to address ________.
A) harassment of consumer-debtors by credit reporting agencies
B) discrimination by banks and credit unions in the enforcement of consumer loan contracts
C) errors in electronic transactions related to debt collection
D) harassment of consumer-debtors by creditors or debt collectors
72) Corporations and persons applying for more than $25,000 in credit (except for buying a
home) are not covered by the Truth-in-Lending Act of 1969.
73) A consumer has a right to cancel a home loan seven days after entering the contract.
74) Identity theft may be defined as the use of another’s name to obtain some illegal gain through
financial instruments held or owned by another.
75) Describe the consumer rights and remedies provided by the Electronic Fund Transfer Act
(EFTA) of 1978.
76) State the violations of the Equal Credit Opportunity Act.
77) ________ fees are fees that banks charge retailers when consumers pay with debit cards.
A) Punitive
B) Mixed
C) Transfer
D) Interchange
78) Under the ________ Act, the Federal Reserve Board determines what constitutes a
reasonable and proportional fee for debit card transactions.
A) Dodd-Frank
B) Federal Consumer Protection
C) Bankruptcy Reform
D) Consumer Credit Protection
79) The new ________ Bureau will regulate mortgage, credit cards, some payday lenders and
check cashing companies, and lenders that provide private student loans.
A) Bankruptcy Protection
B) Federal Consumer Protection
C) Consumer Financial Protection
D) Consumer Credit Protection
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80) Which of the following is a correct statement regarding residential mortgages?
A) Lenders are no longer allowed to pay mortgage brokers a commission based on the interest
rate for a home loan.
B) The Dodd-Frank Act would require borrowers to pay a portion of the closing cost up front
and include the rest within the loan in the form of a higher interest rate.
C) Prepayment penalties are unlimited unless they are capped in the mortgage agreement.
D) Lenders are not required to determine whether the borrower could afford the monthly
mortgage/payments, combined with insurance and assessments.
81) Interchange fees usually run about five percent of a given transaction.
82) Discuss the impact of the Dodd-Frank Act on credit and debit cards, consumer loans, credit
scores, and residential mortgages.
83) Which of the following is the main reason for the argument that state, city, county, and
private agencies are more effective at resolving consumer problems than federal agencies?
A) These agencies have more effective resources to solve the problems that the average
consumer encounters than federal agencies.
B) These agencies can better understand the problems that the average consumer encounters than
federal agencies.
C) These agencies are more easily available to solve the problems that the average consumer
encounters than federal agencies.
D) These agencies are closer geographically to the problems that the average consumer
encounters than federal agencies.
84) The ________ was drafted by the National Conference of Commissioners on State Laws in
1968 and regulates interest and finance rates, and prohibits fine-print clauses.
A) Dodd-Frank Act
B) Uniform Consumer Credit Code
C) Federal Consumer Protection Act
D) Federal Bankruptcy Code
85) The aim of the UCCC was to replace the patchwork of differing ________ consumer laws
with a ________ state law in the area of ________
A) state; uniform; consumer credit
B) federal; uniform; product liability
C) state; decentralized; consumer credit
D) federal; centralized; product liability
86) The UCCC takes a ________ approach to consumer credit.
A) free market
B) disclosure
C) clandestine
D) caveat emptor
87) The UCCC does all but which of the following?
A) regulates interest rates
B) establishes creditors’ remedies
C) regulates finance rates
D) promotes fine-print clauses
88) The UCCC incorporates the ________ by reference.
A) FLSA
B) TILA
C) FCRA
D) ADAAA
89) Like the ________ regulations, the UCCC gives the consumer ________ day(s) to cancel a
sale when it is made as a result of home solicitations.
A) CPSA; 30
B) CFPB; 5
C) FTC; 3
D) FRB; 1
90) So far, ________ states have adopted the UCCC, and each of them has ________.
A) 10; somewhat altered the original uniform statute
B) 15; adopted the original uniform statute in its entirety
C) 20; somewhat altered the original uniform statute
D) 25; adopted the original uniform statute in its entirety
91) ________ states have statutes forbidding deceptive acts and practices in a way similar to
Section 5 of the ________.
A) 18; FTCA
B) 27; CPSA
C) 36; CPSA
D) All; FTCA
92) State laws forbidding deceptive acts and practices are so closely modeled on Section 5 of the
FTCA that they are called ________ laws.
A) nanny FTC
B) plagiarized
C) baby FTC
D) mirror-image
93) Which of the following is a correct statement regarding unfair and deceptive practices
statutes?
A) Municipal mayoral offices typically have consumer fraud divisions that investigate consumer
fraud.
B) Rarely, if ever, is notice of investigation by a state attorney general’s office sufficient to
discourage a practice such as false advertising.
C) Private consumer actions as well as class actions are permitted under most state statutes.
D) Consumers may obtain actual, but not punitive, damages.
94) One class of ________ consumer laws, the ________ laws, gives consumers warranty and
refund rights on used cars when a material defect can be shown.
A) state; fruit-of-the-poisonous-tree
B) federal; lemon
C) state; lemon
D) federal; fruit-of-the-poisonous-tree
95) State attorneys general have been encouraging private groups such as the ________ to play a
role in exposing fraudulent sales tactics and in ________ disputes.
A) Consumer Financial Protection Bureau; arbitrating
B) Better Business Bureau; litigating
C) Consumer Financial Protection Bureau; litigating
D) Better Business Bureau; arbitrating
96) Given the comprehensive nature of the federal consumer protection legislation, what purpose
is served by parallel state legislation?
97) The Philippines prohibits ________ advertising.
A) contributory
B) commercial
C) comparative
D) conditional
98) In 1984, the ________ Commission adopted what was termed a “Misleading Advertising
Directive” similar to Section 5 of the FTCA.
A) European Union’s
B) United Nation’s
C) NAFTA
D) Mercosur
99) In ________, the Federal Consumer Protection Act of 1975 (FCPA) was modeled in large
part after several U.S. consumer protection statutes. The FCPA covers areas such as advertising,
warranties, consumer credit disclosure, and unconscionable clauses in contracts.
A) Great Britain
B) Mexico
C) Australia
D) Canada
100) Describe Mexico’s Federal Consumer Protection Act of 1975.