978-1285770178 Solution Manual BL ComLaw 1e SM-Ch24

in whole or in part.

ANSWERS TO QUESTIONS

AT THE ENDS OF THE CASES

CASE 24.1—QUESTION (PAGE 470)

THE SOCIAL DIMENSION

subscription) to get the promised item, then the header will be considered deceptive. Similarly,

an e–mail header that says “lose twenty pounds in one week” might be deceptive—but it might

not be if it included a qualifying statement, such as “results not typical.” In this particular case,

an ad placed by ValueClick through its affiliates contained a subject line that said “Get a $300

Gift Card FREE,” when in fact the consumer had to pay a fee or participate in more promotions

THE ETHICAL DIMENSION

Suppose that the defendant automaker had opposed this action solely to avoid paying

for a car that had proved to be a “lemon.” Would this have been unethical? Explain.

Arguably, a judgment against the defendant in this case could have applied to a large number of

vehicles—and potentially to other vehicle makers’ products—and this might have led to a

in whole or in part.

argument that a decision holding debt collectors and their attorneys liable for mistaken

made a mistaken legal interpretation of the act, this would give a competitive advantage to debt

collectors who press the boundaries of lawful conduct. In other words, attorneys would easily

be able to violate the act by making impermissible statements and then later avoid liability by

claiming that the statement represented a mistaken interpretation of the requirements of the act.

The Court agreed with this argument. The Court found it difficult to square such a result with

writing. Would the result have been different? Explain. No. It is not likely that the result in

the Jerman case would have been different if, instead of serving notice on Karen Jerman in

writing, Carlisle, McNellie, Rini, Kramer & Ulrich had simply told her about their assumption of

her debt unless she disputed it in writing. The collection agency’s violation of the Federal Debt

Collection Practices Act (FDCPA) was not the form of their notice to Jerman, but requiring her to

4A. How might the ruling in this case affect other collection agencies? When initiating

contact with a debtor to collect a debt, a collection agency must give the debtor a validation

notice that states he or she has thirty days to dispute the debt and request written verification of

it. The ruling in the Jerman case clarifies the terms of the validation notice that collection

careful with the wording of their collection notices.

4 UNIT SIX: GOVERNMENT REGULATION

in whole or in part.

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

1A. Deceptive advertising

The advertising would mislead a reasonable consumer who would show up at the store

expecting the advertised item to be available. This is a classic example of bait and switch

advertising—luring a customer in with a low priced item (the MetroRider EZ, the bait), then

switching his or her interest to a more expensive item (the MetroRider FX).

3A. Credit discrimination

The Equal Credit Opportunity Act prohibits the denial of credit solely on the basis of race,

religion, national origin, color, gender, marital status, or age. If the clerk required a cosigner on

Sage’s loan because of her race or gender, a court would likely find that the dealer violated this

ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

Laws against bait-and-switch advertising should be abolished because no

advertise items, so once in the stores, these consumers may end up paying for higher-priced

versions of the same products. Retailers must be prevented from using such unethical tactics.

CHAPTER 24: CONSUMER LAW 5

in whole or in part.

ANSWERS TO ISSUE SPOTTERS IN THE EXAMPREP FEATURE

1A. United Pharmaceuticals, Inc., believes that it has developed a new drug that will be

effective in the treatment of patients with AIDS. The drug has had only limited testing, but

United wants to make the drug widely available as soon as possible. To market the drug,

what must United show the Food and Drug Administration? Under an extensive set of

2A. Gert buys a notebook computer from EZ Electronics. She pays for it with her credit

card. When the computer proves defective, she asks EZ to re pair or replace it, but EZ

refuses. What can Gert do? Under the Truth-in-Lending Act, a buyer who wishes to withhold

payment for a faulty product purchased with a credit card must follow specific procedures to

settle the dispute. The credit card issuer then must intervene and attempt to settle the dispute.

Andrew will not be required to pay for the cookbook because of federal consumer protection

law. The federal Postal Reorganization Act of 1970 allows Andrew to retain or discard the

cookbook without incurring any obligation, because it was unsolicited merchandise. The mailing

of this unordered cookbook could also be considered an unfair trade practice. (As a California

resident, Andrew is also protected by the California Civil Code, which permits consumers to

the liability of the cardholder to $50 for unauthorized charges made prior to the time the creditor

is notified. There is no liability for any unauthorized charges made after the date of notice. In

the case of the Midtown Department Store credit card stolen on May 31, the $500 charge made

on June 1, which is prior to Ochoa’s notice, causes Ochoa to be liable for the $50 limit. For the

June 3 charge of $200 made after the notification, Ochoa has no liability. TILA also deals with

in whole or in part.

CHAPTER 24: CONSUMER LAW 7

in whole or in part.

judgment in the defendants’ favor, and on the reasoning stated above, the U.S. Court of

Appeals for the Second Circuit affirmed.

24–6A. Deceptive advertising

(Chapter 24—Page 467)

24–7A . BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Fair debt collection practices

Engler may recover under the Fair Debt Collection Practices Act (FDCPA). Atlantic is subject to

the FDCPA because it is a debt-collection agency and it was attempting to collect a debt on

behalf of Bank of America. Atlantic also used offensive tactics to collect from Engler. After all,

(a) Check Investors argued that the payors were criminals or tortfeasors because they

had written “bad” checks, and that the amounts of the checks were not “debts” because they

arose from criminal or tortious conduct. For the same reasons, asserted Check Investors, the

payors were not “consumers” entitled to protection under the FDCPA. Check Investors also

argued that the FDCPA did not apply because the firm was collecting NSF checks that it had

court echoed the finding that Check Investors had failed to prove the intent required to establish

a crime or tort and added that, even if intent had been shown, the FDCPA had no “fraud”

exception. The court held that even if accepted the contention that the payors were criminals or

tortfeasors, they would still qualify as consumers under the FDCPA.

8 UNIT SIX: GOVERNMENT REGULATION

in whole or in part.

To hold that Check Investors was a “debt collector,” the court focused on the status of the

collection purposes.” The court added that “[n]o merchant worried about goodwill or the future of

his/her business would have engaged in the [same] kind of conduct.” In fact, “[n]ot only do we

conclude that Appellants are ‘debt collectors’ rather than ‘creditors,’ we believe that their course

of conduct exemplifies why Congress enacted the FDCPA.”

Check Investors’ practices were thus held to be illegal and were arguably unethical. The

imprisonment or that a consumer committed a crime. The prohibition on unfair or

unconscionable practices precludes a debt collector from adding any charge to the underlying

debt unless that charge is authorized by law or the agreement creating the debt.”

(b) Of course, there are, and likely always will be, persons who willfully refuse to pay

legitimate debts. Recognizing this fact, the U.S. Court of Appeals for the Third Circuit in this

majority of consumers who obtain credit fully intend to repay their debts. When default occurs, it

is nearly always due to an unforeseen event such as unemployment, overextension, serious

illness or marital difficulties or divorce.”

24–9A . LEGAL REASONING GROUP ACTIVITY—Consumer protections

Of course, dong business in more than one jurisdiction means complying with different sets of

laws. A business would have to adjust its methods accordingly.

(c) Inequitable regulation can lead to inequitable results in similar cases in different

states. This can mean that the citizens of one state are subject to more chicanery on the part of

some unscrupulous merchants and creditors than in other states. But forcing uniform federal

consumer legislation on all of the states would be to extend federal control into an area that has

traditionally been within the states’ prerogative, and could be argued to be unconstitutional.