Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
1. No. As the text states, the FTC is able to order such corrective advertising. As the D.C.
Circuit stated, “[t]he affirmative disclosure that Listerine will not prevent colds or lessen their
2. The FTC’s argument was correct. Therefore, the FTC won the appeal. The Ninth Circuit
Court of Appeals held that “a claim of product effectiveness is false . . . if evidence developed
3. Yes. The representations made by Gill and Murkey were false. They could not permanently
remove accurate, non-obsolete information from consumers’ credit reports. Given the nature
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
4. Yes. First, even though the harm to each individual consumer was small, the consumer injury
still was “substantial” because Orkin made $7,000,000 and small individual harms to a large
class of people can constitute a substantial overall harm if enough people are affected.
5. No. “The provisions of the Magnuson-Moss Warranty Act [apply] to consumer products
only….The term consumer product means any tangible personal property which is distributed
6. The court ruled that the defendants violated the FDCPA by threatening to take an action that
the debt collector and creditor did not really intend to take. The letters effectively amounted
7. NCMG violated both section 5 and the TSR. It violated section 5 by expressly or impliedly
making the following false or misleading representations: that NCMG would provide a
personal credit analysis (when in fact personal analyses were not done); and that its
customers were pre-approved for complimentary credit cards and would definitely receive
8. The Second Circuit reversed the dismissal. The court held that a person cannot be held liable
for obtaining a credit report under false pretenses if in fact the owner had a legitimate
9. No. Once Grant disputed the entry in the initial credit report, the FCRA required TRW to
reinvestigate the matter and record the current status of the relevant information unless it had
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 48 – The Federal Trade Commission Act and Consumer Protection Laws
10. No. Public’s action was not forbidden sex discrimination under the ECOA. Miller’s husband
was required to cosign because of Miller’s lack of creditworthiness, not because of her
11. No. The relevant portion of the Fair Credit Billing Act (15 U.S.C. section 1666(a)) only
12. Yes. Applying a “least-sophisticated-consumer” test, the U.S. Court of Appeals for the
Eleventh Circuit concluded that such an effort to collect a time-barred debt was both
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.