46. The Consumer Product Safety Commission:
a. only has the authority to educate the public concerning product safety problems.
b. uses data it gathers to set uniform product safety standards for goods such as toys and lawn mowers.
c. can only make manufacturers voluntarily submit their products for testing if the product falls below its
regulatory standards.
d. has no enforcement powers since compliance with its regulations is left up to the manufacturer.
47. The National Highway Traffic Safety Administration:
a. seeks recalls on autos for safety reasons.
b. tests the fuel efficiency of each year’s car models.
c. enforces trademark laws on cars and car parts to ensure buyers get what they think they are buying.
d. None of these are correct.
48. In order for advertising to be found deceptive by the FTC, it is necessary that:
a. the advertisement can only be reasonably interpreted in one way, and in that way, it is misleading.
b. there is a misrepresentation, omission, or practice that is likely to mislead the consumer acting reasonably in
the circumstances, to the consumer’s detriment.
c. the sellers have malice or evil intent.
d. something affirmative was said which was misleading; i.e., an omission cannot be deceptive.
49. Most lemon laws define a lemon as a car that:
a. was sold by a dealer who refuses to make reasonable attempts to correct the problem.
b. continues to have a defect that substantially impairs its use, value, or safety, even after the manufacturer has
made reasonable attempts to correct the problem.
c. has been unpopular and so is sold at a discounted price.
d. a manufacturer must destroy so that it cannot be sold to other unsuspecting consumers.
50. The Food and Drug Administration:
a. uses three basic methods of enforcement.
b. is a relatively recent agency, having been formed in 1976.
c. is the oldest federal consumer protection agency.
d. has no authority to require premarket approval of medical devices.
51. Under the FCCPA, the liability of a credit card holder for another’s unauthorized use of the card is limited to:
a. $500.
b. $100.
c. $50.
d. None of these; liability is unlimited.
52. The Fair Debt Collection Practices Act defines the following practices as abusive, EXCEPT:
a. a non-lawyer bill collector representing himself as a lawyer.
b. a creditor, using his own name, telephoning the debtor at 7 a.m.
c. a debt collector telephoning the debtor at inconvenient hours.
d. using obscene language.
53. The federal Truth–in–Lending law:
a. requires the lender to show how much profit is made on a particular sale.
b. regulates the maximum cost of credit.
c. is a uniform law made available to all states, like the UCC.
d. is intended to allow comparison of various credit offers or advertisements.
54. A business, according to the FTC:
a. must disclose a product’s country of origin.
b. may not have a salesperson make statements such as, “This is a great buy.”
c. may use visual aids, such as adding marbles in a bowl of vegetable soup to make it look thick, when televising
commercials.
d. All of these are correct.
55. The Federal Trade Commission Act allows the FTC to:
a. determine what constitutes deceptive advertising practices.
b. prohibit all advertising in certain professions.
c. require advertisers to contribute to a fund to reimburse injured consumers.
d. require the independent testing of consumer goods.
56. The Truth–in–Lending Act:
a. applies only to such lenders as banks and savings and loans.
b. protects individuals who receive loans for more than $25,000, except for home mortgage loans.
c. is regulated by the FTC and the Federal Reserve Board under Regulation Z.
d. allows a buyer who is financing his home with a first mortgage to rescind that transaction within three days.
57. Which of the following best expresses the policy behind the Truth-in–Lending Act?
a. To help borrowers by requiring lenders to charge a “reasonable” rate of interest as determined by the Federal
Reserve Board.
b. To help small business by prohibiting lenders from using, as collateral for secured loans, a business’s most
important assets.
c. To help debtors for loans for personal, family, household or agricultural purposes to be armed with the
necessary information on a loan to better bargain for credit and to choose the creditor with the best terms.
d. To help lenders by permitting them to investigate a person‘s credit history without having to worry about state
libel laws.
58. If the FTC rules that a seller has made a false or deceptive advertising statement, the Commission:
a. has no power to address the practice.
b. can require the seller to make additional advertisements to correct it.
c. can require the company to go out of business.
d. can report the company to the President of the United States for deregulation.
59. When a debt is secured by property as collateral and the debtor defaults, the creditor may:
a. take possession of the property and retain it in full satisfaction of the debt or sell it.
b. take possession of the property and use it until the debtor pays the debt.
c. not take possession of the property, but must sue the debtor for the balance due.
d. None of these.
60. Ellen, age 25, was recently divorced and has applied to Mayberry Bank for a loan. The bank, as regulated by the
Equal Credit Opportunity Act:
a. can ask her if she is married.
b. can ask her if she plans to have children soon.
c. can discount her loan rating because she is 25 and likely to have children within the next five years.
d. must notify Ellen within 30 days after receiving her credit application of the action taken, and if she is denied
credit, the bank must give her specific reasons for the denial.
61. Which of the following is not a purpose of the Consumer Product Safety Commission?
a. To create legislation imposing mandatory safety standards
b. To protect the public against unreasonable risks of injury associated with consumer products
c. To assist consumers in evaluating the comparative safety of consumer products
d. To develop uniform safety standards for consumer products
62. The FTC remedy of “affirmative disclosure” would require:
a. a new ad that admits the first ad was false.
b. providing certain information in a company‘s ads.
c. that the advertiser desist from deception in all products it markets.
d. All of these would be required.
63. In a typical situation in which the FTC discovers a potentially deceptive practice, the FTC:
a. obtains a cease and desist order immediately, before any more damage is done.
b. investigates, files a complaint, and has a hearing in front of an ALJ.
c. requests a court hearing in the local federal trial court.
d. investigates and, if warranted, brings the matter before the five-member commission for issuance of a
mandatory safety standard.
64. In order for a full warranty to be given for a consumer product, the manufacturer must provide that:
a. the product will be repaired for free.
b. the warranty lasts for at least 10 days.
c. the consumer can opt for refund rather than repair.
d. consequential damage cannot be excluded.
65. Most state attorneys general:
a. help to coordinate lawsuits against a company that has been engaging in fraudulent acts involving more than
one state
b. are active in consumer protection by enforcing laws against consumer fraud through judicially imposed
injunctions.
c. help consumers by enforcing laws that impose restitution.
d. All of these.
66. Under the Fair Credit Billing Act, if a consumer makes a complaint about the amount on his charge account bill, the
store can:
a. immediately bar the customer from any further credit purchases.
b. report the unpaid amount to a credit-reporting agency as delinquent.
c. refer the matter to a collection agency for immediate collection.
d. None of these.
67. Sue has a major store’s credit card. On Monday she charged a $47.90 sweater and then lost the card. Myra found it
Monday and charged a $100 scarf and $400 purse. Sue missed her card at 8 a.m. Tuesday and called the store. That
day, Myra charged a coat for $4,000. Sue’s bill was $4,547.90. Sue owes:
a. $47.90.
b. $547.90.
c. $97.90.
d. $4,547.90.
68. The Fair Credit Reporting Act has to do with:
a. allowing consumers to get their own credit report at no cost once a year
b. credit checks done by potential lenders.
c. reports made by credit agencies.
d. All of these.
69. If a debtor defaults on the minimum payment of a credit contract, all states would allow the creditor to:
a. impose a late charge.
b. garnish wages if there is a court proceeding to enforce the collection of a judgment.
c. Both of these.
d. None of these.
70. The CFPA excludes from the Bureau of Consumer Financial Protection’s authority the activities of all but which of
the following?
a. Auto dealers
b. Check cashing businesses
c. Real estate brokers
d. Employee benefit plans
71. What are the remedies available for the Federal Trade Commission?
a. Affirmative exemption
b. Corrective advertising and multiple product orders
c. Impounding inventory
d. Fines and monetary penalties
72. What reported warranty problems caused Congress to enact the Magnuson-Moss Warranty Act?
a. Most warranties were not understandable.
b. Most warrantors disclaimed implied warranties.
c. The warrantors did not live up to their warranties.
d. All of these.
73. The Credit Card Fraud Act prohibits which of the following practices?
a. Possessing unauthorized cards
b. Counterfeiting or altering credit cards
c. Using a card obtained from a third party with his consent when the third party conspires to report the cards as
stolen
d. All of these.
74. The Fair Debt Collection Practices Act requires a debt collector to provide the consumer with a written notice. What
information must be contained in this notice?
a. The amount of the debt, with interest and penalties clearly delineated
b. The name of the current creditor and former creditor
c. A statement informing the consumer that he can request verification of the alleged debt
d. A copy of the original credit contract with the original creditor
75. Clark goes to the First Bank to obtain a consumer loan. The bank requests that the Rich Credit Reporting Agency
furnish a credit report, which they do. Based upon the report, which says that Clark has been convicted of theft and
credit card fraud, the bank denies Clark‘s application. Is Clark entitled to know what was in the report? If Clark
thinks the information in the report is inaccurate, what can he do?
76. Homemade Soup Co. has advertised their soup in certain magazines using photographs showing bowls of their soup
but with pebbles at the bottom of the bowl. The pebbles were used to displace the soup in the bowl, forcing the
vegetables and meat to the surface. This photographer’s trick made the soup appear heartier than it was. An FTC
staffer is thumbing through the latest edition of her favorite magazine. She notices the Homemade Soup Co. ad and
goes to her kitchen, opens a can of Homemade’s soup and decides that her bowl of soup looks nothing like the one in
the ad. What are the steps the FTC would take to proceed against Homemade Soup Co.?
77. Ronald Beeb, who lives in Cleveland, receives a mailing from Florida from the SwampLand Reclamation Project. It
states that the Beebs can purchase one–acre sites as part of a newly planned development of 200 lots located in
Leon County, Florida. The Beebs contact the company and are given a purchase agreement but no additional
information. They sign the purchase agreement and send it back. Then, a week later they decide they would prefer
to winter in either New Zealand or Australia. Can the Beebs get out of the contract?
78. Betty likes to shop using her credit cards.
a. What provisions of the Truth-in–Lending Act apply to the use of credit cards?
If Betty’s account at Trevor’s Department Store suddenly shows a $200 charge that she did not
b. make and she notifies Trevor’s in writing of the error, what must Trevor’s do under the Fair
Credit Billing Act?
79.
a. Historically, what was the common law rule with respect to consumer transactions? How has
this rule been changed by statutory enactments?
b. Why do you think so many consumer protection statutes have been passed in more recent
years?
KEYWORDS: Blooms: Synthesis
80. Patricia, who is married to Dustin, applies for a credit card from Vankirk’s Department Store, but she is turned down
because she is a married woman and the store’s policy is to issue cards only in the name of the husband in such
situations. What are her legal rights in this situation?