Deck 2: Crimes Against Consumers

Question 1

The term "laissez faire" refers to which of the following?

A)Governments should not interfere with free markets
B)Consumers being protected from fraud artists
C)Buyers should be aware of offers that sound too good to be true
D)Fairness to consumers

Answer 1

A

Question 2

The number one consumer complaint concerning fraud involves:

A)refinance loans.
B)home improvement.
C)auto repair.
D)telemarketing.

Answer 2

C

Question 3

A criticism of the caveat emptor doctrine is:

A)too much government regulation.
B)reduced profit for businesses.
C)hurts consumers by raising prices.
D)latent defects.

Answer 3

D

Question 4

A victim of a fraud is known as a mark because he/she:

A)could fall for future scams.
B)has been identified as a victim.
C)was a more available victim.
D)is an easy target.

Question 5

Transamerica Financial Services and Mellon Bank and also Resources Financial and Fleet Financial bank worked together to offer home loans to low-income people because:

A)there were not enough lenders in predominantly minority areas.
B)the finance companies wanted to assist first-time home buyers.
C)it enabled both to offer lower interest rates.
D)the banks wanted to conceal involvement in this lending practice.

Question 6

Telemarketers target all of the following groups except:

A)family members of AIDS victims.
B)the bereaved.
C)those worried about dependence on foreign oil.
D)college students living away from home for the first time.

Question 7

Which telemarketing scam relies on use of a certain area code to make money just from phone calls?

A)777 calls
B)900 calls
C)800 calls
D)888 calls

Question 8

Some of the worst con artists practice their craft based on meteorological events.These are known as ________ con artists.

A)event
B)disaster
C)weather
D)special occasion

Question 9

Schemes that offer fee-based credit cards, loan applications saying "guaranteed approval," home equity loans, and trade schools for low-paying jobs target what group of people?

A)The elderly
B)The unemployed
C)The middle class
D)The poor

Question 10

The term "caveat emptor" refers to which of the following?

A)Buyers should be aware of offers that sound too good to be true
B)Governments should not interfere with free markets
C)Consumers being protected from fraud artists
D)Fairness to consumers

Question 11

American Family Publishers used all of the following techniques to trick entrants except:

A)Free merchandise
B)Small print
C)YOU'RE OUR NEWEST $12 MILLION WINNER
D)Backgrounds that made print difficult to read

Question 12

A boiler room might be characterized by:

A)telephones.
B)well-dressed salesmen.
C)support personnel.
D)fancy furniture.

Question 13

American Family is half-owned by which media giant?

A)Disney Corporation
B)Sony Pictures
C)Turner Broadcasting
D)Time Warner

Question 14

The following companies have all been accused of fraud involving car problems and possible solutions except:

A)Ford.
B)Kmart.
C)Goodyear.
D)Firestone.

Question 15

American Family Publishers uses which two individuals as front men for its sweepstakes and promotions?

A)Ed McMahon and Dick Clark
B)Dan Rather and Peter Jennings
C)Pat Robertson and Martin Sheen
D)Johnny Carson and James Darren

Question 16

The front, the drive, and the close are all part of the telephone swindle.The drive includes:

A)empty slogans and statistics.
B)sense of urgency.
C)assessment of assets.
D)information about competitors.

Question 17

The "phoner toner" salesman coerced the school district office manager to pay fraudulent invoices by:

A)threatening to accuse her of accepting gifts and then paying for goods not received.
B)threatening her children.
C)threatening to disclose an affair to her husband.
D)refusing to send supplies for students.

Question 18

Magazine sweepstakes typically rely on which two ploys to entice people to buy magazines and enter contests?

A)Gift certificates and free merchandise
B)Personal guarantees and personalized letters
C)Travel and restaurant guarantees
D)Free magazines and coupons

Question 19

5 - 10% of all minutes logged on the telephone time scams are concentrated in what area?

A)Psychic hotlines
B)Music sales
C)Work at home offices
D)Sex lines

Question 20

In 1999, Susan Collins described the predatory practices of sweepstakes companies as "increasingly deceptive and increasingly aggressive." She made these remarks in what setting?

A)As chairman of a Senate committee
B)During a television news magazine segment
C)In testimony before a Congressional committee
D)In a nationally syndicated newspaper column

Question 21

Microsoft was prosecuted for engaging in monopolistic practices for providing a free internet browser with its operating system.This practice is known as bundling.Why was free bad?

A)Consumers were forced into buying a low-quality browser.
B)Microsoft had a secret agreement with other browser manufacturers.
C)Consumers got no choice of browser.
D)After competition was eliminated there was no restraint on pricing.

Question 22

When governments are the target of price-fixing by vendors providing goods and services, it is called:

A)bid-rigging.
B)government fraud.
C)illegal rigging.
D)contract manipulation.

Question 23

The myth of the free market and caveat emptor work in tandem to make consumers vulnerable to unscrupulous vendors.

Question 24

Crimes against consumers do not carry a heavy social cost.

Question 25

Monopolistic activities were criminalized in the Sherman Antitrust Act of 1890.Reasons for penalizing monopolistic behavior include all of the following except:

A)benefits to big business.
B)reduced competition.
C)poorer-quality products.
D)higher prices.

Question 26

Many legitimate companies use 900 numbers to serve customers.

Question 27

The collapse of the home mortgage market has led to very few scams.

Question 28

The three major categories of advertisements include all of the following except:

A)Celebrity
B)Informative
C)Puffing
D)Deceptive

Question 29

Items that look like brand name merchandise but in fact are counterfeit are:

A)markoffs.
B)ripoffs.
C)liftoffs.
D)knockoffs.

Question 30

Telemarketing fraud is characterized by use of the Internet to get consumers to send money to the promoter for worthless or overvalued products or services.

Question 31

Computer-generated personalized letters are a standard marketing ploy in the sweepstakes industry.

Question 32

Which of the following activities could be described as "bait and switch"?

A)Substituting a more expensive item with a product of lesser quality
B)Substituting a generic product for a brand name product
C)Substitution a product of lesser quality with a more expensive item
D)Using misleading ads to get consumers to buy substandard products

Question 33

Consumer fraud entails the use of deceit, lies, or misrepresentations to entice customers to buy goods or services.

Question 34

Live "sex lines" account for 5 to 10% of all "900" minutes logged.

Question 35

American Family employed Ed McMahon and Johnny Carson as sweepstake representatives.

Question 36

The United States is one of the few countries that permit television advertising for products that target children.Most countries consider this to be:

A)illegal.
B)immoral.
C)dishonest.
D)disrespectful.

Question 37

Auto repairs make up the largest category of complaints received by Congressional panels.

Question 38

Which federal agency regulates advertising?

A)FTC
B)SEC
C)FDIC
D)FCC

Question 39

What two industries are frequent targets of antitrust litigation?

A)Oil and airlines
B)Car repair and steel
C)Utility and drug companies
D)Grocery and department stores

Question 40

Pharmaceutical companies have been criticized by Congress for excessive and unreasonable profits.Drug company profits are more than ________ times the average profit of Fortune 500 companies.

A)three
B)two
C)five
D)four

Question 41

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Mark Suckman

Question 42

Price-fixing is criminalized under the ________________Antitrust Act of 1890.

Question 43

Price-gouging occurs when entities take advantage of laws, monopolies, and real or contrived shortages to demand excessive payments.

Question 44

One of the fastest growing forms of deceptive products occur in ads for weight-loss ________________.

Question 45

The classic telephone swindle consists of three calls known as the front, the drive, and the ________________.

Question 46

The United States is one of the few countries in the world that ________________advertisers to sell products to children via television.

Question 47

Much of the auto repair fraud that has been uncovered implicates major ________________ chains.

Question 48

Victims of telemarketing fraud are called "marks."

Question 49

________________ % of Americans have been targeted at least once by telemarketers.

Question 50

The classic telephone swindle consists of the front, the drive, and the walk.

Question 51

Two of the most notable figures caught in the Double Barrel were John A.Field III and Markus K.Dalton.

Question 52

The airline industry and the oil industry have been favorite targets of antitrust action.

Question 53

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Telemarketing fraud

Question 54

About ________________ % of American households make at least one 900 call each year.

Question 55

The Federal Trade Commission has classified ads as informative, puffing, and ________________.

Question 56

Consumer ________________ is a category of crimes against consumers.

Question 57

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Telephone swindle

Question 58

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
False advertising

Question 59

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Bait and switch

Question 60

Telemarketing fraudsters tend to view their victims as ________________ in their plight.

Question 61

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Price-gouging

Question 62

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Knockoffs

Question 63

Do you think the United States is losing manufacturing jobs? Examine historical data, taking into account inflation, population growth, and employment in other sectors.Explain how data can be compared over time.

Question 64

What are some of the tactics that are used to entice people into believing that they are actual winners in sweepstakes?

Question 65

Evaluate knockoff rip-offs. What are they? Which industries are most prone to knockoffs? Why do you think the knockoff business is booming?

Question 66

Match the key terns listed in Column 1 to the description in Column 2. Use each description only
a.The covert substitution of low-quality counterfeit versions of brand-name consumer products.
b.Consists of three calls beginning with the front
c.Characterized by the use of the telephone to get consumers to send money to the promoter for worthless or overvalued products or services
d.Deceptive advertisements that make false or misleading claims
e.Used a telemarketing scheme to convince a public-school office manager to send him checks totaling $2 million for nothing
f.Bid-rigging where consumers lose the benefits of competition
g.Defined by the FTC as an alluring but insincere offer to sell a product or service which the advertiser does not intend or want to sell
h.The practice of taking extraordinary advantages of consumers because of the bias of the law, monopoly of the market, or because of contrived or real shortages
Price-fixing

Question 67

Evaluate consumer fraud. What does consumer fraud entail? Give an example of consumer fraud discussed in the text.

Question 68

Discuss and give examples of the "Wal-Mart Way."