Deck 8: Consumer Protection Law

Question 1

Which of the following statements about the CAN-SPAM act is not accurate?

A) Punishment may include fines and/or imprisonment.
B) The Act can be enforced by an aggrieved consumer or by the FTC or other government officials.
C) Unsolicited commercial email must be labeled as an advertisement.
D) Unsolicited commercial email must provide the recipient with an opt-out opportunity.

Answer 1

B

Question 2

Explain the scope of the FTC's Cooling-off Rule and what information a seller must provide a buyer.

Answer 2

The FTC's Cooling-off Rule requires sellers to give consumers three days to cancel and receive a full refund on any purchase of $25 or more made at the consumer's home or at certain locations other than the seller's normal place of business, such as hotel or motel rooms, convention centers, and fairgrounds. The seller must provide the buyer with: 1) a summary of the right to cancel; 2) two copies of a cancellation form; and 3) a contract or receipt, which must be in the same language that was used in the sales transaction.

Question 3

Jim is in big trouble. He just graduated from business school and started a dot.com. Jim needed the finest clothes to impress the East Coast money establishment so he ran up a huge bill on his store credit card at a large department store. Jim's company was all set to launch his service where customers e-mail Jim when they need their driveway shoveled. His site, shovelyourwalkmister.com, wasn't a big hit and venture capitalists won't even log on to his site, much less return his calls. To make matters worse, the department store is trying to collect on its account and had been calling him at all hours of the night, following him around to social events, and even telling business associates mostly kids hired to shovel driveways) that Jim is a deadbeat. Can Jim use the Fair Debt Collections Practices Act FDCPA) to protect himself from the department store?

A) No, the FDCPA only protects consumers who have declared bankruptcy.
B) Yes, the FDCPA limits abusive practices such as those used by the department store.
C) No, the FDCPA only applies to third party collection agencies.
D) Yes, but only if Jim has asked the department store to stop its abusive collection practices.

Answer 3

C

Question 4

What action does a consumer have to take in order to treat unsolicited merchandise received through the mail as a gift?

A) The consumer does not have to do anything.
B) The consumer must believe in good faith that the merchandise was not sent as part of a "sales on approval" transaction.
C) Nothing; unsolicited merchandise is never treated as a gift.
D) The consumer must notify the sender that the consumer is treating the merchandise as a gift.

Question 5

The Telephone Consumer Protection Act TCPA) prohibits all but which of the following?

A) Unsolicited fax ads.
B) Unsolicited e-mail.
C) Automatic telephone dialing systems.
D) Using a prerecorded voice.

Question 6

Which of the following statements about the National Do Not Call Registry is false?

A) Telemarketers may call residential or cell phone numbers using an automatic dialer if the consumer does not place the number on the Registry.
B) The Registry is not available to business lines.
C) The Registry does not prohibit calls from political organizations and charities.
D) Calls from companies with which the receiver has had a previous relationship such as a purchase or inquiry) are not prohibited by the Registry.

Question 7

Under the FTC's Telemarketing Sales Rule, which of the following is NOT one of the things telemarketers must disclose?

A) The total cost of the product.
B) The quantity of goods being sold.
C) Whether the sale is final or non-refundable.
D) The telemarketer must disclose all of the above information.

Question 8

Which of the following is NOT one of the reasons why a company must notify the Consumer Product Safety Commission CPSC) about its product?

A) The product has a defect that creates a substantial risk of injury to the public.
B) The product was not pre-registered with the CPSC before going to market.
C) The product creates an unreasonable risk of serious injury or death.
D) The product violates a consumer product safety standard or ban.

Question 9

Third party collection agencies are constantly hounding you for overdue debts. They call you at home, at work, and they have even shown up to "work out" a payment plan with you at social events. You are beginning to fear for your safety, as well as your sanity. Is there any federal statute you can turn to for protection? If so, what relief is available?

Question 10

Explain what the term "off-label" means in the context of drugs or medical devices.

Question 11

A door-to-door computer salesman, Franz, recently visited Gary Gullible in his house. Franz was selling a model named the Komputer, manufactured by a German computer company. Franz told Gary that the computer was made in Germany but used standard American parts. He assured Gary that the Komputer would be perfect for his kids to use to write reports and do school work. The Komputer came installed with standard software that the user could not modify. Franz told Gary there was no refund and all purchases were final. Gary bought the Komputer for $399.99. Everything was fine until the next day when Gary turned on the Komputer and opened the word processing program. The program used a German dictionary, such that the spelling and grammar checkers were useless. Is there any thing Gary can do?

A) No, Gary gave up any rights he had when he purchased the Komputer knowing there was no refund.
B) No, because the word processing program is presumably only one program among many, and the rest of the computer would have to be defective to allow a refund.
C) Yes, but only if Gary can show that Franz told him that the word processing program used an English dictionary.
D) Yes, the FTC's Cooling-off Rule requires the seller to give consumers three days to cancel the sale.

Question 12

One of your friends is interested in starting a telemarketing company. She comes to you looking for advice on the FTC's Telemarketing Sales Rule. What is the scope of Rule and what conduct does it prohibit?
a.m. or after 9 p.m. and from calling customers who have previously indicated they do not want to be called.