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CHAPTER 44
CONSUMER LAW
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
DIGITAL UPDATE—CRITICAL THINKING
What is the equivalent of native advertising in commercially released movies? Product
placement. Specifically, car companies, electronics companies, and others pay movie
producers to use their products in their movies. When you see Apple products clearly and
repeatedly in a movie, you can be pretty certain that Apple Corporation paid for those product
placements. When you see many Cadillac Escalades throughout a movie, you can be pretty
certain that General Motors paid for such product placements.
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 44.1—CRITICAL THINKING
ETHICAL
POM claimed that it is unethical to require RCTs to substantiate disease-related claims
about food products. It argued that, for instance, “doctors cannot . . . ethically deprive a
control group of patients of all Vitamin C for a decade to determine whether Vitamin C
helps prevent cancer.” Is this a valid argument? Why or why not? No, POM’s argument
CASE 44.2—CRITICAL THINKING
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that Lexmark had issued a retraction of its advertising claims before this case
reached the Supreme Court. Would the outcome have been different? Discuss. If
Lexmark had issued a retraction of its advertising claims with respect to Static Control before
this case had reached the Supreme Court, the retraction would have been another factor in the
LEGAL ENVIRONMENT
Under the Court’s ruling in this case, is Static Control now entitled to relief? Explain
CASE 44.3—LEGAL REASONING QUESTIONS
1. Comcast argued that it refunded Santangelo’s $50, plus interest in the amount of $10,
four months after pulling his credit report. Does this argument undercut the plaintiff’s
CHAPTER 44: CONSUMER LAW 3
2. What might discovery reveal that would affect the outcome in this case? Explain. At
the stage in the course of the litigation in the Santangelo case at which the court issued its ruling
on Comcast’s motion to dismiss, the parties had not yet engaged in discovery. Because the
court denied the motion to dismiss, the parties can now proceed with discovery.
3. What damages might Santangelo be able to prove based on the depletion of his credit
score? Santangelo contended that Comcast did not have a permissible purpose for obtaining
his credit report after he paid the $50 deposit in exchange for the company’s promise not to
4 UNIT NINE: GOVERNMENT REGULATION
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
2A. Dealer’s duty
Under the FTC’s Mail or Telephone Order Merchandise Rule, as amended to include online
3A. Credit discrimination
The Equal Credit Opportunity Act prohibits the denial of credit solely on the basis of race,
4A. Banning authority
The CPSC is the Consumer Product Safety Commission, the organization responsible for
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
consumer is ever forced to buy anything. Just because an advertised item is not available
when a consumer goes to buy it does not mean that sellers should be prevented from “up-
CHAPTER 44: CONSUMER LAW 5
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. United Pharmaceuticals, Inc., believes it has developed a new drug that will be ef-
fective in the treatment of AIDS patients. 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 U.S. 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
ANSWERS TO BUSINESS SCENARIOS
AT THE END OF THE CHAPTER
44-1A. Unsolicited merchandise
Andrew will not be required to pay for the cookbook because of federal consumer protection
44-2A. Credit-card rules
The Truth-in-Lending Act (TILA) deals specifically with lost, stolen, and the unauthorized use of
credit cards. For credit cards solicited by the cardholder and then lost or stolen, the act limits
6 UNIT NINE: GOVERNMENT REGULATION
ANSWERS TO BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
44-3A. SPOTLIGHT ON MACDONALD’S—Food labeling
Parents are often aware that doses of medicine are smaller for young children and that portion
44–4A. Deceptive advertising
Yes. The court rejected the motion by the tobacco companies for judgment on the pleadings.
Under Illinois law, the plaintiffs’ claim that the tobacco companies were unjustly enriched by
44–5A . BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Fair debt collection practices
44–6A. Deceptive advertising
Yes, Ross can be held personally liable for a violation of the Federal Trade Commission (FTC)
Act’s prohibition of deceptive acts or practices. Generally, deceptive advertising occurs if a
44–7A. A QUESTION OF ETHICS—Fair debt collection practices
(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
8 UNIT NINE: GOVERNMENT REGULATION
(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
ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS
AT THE END OF THE CHAPTER
44–8A . Consumer protections
(a) Sellers in one state may be prohibited from engaging in a certain practice that is
permissible in another. This may seem unfair in individual cases. But there are greater
(b) A business must comply with the laws of the jurisdiction in which it does business.
(c) Inequitable regulation can lead to inequitable results in similar cases in different
