Deck 39: Consumer and Environmental Law

Question 1

There is a significant distinction between regulating the information dispensed about a product and regulating the product's actual content.

Answer 1

True

Question 2

Advertising will be deemed deceptive if it includes a claim that omits a material fact about a product.

Answer 2

True

Question 3

An obviously exaggerated advertising claim will be considered deceptive even if a reasonable consumer would not believe it to be true.

Answer 3

False

Question 4

Shipping times promised in ads are estimates-merchants are not required to notify consumers when orders cannot be shipped as timely as promised.

Question 5

The government cannot remove a product from the market simply because it is considered imminently hazardous.

Question 6

An ad is more likely to be considered fair if its benefit to consumers or the competition outweighs any injury it might cause to the interests of consumers.

Question 7

With respect to tainted foods, the focus of federal regulators has shifted from responding to incidents of contamination to preventing them.

Question 8

A business that cannot provide scientific evidence to support its marketing claims may be held liable for deceptive advertising.

Question 9

Regulation Z was issued by the Federal Reserve Board of Governors to implement the disclosure requirements of the Truth-in-Lending Act.

Question 10

Because consumers may not read an entire web page, an online disclosure should be placed as close as possible to any claim being qualified.

Question 11

The quality and safety of food may be important to consumers, but food labels that provide standard nutrition facts are a seller's option, not a requirement.

Question 12

The Truth-in-Lending Act applies to a loan between two consumers because in that transaction, the lender is a person who in the ordinary course of business is extending credit.

Question 13

A consumer may recover under a state consumer-fraud statute, even if he or she has not suffered actual damages proximately caused by a deceptive act.

Question 14

Labels on fresh and frozen fruits and vegetables must indicate where the food originated so that consumers can know if the food was imported.

Question 15

The Telemarketing Sales Rule applies to any offer-domestic or foreign-made to consumers in the United States.

Question 16

The Federal Food, Drug, and Cosmetic Act protects consumers against contaminated and misbranded food and drugs.

Question 17

A false statement or unjustified claim about a competitor's products can result in liability for deceptive advertising.

Question 18

Half-truths-information that is true but incomplete-are not deceptive because such statements are at least half true.

Question 19

Generally, online ads-unlike other ads-can be less than truthful and not every claim must be substantiated.

Question 20

A deceptive ad for a product involving wrongful charges to consumers may result in an award of damages of a defendant's unjust gains and consumers' losses.

Question 21

An environmental impact statement includes a formal analysis of the impact of any major federal action that will significantly affect the environment.

Question 22

A credit cardholder is not liable for any unauthorized charges made before the time the creditor is notified that the card is lost.

Question 23

Under the Fair Credit Reporting Act, a consumer can request the identity of anyone who has received a credit agency's report on the consumer.

Question 24

A business that believes a federal agency's action threatens the environment can use an environmental impact statement as a means to challenge it.

Question 25

The primary responsibility for preventing and controlling air pollution rests with the federal government.

Question 26

An ad for Running Shoes Inc. states that its footwear is "The Athlete's Choice." Because of this ad, the Federal Trade Commission is most likely to issue

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

Question 27

To minimize potential liability under Superfund, a business can conduct its own regular environmental compliance audits of its operations.

Question 28

Consumer Staples Inc. includes in its advertising obvious exaggerations, vague generalities, and puffery about its products. The firm may be subject to sanctions for

A) the obvious exaggerations.
B) the vague generalities.
C) the puffery.
D) none of the choices.

Question 29

Because point-source water pollution control is based on a permit system, the permits are the key to enforcement.

Question 30

To obtain relief under the nuisance doctrine, a property owner may have to identify a distinct harm separate from that affecting the general public.

Question 31

Sources of consumer and environmental protection, and the public means to implement and enforce those provisions, exist at the level of

A) the federal government only.
B) the federal and state governments only.
C) the state and local governments only.
D) the federal, state, and local governments.

Question 32

Lawn Company and Mowers Inc. make yard tools. Both companies use only steel produced in the United States. Lawn's ad claims, "We use only U.S. steel, while our competitor uses inferior foreign steel!" For purposes of the application of advertising standards under the Federal Trade Commission Act, this statement is most likely

A) an obvious exaggeration.
B) puffery.
C) a false claim about a competitor's product.
D) a half-truth.

Question 33

A debt-collection agency can always contact a debtor at his or her place of employment.

Question 34

A creditor can always require the signature of a cosigner on a credit application.

Question 35

Because the government knows CO2 pollution causes climate change, a young generation might succeed in a suit alleging that by failing to address this cause the government is violating their constitutional rights.

Question 36

Brew House Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the Corporate World!" The Federal Trade Commission would consider this ad

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

Question 37

Creditors that use information from credit-reporting agencies cannot be held liable for violations of the Fair Credit Reporting Act.

Question 38

Selling a site where hazardous wastes were disposed of relieves the seller-and the buyer-of liability for the clean-up, as does merging with or buying a corporation that has not violated Superfund.

Question 39

Credit can be denied solely on the basis of national origin.

Question 40

Employees might sue an employer whose failure to use pollution controls contaminated the air and caused the employees to suffer respiratory illnesses.

Question 41

Equity Lending Company extends credit to consumers. Equity applies a variety of requirements to determine applicants' qualifications for credit, the amount, the interest rate, and other terms. Under the Equal Credit Opportunity Act, the lender cannot base its credit decisions on an applicant's

A) credibility.
B) financial awareness.
C) occupation.
D) gender.

Question 42

Cutting Edge Inc. makes and sells tools. One of the tools is believed to be hazardous. The firm may be required to

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 43

Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule, the firm may be liable for failing to

A) ship orders within the time promised in its ads.
B) notify consumers when orders are shipped.
C) provide a cooling-off period of three days before shipping.
D) all of the choices.

Question 44

Regional Disposal Center operates a recycling plant. Stan and other citizens file a suit, alleging injuries from the plant. To succeed, they must show that the defendant failed to use reasonable care if the suit is based on

A) a negligence theory.
B) a nuisance theory.
C) any theory.
D) a strict liability theory.

Question 45

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

A) the car loan only.
B) the home repair loan only.
C) the retail installment sale only.
D) the car loan, the home repair loan, and the retail installment sale.

Question 46

Auto & Life Insurance Company fails to notify its new customers when they are charged higher premium rates as a result of their credit scores. This is a willful violation of

A) the Equal Credit Opportunity Act.
B) the Fair Credit Reporting Act.
C) state law, but no federal law.
D) the Fair Debt Collection Practices Act.

Question 47

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

A) credit terms offered by other lenders.
B) comparative prices for goods to be bought with the borrowed funds.
C) Credit Loan's credit terms.
D) the borrowers' credit scores.

Question 48

EZ Workout Inc. advertises Fit Step, an exercise machine, online. In its ads, EZ claims that the use of Fit Step measurably enhances the attainability of fitness and weight loss goals, and will contribute significantly to the length of its users' lives. In this context, the company's ads and claims must be

A) hyperlinked.
B) reasonably avoidable.
C) substantiated.
D) all of the choices.

Question 49

Clean Wash Inc. operates a chain of car washes throughout the United States. The government entity that is most likely to be involved in regulating the chain's environmental impact is

A) Congress.
B) federal and state regulatory agencies.
C) local chambers of commerce.
D) local police departments.

Question 50

Leo's application to Metro Bank for a credit card is denied on the basis of what Leo believes is an inaccurate credit report. Leo should

A) immediately apply for a credit card with a different financial institution.
B) appeal the denial to the appropriate federal or state agency.
C) obtain his credit report and notify the reporting agency of inaccuracies.
D) file a suit against the bank, alleging a violation of federal credit laws.

Question 51

Retail Properties, Inc., wants to build a parking ramp to connect to its Shoppers Mall, both of which are on private land. For this action, an environmental impact statement is

A) prohibited.
B) required.
C) unnecessary.
D) voluntary.

Question 52

Consumer Finance Corporation (CFC) extends credit to consumers. CFC applies several criteria to decide customers' "suitability" for credit. Under the Equal Credit Opportunity Act, CFC cannot base its decision on a customer's

A) intelligence.
B) education.
C) culture.
D) race.

Question 53

Smelter Inc. operates a plant-a "major source"-that emits hazardous air pollutants for which the Environmental Protection Agency has set maximum levels of emission. The plant does not use equipment to reduce its emissions. Under the Clean Air Act, this is most likely

A) a violation.
B) not a violation because a "major source" is exempt.
C) not a violation because the plant does not use any equipment.
D) not a violation because the plant is not a mobile source.

Question 54

ChemCo Inc. makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is

A) the Consumer Product Safety Commission.
B) none of the choices.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 55

Ski Resorts, Inc., wants to add a new run to its facility in a national park on federal land. For this action, an environmental impact statement is

A) prohibited.
B) required.
C) unnecessary.
D) voluntary.

Question 56

Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is

A) Corner Market and Deli & Drug.
B) Deli & Drug only.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 57

Fried Food, Inc., operates a commercial frying plant, discharging pollutants into the air. Greta reports the violations to the Environmental Protection Agency. Greta

A) is not entitled to a payment.
B) may be paid up to any amount.
C) may be paid up to $1,000.
D) may be paid up to $10,000.

Question 58

The credit department of Mega-Mart often calls Nora at work about an overdue bill over the objection of Nora's employer. This is a violation of

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.

Question 59

Mary receives an unsolicited credit card in the mail and tosses it on her desk. Without Mary's permission, her roommate Nan uses the card to buy a new laptop for $1,800. Mary is liable for

A) $1,800.
B) $500.
C) $50.
D) none of the choices.

Question 60

Ultrahazard Corporation transports radioactive materials. Vince, an Ultrahazard employee, is diagnosed with radiation sickness after exposure to the materials. Vince's suit against Ultrahazard to recover for the injury is

A) an environmental impact statement.
B) a nuisance.
C) a toxic tort.
D) a hazardous substance response.

Question 61

Centre City operates its own municipal public drinking water system for which the Environmental Protection Agency has set maximum levels of pollutants. The city does not use any equipment to meet these standards. With regard to any contamination of the water, under the Safe Drinking Water Act, this is most likely

A) a violation.
B) not a violation because the city does not set the standards.
C) not a violation because water is not a stationary source.
D) not a violation because the city does not use any equipment.

Question 62

Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics, Inc., wants to advertise its sweaters as having "That Wool Feel," but does not want to specify on labels that the sweaters are 100 percent polyester. Can these firms market their products as they would like? If not, why not?

Question 63

Hi-Yield, Inc. makes an herbicide with a risk to people of developing cancer from exposure. This substance must be

A) disposed of before anyone develops cancer.
B) registered before it is sold.
C) taken off the market and placed in temporary storage.
D) used only in a way that avoids exposure to people.

Question 64

Without a permit from the U.S. Army Corps of Engineers, Condos Corporation fills a wetlands area that it owns in preparation for the construction of a housing complex. Under the Clean Water Act, this is most likely

A) a violation.
B) not a violation because a permit is not needed to fill wetlands.
C) not a violation because the area was filled before construction.
D) not a violation because there was no discharge of pollution.

Question 65

Disposal Company operates a hazardous waste storage facility. Concerned that there may be a release of chemicals from the site, the company sells the property to Eager Developers Inc. If there is a release, the seller is most likely

A) liable.
B) not liable because the site was sold before the release.
C) not liable because the company was concerned about the release.
D) not liable because the company no longer operates the facility.

Question 66

Without a permit, Timberline Plywood Company discharges its untreated wastewater into Urban City's storm drainage pipes, which empty into Valley Creek. Under the Clean Water Act, this discharge is most likely

A) a violation.
B) not a violation because the company does not have a permit.
C) not a violation because water is not a stationary source.
D) not a violation because a storm drainage pipe is not a point source.

Question 67

Noxious Inc. makes and sells pesticides. If a substance is identified as harmful and the harm is imminent, the Environmental Protection Agency can

A) conduct an inspection of the maker's plant.
B) declare the substance to be unregulated and allow its production.
C) ignore the risk if the benefit outweighs the harm.
D) order the substance to be sold in an adulterated form.

Question 68

Before being transported, hazardous waste produced by the operations of Fabrication Inc. must be properly labeled and packaged under the Resource Conservation and Recovery Act by

A) the federal Environmental Protection Agency.
B) the local Resource Conservation and Recovery Committee.
C) the state Environmental Regulatory Commission.
D) Fabrication Inc.

Question 69

Metal Foundry Inc.'s complex spews smoke and odors. The site features its own rail system, and trucks enter and exit the complex night and day. Neal and other residents of an adjacent neighborhood can feel the vibrations of the trains and trucks, and suffer other effects from the operations. Neal and others file a suit against Metal Foundry. Why might the court rule in favor of the defendant?

Question 70

Blue Water Power Corporation wants to begin operations that include the discharge of waste into navigable waters. Under the Clean Water Act, Blue Power must install certain equipment

A) with all deliberate speed after beginning operations.
B) before beginning operations.
C) only on a voluntary basis.
D) only if a regulatory agency challenges the discharge.

Question 71

Under the Marine Protection, Research, and Sanctuaries Act (the Ocean Dumping Act), Coastline Chemicals, Inc., may dump its chemical waste into the ocean

A) after obtaining a permit.
B) before obtaining a permit.
C) without a permit.
D) not at all.

Question 72

A cruise ship owned by Bay Cruises Inc. discharges some of the oil contained in its hold into Chesapeake Bay and onto the shore. Under the Oil Pollution Act, this is most likely

A) a violation.
B) not a violation because this type of discharge is not pollution.
C) not a violation because a cruise ship is not a stationary source.
D) not a violation because a ship's hold is not a point source.