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1. The Consumer Financial Protection Bureau (CFPB) was created to represent consumers by filing suit in federal court
asking for damages on behalf of the injured consumer.
a.
True
b.
False
2. The Federal Trade Commission Act considers the terms “deceptive” and “unfair” to be synonymous when determining
what practices should be prohibited.
a.
True
b.
False
3. Tweeted ads must clearly indicate that they are, in fact, ads by including some equivalent of "ad" or "sponsored."
a.
True
b.
False
4. The Truth-in-Lending Act applies to private individuals who loan money.
a.
True
b.
False
5. "Bait and switch" tactics are not a violation of FTC rules if the merchant does not have enough stock on hand to meet
reasonable demand for the advertised product.
a.
True
b.
False
6. Prime Products, Inc. found out that it was going to take three weeks to ship the comforter Margaret ordered instead of
the seven days it had originally promised her. Prime Products must cancel Margaret’s order and notify her that it can
deliver within three weeks if she wants to reorder.
a.
True
b.
False
7. Brett applies for a $60,000 loan to purchase a tractor for his farm business. This loan is subject to TILA disclosure
requirements.
a.
True
b.
False
8. An employer cannot request a consumer report on a potential employee without that person's permission.
a.
True
b.
False
9. Company policy of PushOne, Inc. is to block the company name and telephone number on potential customers’ Caller
ID systems so they won’t know the call is from a telemarketer. This policy violates FTC rules.
a.
True
b.
False
10. The Equal Credit Opportunity Act makes it illegal for a lender to discriminate against a potential borrower because of
race, national origin, religion, or sex, but it is permissible to treat a borrower differently if he or she is on welfare.
a.
True
b.
False
11. Electronic payments via a telephone, computer, or wire transfers are not regulated by the government.
a.
True
b.
False
12. The FTC may consider an act unfair if it simply violates public policy.
a.
True
b.
False
13. The Magnuson-Moss Warranty Act requires manufacturers to provide a warranty on their products regardless of cost.
a.
True
b.
False
14. In 30-year mortgages, the finance charge typically exceeds the amount of the principal.
a.
True
b.
False
15. Consumers may keep as a gift any unordered merchandise that they receive in the mail.
a.
True
b.
False
16. Ron's Furnace Repair advertised it would inspect any homeowner's furnace for free. Janet had Ron's come to inspect
her furnace. The servicewoman dismantled the entire furnace then refused to put it back together unless Janet paid her
$250. The FTC considers such a practice to be
a.
an unfair practice.
b.
a deceptive practice.
c.
an act that violates public policy.
d.
All the above.
17. For the FTC to consider a practice to be unfair, it must meet a three-part test. Which of the following is NOT one of
those tests?
a.
The practice causes a substantial consumer injury.
b.
The harm of the injury outweighs any countervailing benefit.
c.
The consumer had no reasonable way to recoup lost funds from the injury.
d.
The consumer could not reasonably avoid the injury.
18. Millie ordered clothes from a mail order catalog. No time was specified as to when the goods would be shipped. In
such a case the FTC requires that the company must ship the goods to Millie
a.
within 3 business days after receiving the order.
b.
within 10 business days after receiving the order.
c.
within 30 days after receipt of the order.
d.
within a reasonable time and within time lines consistent with industry standards.
19. The issue in the Kruser v. Bank of America case involved
a.
lost credit cards.
b.
unauthorized withdrawls.
c.
unfair interest rates.
d.
privacy.
20. Under the Fair and Accurate Credit Transactions Act (FACTA),
a.
a creditor may not discriminate against a borrower on the basis of race, sex, religion, or age.
b.
a debt collector may not harass or abuse debtors.
c.
a credit card company must promptly investigate and respond to any consumer complaints about a credit card
bill.
d.
a consumer has the right to obtain one free credit report every year from each of the three major reporting
agencies.
21. Mabel is a single 40-year-old who has borrowed money on numerous occasions. Her payment record has been good,
except she has been delinquent in paying a few bills. Which of the following is true regarding credit information gathered
on Mabel?
a.
Since Mabel has been delinquent, she waives her right to see the credit files.
b.
If Mabel is rejected for a loan because of the consumer report, the lender must tell her the source of the report.
c.
Mabel has a right to have the information regarding her delinquency in paying a few loans stricken from her
credit record because her record has generally been good.
d.
Mabel's only legal remedy, if there is erroneous information in her credit file, is to report the problem to the
FTC for enforcement.
22. The Fair Debt Collection Practices Act prohibits which of the following practices?
a.
A debt collector falsely representing himself as a lawyer
b.
A debt collector telephoning the debtor at 8:00 a.m.
c.
Visiting a debtor at work if the employer permits personal visits
d.
Using neighbors to locate the debtor
23. Which of the following statements express the purpose of the Truth-in-Lending Act?
a.
To require lenders to charge a "reasonable" rate of interest
b.
To regulate interest rates and terms of loans
c.
To provide consumers with information necessary to make the best credit decision
d.
To help lenders limit state laws
24. "Bait and switch" is
a.
advertising a product for sale and then giving the customer a rain check.
b.
placing the store brand and the national brand side-by-side in a store to confuse customers.
c.
selling the store brand at a lower price than the national brand.
d.
advertising certain goods and then pressuring the customer to buy different, more expensive goods.
25. If a consumer cancels a door-to-door sale within the required time, how many days does the seller have to return the
buyer's money?
a.
3
b.
10
c.
21
d.
30
26. Marla applies for and receives a three-year loan through Sharkey Lenders for $5,000 at 27% APR.If the loan
agreement violates the applicable usury statute, Marla may be able to keep
a.
the interest that exceeds the usury limit.
b.
all of the interest on the loan.
c.
the interest and the $5,000.
d.
Any of the answer choices are possible, depending on where the loan was made.
27. Under the Truth In Lending Act, a lender must disclose all of the following EXCEPT
a.
the average percentage rate charged by competitors.
b.
the amount financed.
c.
the annual percentage rate (APR).
d.
the finance charge.
28. Don received in the mail merchandise he never ordered. The package was addressed to him, and when he opened it he
saw a brochure stating he could keep the products for only $19.95. If he chose not to keep the products he was instructed
to mail them back within five days. Which of the following is correct?
a.
Don can keep and use the merchandise without having to pay for it.
b.
Don can keep the merchandise only if he pays the $19.95 charge.
c.
Don must send the merchandise back within five days if he does not want it.
d.
Don must return the merchandise within 30 days if he does not want it.
29. Under FTC rules, a customer can cancel a door-to-door sales contract within
a.
three business days of the sale.
b.
five business days of the sale.
c.
one calendar week from the date the sale was made.
d.
a “reasonable time” after the sale was made.
30. The maximum rate of interest for credit transactions is established by
a.
state law.
b.
federal law.
c.
the Federal Reserve Board.
d.
the FTC.
31. John loans George money and they sign a written agreement whereby George will repay John in monthly installments.
Is this loan subject to the Truth-in-Lending Act?
a.
Yes, if the loan is for more than $1,000.
b.
Yes, if John and George live in different states.
c.
No, if John is not in the business of offering credit.
d.
No, if John and George are related.
32. With regard to mortgages, the Consumer Finance Protection Bureau (CFPB) requires mortgage servicers
a.
to contact borrowers who are 36 days late in making a payment.
b.
to wait 180 days after nonpayment before beginning foreclosure.
c.
to credit payments within 3 days after they are received.
d.
to extend delinquent borrowers additional time to repay the loan.
33. Under the TILA, a qualified mortgage (QM)
a.
limits up-front points and fees to 5 percent.
b.
limits all of a borrower's debt to 43 percent of his or her income.
c.
allows balloon payments only if the borrower agrees up front.
d.
must allow for negative amortization.
34. MoneyMaker Toy Company violated the safety standards set forth by the Consumer Product Safety Commission when
it produced a toy gun that caused injury to hundreds of children. Because of MoneyMaker’s actions
a.
the CPSC can impose civil penalties on the company.
b.
the CPSC can impose criminal penalties on the company.
c.
users can sue for damages, including attorney’s fees, if MoneyMaker knew it was violating a consumer
product safety rule when it produced the guns.
d.
All of the answers are correct.
35. Under the Fair Debt Collection Practices Act, a collection company is legally permitted to
a.
call the debtor at any time of the day.
b.
call acquaintances of the debtor to tell them that the consumer is in debt.
c.
call the debtor even if the debtor has requested in writing that he or she wishes no further contact.
d.
visit the debtor at work if the consumer's employer permits such contact.
36. In 1969, the federal government estimated that consumer products caused 30,000 deaths, 110,000 disabling injuries
and 20 million trips to the doctor. The product category causing the majority of harm was
a.
automobiles.
b.
children's toys.
c.
power tools.
d.
food products.
37. Consumers have a right to
a.
exclude as obsolete information about a bankruptcy discharge seven years previously.
b.
know the name of anyone to whom credit information has been supplied by a consumer reporting agency
within the last three years.
c.
have their own version of a disputed credit situation included in their credit file.
d.
have investigative reports become obsolete after 1 year.
38. Suppose Bill's credit card is stolen and he notified his credit card company of this fact. Which of the following is true
regarding the amount of unauthorized charges made before Bill notified his credit card company?
a.
Bill is not responsible for any of the unathorized charges.
b.
Bill is responsible for the first $50 of unathorized charges.
c.
Bill is responsible for the first $100 of unauthorized charges.
d.
Bill is responsible for half of the unauthorized charges.
39. Sandy noticed an unauthorized electronic funds withdrawal on her bank statement. In order for her to not be liable for
the withdrawal, she must notify her bank within _______ of the date of the bank statement.
a.
10 days
b.
30 days
c.
60 days
d.
90 days
40. What are the three tests or elements used by the FTC to determine whether a particular act is an unfair trade practice?
41. Commonground Collections has been hired to collect past-due medical bills for Lakeview Physicians. List some
activities that Commonground may not do pursuant to the FDCPA.
42. The Trimbles apply to Community Bank for an installment loan of $20,000 to remodel their bathroom. Discuss the
disclosures Community Bank is required to make.
43. Discuss the major provisions of the Credit CARD Act.
44. Richard received his credit card bill and noticed an error. He wrote to the company the next week, pointing out the
error in his bill. Under the law, what is the credit card's obligation once it receives Richard's letter?
45. Brooke uses her credit card to purchase a lawn mower at the local “big box” hardware store, but when she tries to use
the mower for the first time, she finds it is not self-propelled as advertised. Does she have any recourse?
