Deck 19: Consumer Protection

Question 1

The FDA uses a food purity standard that says that an additive should have no more than a one-in-a-million chance of causing cancer.

Answer 1

False

Question 2

The FDA does not regulate health claims made on food products.

Answer 2

False

Question 3

The Food Quality Protection Act states that food should have a "reasonable certainty of no harm."

Answer 3

True

Question 4

Common vitamins-niacin and riboflavin-do not have to be listed on nutrition labels.

Question 5

The Department of Agriculture has primary responsibility for sanitation of meats and poultry; the FDA has responsibility for most other foods.

Question 6

The Food Quality Protection Act of 1996 states that food should have a "de minimus" chance of harming consumers.

Question 7

If a product is labeled "fresh" it may either be raw, unprocessed food or frozen food, so long as it was frozen fresh.

Question 8

The FDA requires nutrition labels only on canned or bottled foods sold to the public.

Question 9

To the FDA "low fat" means less than 10 grams of fat per serving.

Question 10

The FDA issues standards for nutrition labels on food.

Question 11

The Food, Drug and Cosmetic Act of 1938 allowed the FDA to impose pure food standards for the first time.

Question 12

One reason for passage of the Pure Food and Drug Act is the high death rate of soldiers during the Spanish-American War due to impure food.

Question 13

The 1906 Pure Food and Drug Act provided primarily for protection against adulteration and misbranding of food and drugs.

Question 14

The 1906 Pure Food and Drug Act was the first step by the federal government to regulate food safety.

Question 15

The FDA was created in 1914.

Question 16

The FDA determines the legal meaning of terms like "light" and "low fat" when used on food products.

Question 17

The FTC determines the legal meaning of terms like "light" and "low fat" when used to advertise food products.

Question 18

The Department of Agriculture has primary responsibility for sanitation of foods; the FDA focuses on food additives.

Question 19

The Food, Drug and Cosmetic Act of 1938 gave the FDA broad powers to regulate food production and prohibit false advertising of drugs.

Question 20

The Delaney Clause (the Food Additives Amendment) allows the FDA to regulate food additives.

Question 21

The FDA decides what drugs may be sold as well as what drugs may be sold over the counter and what drugs may be sold only by prescription.

Question 22

Medical devices are subject to FDA regulation.

Question 23

In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug set the federal safety standard that precluded a safety claim brought under state law.

Question 24

The Kefauver Amendment of 1962 requires the FDA to approve drugs based on proven effectiveness, not just safety.

Question 25

In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug did not mean the drug maker could not be sued for having an inadequate warning label on the drug.

Question 26

Most advanced European nations have substantially stronger regulations of drugs than exist in the U.S.

Question 27

It costs about $25 million and takes an average of 3 years to develop one new drug and clear all FDA rules before marketing the product.

Question 28

Medical devices approved by the FDA before being sold and then monitored for problems.

Question 29

It takes about $1 billion for a drug company to develop a new drug to market.

Question 30

It costs an average of about a billion dollars to develop one new drug and clear all FDA rules. If a drug is not approved for marketing, the FDA pays the company for the costs of the tests.

Question 31

The Kefauver Amendment of 1962 requires the FDA to approve drugs based on their proven safety.

Question 32

Making illegal copies of patented drugs is a serious problem for public health around the world.

Question 33

No drug may be marketed for sale until the FDA has approved the drug for sale as safe for intended use.

Question 34

In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug set the federal standard that was not subject to change without FDA approval.

Question 35

Before passage of the 1938 Food, Drug and Cosmetic Act there were no such things as prescription drugs. That is, people could buy any legal drug.

Question 36

Drugs must complete three phases of trials before considered by the FDA for release to the public.

Question 37

Once the FDA has approved a drug for sale there may be no liability imposed on the drug manufacturers for side-effects that were revealed during the testing process.

Question 38

Dietary supplements, unlike drugs, are not regulated.

Question 39

It costs an average of about a billion dollars to develop one new drug and clear all FDA rules before marketing the product.

Question 40

In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug did not mean the drug maker was not responsible for updating the label to include new relevant safety information.

Question 41

Maximum judgment in an FTC deception cases is $1 million.

Question 42

The FTC may prosecute companies that solicit investments for things such as phony oil and gas wells.

Question 43

The FTC deception policy states that any deceptive practice likely to mislead any consumer will be challenged by Congress.

Question 44

Many FTC complaints are settled by consent decree rather than a trial.

Question 45

The FTC was created by Congress to help enforce antitrust laws and deal with deceptive business practices.

Question 46

The FDA seized shipments of orange juice that were not properly labeled.

Question 47

The FTC may sue a company for an unfair act that is not deceptive.

Question 48

The FTC's advertising substantiation program allows the FTC to ensure that retailers have a reasonable basis for claims made about products they are selling.

Question 49

The FTC deception policy is the same, in effect, as common law fraud.

Question 50

The FTC may not prosecute companies that sell investment scams; that responsibility falls with the Securities and Exchange Commission.

Question 51

The FTC is required by law to sue all advertisers that publish deceptive ads.

Question 52

Once the FDA approves a drug for the market, it has no further power to control the sale of that drug except to issue public warnings.

Question 53

The FTC investigates a wide range of practices suspected to be unfair and deceptive.

Question 54

In recent years, the FDA has allowed drugs that show some promise for life-threatening diseases such as AIDS to be used more quickly than normally.

Question 55

The FDA may seize shipments of products that are falsely labeled.

Question 56

The FTC deception policy holds that failure to reveal certain information may be found to be deceptive.

Question 57

If a person is injured by a drug because a physician gives an improper dose, the maker may be protected from liability under the "learned intermediary" doctrine.

Question 58

The FTC may not regulate products sold by telemarketing; those are controlled by the Federal Communications Commission.

Question 59

The FTC may not bring an action against a company for an unfair act; the act must be unfair and deceptive.

Question 60

The FTC deception policy is applied equally to all products regardless of the sex, age, race or financial condition of the consumers in the relevant market.

Question 61

The "R-value Rule" states that refrigerator makers must clearly explain to consumers what kind of insulation is used in their products.

Question 62

The Mail Order Rule attempts to reduce the incidence of deceptive practices in the first-class postal business.

Question 63

The Used-Car rule issued by the FTC requires used car sellers to give consumers clear warranty information.

Question 64

Trade regulation rules tend to be issued in areas where the FTC thinks there are particular problems with deception.

Question 65

When the FTC proposes a trade regulation rule, it must be published in the Federal Register for public inspection before it becomes effective.

Question 66

Under the Lanham Act, the FTC may sue advertisers for damages for deceptive ads.

Question 67

Under the Lanham Act, Ford was able to sue General Motors for false advertising that hurt Ford pickup sales, and collected over $100 million in damages.

Question 68

The Used-Car rule issued by the FTC has increased the price of used cars about five percent.

Question 69

States have laws similar to the FTC's powers to attack deceptive business practices.

Question 70

Under the Lanham Act, a private party injured by the false ads of a competitor may sue the competitor for double value of lost profits.

Question 71

The British Office of Fair Trading operates somewhat like the FTC in the U.S.

Question 72

Under the FTC's advertising substantiation program, if the FTC attacks an ad the usual result is that the advertiser agrees to stop running the ad.

Question 73

State attorneys general usually have the authority to attack deceptive business practices.

Question 74

The FTC's advertising substantiation program requires media ads to be registered with the FTC for review before being used to prevent deception.

Question 75

Under the FTC's advertising substantiation program, if any consumers will be misled by an advertisement, it must be modified.

Question 76

Advertising controls are extremely strict in Europe compared to in the U.S.

Question 77

The FTC has held that if an automobile is advertised to get 35 miles per gallon in highway driving, that must be the average mileage that ordinary drivers will get in ordinary driving, otherwise it is deceptive advertising.

Question 78

The Mail Order Rule requires goods to be delivered by mail to arrive within clearly set time or allow the customer out of the deal.

Question 79

Under the Lanham Act, U-Haul was able to sue a competitor for false advertising and was awarded $40 million in damages.

Question 80

The FTC has the authority to attack deceptive sales practices via the Internet just like any other sale.