Question 1

Puffery constitutes deceptive advertising.

Accepted Answer

A) True 
 B)False  False

Question 2

Precise GPS Company's ad states that its product is "the finest that money can buy." Because of this ad,the Federal Trade Commission is most likely to issue

Accepted Answer

A) a cease-and-desist order. 
B) a counteradvertising order. 
C) a multiple product order. 
D) none of the choices. 
A) a cease-and-desist order. 
B) a counteradvertising order. 
C) a multiple product order. 
D) none of the choices. D

Question 3

Va-Va-Voom Products,Inc.,engages in deceptive advertising when it markets its product Weight-No-More as able to help consumers lose weight in their sleep.Va-Va-Voom is ordered to include in all future advertising of Weight-No-More the statement,"This product will not cause anyone to lose weight while sleeping." This is

Accepted Answer

A) a counteradvertising order. 
B) a multiple product order. 
C) a "cooling-off" law. 
D) a validation notice. 
A) a counteradvertising order. 
B) a multiple product order. 
C) a "cooling-off" law. 
D) a validation notice. A

Question 4

Tory borrows $10,000 from USA National Bank to remodel a room in her home.This transaction is subject to

Accepted Answer

A) no federal law. 
B) the Consumer Leasing Act. 
C) the Consumer Product Safety Act. 
D) the Truth-in-Lending Act. 
A) no federal law. 
B) the Consumer Leasing Act. 
C) the Consumer Product Safety Act. 
D) the Truth-in-Lending Act.

Question 5

Vague generalities and obvious exaggerations constitute deceptive advertising.

Accepted Answer

A) True 
 B)False

Question 6

To generate sales,Yakkity-Yak,Inc.,uses phone solicitation.Under federal law and Federal Trade Commission regulations,in soliciting business,Yakkity-Yak's telemarketers must

Accepted Answer

A) disclose all material facts related to a sale. 
B) identify the seller's name (only if asked). 
C) refrain from calling consumers who have not requested a call. 
D) speak clearly and conspicuously. 
A) disclose all material facts related to a sale. 
B) identify the seller's name (only if asked). 
C) refrain from calling consumers who have not requested a call. 
D) speak clearly and conspicuously.

Question 7

In the ordinary course of business,Xtra Charge Company sells goods to Yvon and other consumers on credit under installment sales contracts that typically require at least one year of monthly payments.Xtra does not disclose all of the credit terms to its customers.This practice is most likely to result in

Accepted Answer

A) a cease-and-desist order. 
B) a fine. 
C) no sanctions. 
D) rescission of the contracts. 
A) a cease-and-desist order. 
B) a fine. 
C) no sanctions. 
D) rescission of the contracts.

Question 8

Paychex Loan Company extends credit in the ordinary course of its business.Under the Truth-in-Lending Act,Paychex must inform potential borrowers of

Accepted Answer

A) credit terms offered by other lenders and its own credit terms. 
B) no credit terms. 
C) only its own credit terms. 
D) only the credit terms that will convince borrowers to "close the deal." 
A) credit terms offered by other lenders and its own credit terms. 
B) no credit terms. 
C) only its own credit terms. 
D) only the credit terms that will convince borrowers to "close the deal."

Question 9

Labels must use words that are easily understood by the ordinary marketing executive.

Accepted Answer

A) True 
 B)False

Question 10

Kristen receives unsolicited merchandise in the mail.Kristen

Accepted Answer

A) may keep the merchandise without any obligation to the sender. 
B) must return the merchandise within five days to avoid payment. 
C) must return the merchandise within fifteen days to avoid payment. 
D) must return the merchandise within thirty days to avoid payment. 
A) may keep the merchandise without any obligation to the sender. 
B) must return the merchandise within five days to avoid payment. 
C) must return the merchandise within fifteen days to avoid payment. 
D) must return the merchandise within thirty days to avoid payment.

Question 11

Kirk receives an unsolicited credit card in the mail and tosses it on his desk.Without Kirk's permission,his roommate Leif uses the card to buy a new personal computer for $1,800.Kirk is

Accepted Answer

A) liable for $1,000. 
B) liable for $500. 
C) liable for $50. 
D) not liable for any amount. 
A) liable for $1,000. 
B) liable for $500. 
C) liable for $50. 
D) not liable for any amount.

Question 12

Fun-E Products,Inc.,makes and sells toys.The government agency that has the authority to remove a potentially hazardous toy from the market is

Accepted Answer

A) the Consumer Product Safety Commission. 
B) the Federal Reserve Board of Governors. 
C) the Federal Trade Commission. 
D) the Food and Drug Administration. 
A) the Consumer Product Safety Commission. 
B) the Federal Reserve Board of Governors. 
C) the Federal Trade Commission. 
D) the Food and Drug Administration.

Question 13

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Accepted Answer

A) True 
 B)False

Question 14

Sweet Treats,Inc.,wants to market a new snack food.On the product's label,standard nutrition facts are

Accepted Answer

A) prohibited. 
B) required. 
C) strictly voluntary. 
D) warranted by the nature of the food. 
A) prohibited. 
B) required. 
C) strictly voluntary. 
D) warranted by the nature of the food.

Question 15

Like other manufacturers and sellers,Happy Household Products Company packages its products with labels.Under federal law,such labels must be

Accepted Answer

A) accurate and use easily understood words. 
B) bright and feature eye-catching colors. 
C) graphically distinctive and well-designed. 
D) interesting and appealing to the average consumer. 
A) accurate and use easily understood words. 
B) bright and feature eye-catching colors. 
C) graphically distinctive and well-designed. 
D) interesting and appealing to the average consumer.

Question 16

Orange Company makes computers.The company's ad states that "if you aren't eatin' an Orange,you aren't gettin' any 'C.' " The Federal Trade Commission would consider this ad

Accepted Answer

A) false and misleading. 
B) impermissibly vague and general. 
C) a deceptive half-truth. 
D) none of the choices. 
A) false and misleading. 
B) impermissibly vague and general. 
C) a deceptive half-truth. 
D) none of the choices.

Question 17

Steel Tool Company makes and sells tools.One of the tools is believed to be hazardous.The appropriate government agency may require Steel to

Accepted Answer

A) export the tool and sell it only abroad. 
B) increase the price to cover the cost of any injuries or damage. 
C) reduce the price to indicate the hazard to consumers. 
D) remove the tool from the market. 
A) export the tool and sell it only abroad. 
B) increase the price to cover the cost of any injuries or damage. 
C) reduce the price to indicate the hazard to consumers. 
D) remove the tool from the market.

Question 18

Counteradvertising requires a company to advertise the products of its competitor to counter its own false claims.

Accepted Answer

A) True 
 B)False

Question 19

In the ordinary course of business,EZ Funds Corporation offers credit to Fay and other consumers and reports on the loans to credit agencies.To save time and money,EZ generally does not correct or update its reported information.This is most likely to result in

Accepted Answer

A) a levy of a nominal fine. 
B) an assessment of damages. 
C) an order of rescission of the loan contracts. 
D) no sanctions. 
A) a levy of a nominal fine. 
B) an assessment of damages. 
C) an order of rescission of the loan contracts. 
D) no sanctions.

Question 20

Kip opens an account at a Lotsa Goodies Store,and buys a digital music player and other items,but makes no payments on the account.To collect the debt,Mako,the manager,contacts Kip's parents.This violates

Accepted Answer

A) no federal law. 
B) the Fair and Accurate Credit Transactions Act. 
C) the Fair Debt Collection Practices Act. 
D) the Truth-in-Lending Act. 
A) no federal law. 
B) the Fair and Accurate Credit Transactions Act. 
C) the Fair Debt Collection Practices Act. 
D) the Truth-in-Lending Act.

Exam 40: Consumer Law

Puffery constitutes deceptive advertising.

Precise GPS Company's ad states that its product is "the finest that money can buy." Because of this ad,the Federal Trade Commission is most likely to issue

Tory borrows $10,000 from USA National Bank to remodel a room in her home.This transaction is subject to

Vague generalities and obvious exaggerations constitute deceptive advertising.

To generate sales,Yakkity-Yak,Inc.,uses phone solicitation.Under federal law and Federal Trade Commission regulations,in soliciting business,Yakkity-Yak's telemarketers must

Paychex Loan Company extends credit in the ordinary course of its business.Under the Truth-in-Lending Act,Paychex must inform potential borrowers of

Labels must use words that are easily understood by the ordinary marketing executive.

Kristen receives unsolicited merchandise in the mail.Kristen

Kirk receives an unsolicited credit card in the mail and tosses it on his desk.Without Kirk's permission,his roommate Leif uses the card to buy a new personal computer for $1,800.Kirk is

Fun-E Products,Inc.,makes and sells toys.The government agency that has the authority to remove a potentially hazardous toy from the market is

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Sweet Treats,Inc.,wants to market a new snack food.On the product's label,standard nutrition facts are

Like other manufacturers and sellers,Happy Household Products Company packages its products with labels.Under federal law,such labels must be

Orange Company makes computers.The company's ad states that "if you aren't eatin' an Orange,you aren't gettin' any 'C.' " The Federal Trade Commission would consider this ad

Steel Tool Company makes and sells tools.One of the tools is believed to be hazardous.The appropriate government agency may require Steel to

Counteradvertising requires a company to advertise the products of its competitor to counter its own false claims.

In the ordinary course of business,EZ Funds Corporation offers credit to Fay and other consumers and reports on the loans to credit agencies.To save time and money,EZ generally does not correct or update its reported information.This is most likely to result in

Kip opens an account at a Lotsa Goodies Store,and buys a digital music player and other items,but makes no payments on the account.To collect the debt,Mako,the manager,contacts Kip's parents.This violates

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