Chapter 40
Consumer and Environmental Law
N.B.: TYPE indicates that a question is new, modified, or unchanged, as
follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
1. Common law judicial decisions that serve to protect the interests of consumers
are not classified as consumer law.
2. Advertising will not be deemed deceptive so long as it appears to be based on
factual evidence, even if it is not.
3. Vague generalities and obvious exaggerations constitute deceptive advertising.
4. Bait-and-switch advertising occurs when an ad appears to be based on factual
evidence but in fact is not reasonably supported by evidence.
5. All ads—both online and offline—must be truthful.
6. Counteradvertising requires a company to advertise the products of its
competitor to counter its own false claims.
7. Labels must use words that are easily understood by the ordinary marketing
executive.
8. Food labels are not required to provide standard nutrition facts.
9. Labels on vegetables and fruits are not required to indicate where the food
originated.
10. Merchants must issue a refund within a specified period of time when a
consumer cancels an order.
11. Merchants must ship orders within the time promised in their ads.
12. Manufacturers are required to report on any products intended for sale if the
products have proved to be hazardous.
13. The key federal statute regulating the credit and credit-card industries is
basically a disclosure law.
14. A credit-cardholder is liable for all unauthorized charges made before the
creditor is notified that the card has been lost.
15. A credit-card company is not required to provide advance notice to consumers
before changing credit-card terms.
16. Major credit reporting agencies must provide consumers with free copies of
their own credit reports every twelve months.
17. A collection agency must include a validation notice whenever it initially
contacts a debtor for payment of a debt.
18. Injured individuals can rely on the common law to obtain damages and
injunctions against business polluters.
19. An environmental impact statement is required for every major federal action
that significantly affects the quality of the environment.
20. The Environmental Protection Agency periodically updates the air pollution
standards.
21. There are no plans to develop national standards regulating the fuel economy
and emissions for medium- and heavy-duty trucks.
22. The Environmental Protection Agency has concluded that greenhouse gases,
including carbon dioxide emissions, do not constitute a public danger.
23. The primary responsibility for preventing and controlling air pollution rests with
the federal government.
24. Different standards for air quality apply to existing sources of pollution and
major new sources.
25. The Environmental Protection lists all hazardous air pollutants (HAPs) on a
prioritized schedule.
26. Performance standards for major sources of air pollution require the use of the
any available technology, or AAT.
27. Those who knowingly violate the Clean Air Act are exempt from criminal
penalties.
CHAPTER 40: CONSUMER AND ENVIRONMENTAL LAW 5
28. Any point source emitting pollutants into water must have a permit.
29. Special requirements must be met to discharge toxic chemicals into surface
waters.
30. The courts have considerably scaled back the Clean Water Act’s protection of
wetlands.
31. Public water system operators must meet the Environmental Protection
Agency’s standards regardless of the economic and technological feasibility.
32. The Environmental Protection Agency sets minimum levels for pollutants in
public water systems.
33. It is a violation of federal law to destroy or deface any labeling required on a
pesticide or herbicide.
34. The Environmental Protection Agency can regulate a toxic substance that
poses an imminent hazard but cannot prohibit its use altogether.
35. When a release of hazardous chemicals from a site occurs, potentially
responsible parties can avoid liability through transfer of ownership.
MULTIPLE CHOICE QUESTIONS
1. Orange Company makes cellphones. The company’s ad states that “if you
aren’t usin’ an Orange, you aren’t gettin’ any ‘C.’ ” The Federal Trade Com–
mission would consider this ad
a. false and misleading.
b. impermissibly vague and general.
c. a deceptive half-truth.
d. none of the choices.
2. Precise GPS Company’s ad states that its product is “the finest that money can
buy.” Because of this ad, the Federal Trade Commission is most likely to issue
a. a cease-and-desist order.
b. a counteradvertising order.
c. a multiple product order.
d. none of the choices.
3. Cleaners & Solvents, Inc. (CSI), engages in deceptive advertising when it
markets its product Dirt Remover as able to kill germs over long periods of
time. In an action against CSI regarding Dirt Remover, the firm is ordered to
stop its false advertising of Dirt Remover and other products. This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling–off” law.
d. a validation notice.
4. Va–Va-Voom Products, Inc., engages in deceptive advertising when it markets
its product Weight-No-More as able to help consumers lose weight in their
sleep. Va-Va-Voom is ordered to include in all future advertising of Weight-No–
More the statement, “This product will not cause anyone to lose weight while
sleeping.” This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling–off” law.
d. a validation notice.
5. Bright Brew Coffee, Inc., processes and sells a variety of coffee products.
Bright Brew’s product packages must include
a. the identity of the company owner.
b. the net quantity of the contents.
c. the restaurants and stores in which the product is sold.
d. the type of consumer most likely interested in the product.
6. Sweet Treats, Inc., wants to market a new snack food. On the product’s label,
standard nutrition facts are
a. prohibited.
b. required.
c. strictly voluntary.
d. warranted by the nature of the food.
7. Under federal law, the calorie content of the food on a menu must be posted by
Organic Mix, LLC, if Organic Mix is
a. a restaurant chain with twenty or more locations.
b. a food distributor with twenty or more customers.
c. a food processor with twenty or more products.
d. a food producer with twenty or more acres.
8. Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills
prescriptions. The chief responsibility to prevent unsafe food and drugs from
being sold rests with
a. the Consumer Product Safety Commission.
b. no single federal agency.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
9. Steel Tool Company makes and sells tools. One of the tools is believed to be
hazardous. The appropriate government agency may require Steel to
a. export the tool and sell it only abroad.
b. increase the price to cover the cost of any injuries or damage.
c. reduce the price to indicate the hazard to consumers.
d. remove the tool from the market.
10. Creditworthy Loan Company extends credit in the ordinary course of its busi–
ness. Under the Truth-in-Lending Act, Creditworthy must inform potential
borrowers of
a. credit terms offered by other lenders.
b. comparative prices for goods to be bought with the borrowed funds.
c. Creditworthy’s credit terms.
d. the borrowers’ credit scores.
11. Tory borrows $10,000 from USA National Bank to remodel a room in her home.
This transaction is subject to
a. no federal law.
b. the Consumer Leasing Act.
c. the Consumer Product Safety Act.
d. the Truth-in-Lending Act.
12. Consumer Finance Corporation (CFC) extends credit to consumers. CFC is
subject to the Equal Credit Opportunity Act, which prohibits credit dis–
crimination based on
a. intelligence.
b. education.
c. income.
d. race.
13. Kirk receives an unsolicited credit card in the mail and tosses it on his desk.
Without Kirk’s permission, his roommate Leif uses the card to buy a new laptop
for $1,800. Kirk is
a. liable for $1,000.
b. liable for $500.
c. liable for $50.
d. not liable for any amount.
14. Bodie’s application to City Bank for a credit card is denied. Bodie can obtain
information on her credit history in a credit agency’s files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
15. Quik Collection Agency calls Pat several times a day, and sometimes in the
middle of the night, about an overdue bill that Regal Sporting Goods turned
over to Quik for collection. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
16. The credit department of Metro-Mart calls Nikki at work about an overdue bill.
Nikki’s employer objects. Metro-Mart continues to call Nikki at work. This is a
violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
17. Dita takes out a student loan from Everloan Bank. When she fails to make the
scheduled payments for six months, Everloan advises her of further action that
it will take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
18. Kip opens an account at a Lotsa Goodies Store, and buys a digital music
player and other items, but makes no payments on the account. To collect the
debt, Mako, the manager, contacts Kip’s parents. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
19. Verna makes a living by commercial fishing in a river allegedly polluted by Wall
Paint Company. To bring a suit against Wall Paint on the ground of private
nuisance, Verna must allege that she suffers from
a. a distinct harm separate from that affecting the general public.
b. a lesser harm than an injunction would impose on Wall Paint.
c. Wall Paint’s failure to use reasonable care to avert herm to Verna.
d. the same harm as that affecting the general public.
20. Rock Mining Company operates a gravel pit next to Siera’s residence. Siera
files a suit against Rock, alleging that the pit is a nuisance and unreasonably
interferes with the enjoyment of her property The court is most likely to award
Siera an injunction
a. if letting the pollution continue is equally as harmful as stopping it.
b. if letting the pollution continue is less harmful than stopping it.
c. if letting the pollution continue is more harmful than stopping it.
d. under no circumstances.
21. New Town Construction, Inc., wants to build a parking ramp to connect to its
New Town Mall, both of which are on private land. For this action, an
environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
22. Rural Electric Company submits a bid to build a dam on federal land as part of
a federal project. For this action, an environmental impact statement is most
likely
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
23. Ski Resorts, Inc., wants to add a new run to its facility in a national park on
federal land. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
24. The operations of Metal Refining Industries, Inc., are major sources of air pollu–
tion. These operations must use
a. the absolutely cleanest air technology.
b. the best available filter technology.
c. the maximum achievable control technology.
d. the most affordable scrubbing technology.
25. Metal Smelting, Inc., operates a plant—a “major source”—that emits hazardous
air pollutants for which the Environmental Protection Agency has set maximum
levels of emission. The plant does not use any equipment to reduce its
emissions. Under the Clean Air Act, this is most likely
a. a violation.
b. not a violation because a “major source” is exempt.
c. not a violation because the plant does not use any equipment.
d. not a violation because the plant is not a mobile source.
26. Industrial Solvents, Inc., averages $15,000 profit per day before deciding to
ignore air pollution standards, after which the average is $30,000. Industrial
Solvents is subject to a fine of
a. $0.
b. $15,000 per day.
c. $30,000 per day.
d. $30,000 total.
27. Fried Food, Inc., operates a commercial frying plant, discharging pollutants into
the air. Greg reports the violations to the Environmental Protection Agency.
Greg
a. is not entitled to a payment.
b. may be paid up to any amount.
c. may be paid up to $1,000.
d. may be paid up to $10,000.
28. Without a permit, Timberline Plywood Company discharges its untreated
wastewater into Urban City’s storm drainage pipes, which empty into Valley
Creek. Under the Clean Water Act, this discharge is most likely
a. a violation.
b. not a violation because the company does not have a permit.
c. not a violation because water is not a stationary source.
d. not a violation because a storm drainage pipe is not a point source.
29. Green River Energy Corporation wants to begin operations that include the
discharge of waste into navigable waters. Under the Clean Water Act, Green
River must install certain equipment
a. after beginning operations.
b. before beginning operations.
c. during operations.
d. only if a regulatory agency challenges the discharge.
30. Vending Products Company operates a vending machine manufacturing plant
on Wandering River. Discharging pollutants from the plant into the river can re–
sult in
a. civil penalties and criminal penalties.
b. civil penalties only.
c. criminal penalties only.
d. no penalties.
31. Without a permit from the U.S. Army Corps of Engineers, Holiday Timeshares,
Inc., fills a wetlands area that it owns before constructing a residential resort.
Under the Clean Water Act, this is most likely
a. a violation.
b. not a violation because a permit is not needed to fill wetlands.
c. not a violation because the area was filled before construction.
d. not a violation because there was no discharge of pollution.
32. A barge owned by Oceanic Shipping Company discharges some of the oil
contained in its hold into the sea and onto the shore. Under the Oil Pollution
Act, this is most likely
a. a violation.
b. not a violation because an oil discharge is not pollution.
c. not a violation because a floating barge is not a stationary source.
d. not a violation because a ship’s hold is not a point source.
33. Metro City operates its own municipal public drinking water system for which
the Environmental Protection Agency has set maximum levels of pollutants.
Metro does not use any equipment to meet these standards. With regard to any
contamination of the water, under the Safe Drinking Water Act, this is most
likely
a. a violation.
b. not a violation because Metro does not set the standards.
c. not a violation because water is not a stationary source.
d. not a violation because Metro does not use any equipment.
34. Hi-Yield Agriculture, Inc., makes a pesticide with a one–in-a-million risk to
people of developing cancer from exposure. This substance must be
a. disposed of before anyone develops cancer.
b. registered before it is sold.
c. taken off the market and placed in temporary storage.
d. used only in a way that avoids exposure to people.
35. Remote Disposal Company operates a hazardous waste storage facility.
Concerned that there may be a release of chemicals from the site, Remote
sells the property to Serene Developers, Inc. If there is a release, Remote is
most likely
a. liable.
b. not liable because the site was sold before the release.
c. not liable because Remote was concerned about the release.
d. not liable because Remote no longer operates the facility.
ESSAY QUESTIONS
1. Milo buys an all-terrain-vehicle (ATV) from No-Limit Toys, Inc., on credit but
makes no payments on the account. Odell, the owner of No-Limit Toys, calls
Milo at home on a Monday morning at three A.M. Odell represents himself as
PayNow Collection Agency and demands payment “or else.” The next day,
Odell sends Milo notice that he has thirty days in which to request verification
of the debt and that its payment will be suspended during that time, but that if
he does not pay the full amount due within five business days, Odell will
arrange for the “destruction of Milo’s good credit rating.” Which laws has Odell
violated, if any, and in what ways?
2. Odiferous Waste Company is a subsidiary of Precarious Investments, Inc.
Odiferous operates a hazardous waste disposal site. QuikChem Corporation is
one of many parties who generate waste disposed of at the site. Odiferous
borrows money from Regal Bank, which takes over the site when Odiferous
goes bankrupt. The Environmental Protection Agency discovers a leak at the
site. Can any of these private parties be forced to pay for the clean up? If so,
who?