Deck 46: Consumer Protection Laws

Question 1

Under the Truth in Lending Act,"finance charge":

A)includes all costs related to the extension of credit.
B)includes all costs related to the extension of credit except for fees for credit reports.
C)includes only interest rates but not any other credit charges.
D)does not include loan fees and fees for credit reports.

Answer 1

A
Explanation: The TILA requires that the interest rate be stated clearly in terms of an annual percentage rate.The contract or disclosure form must also show the dollar costs of credit as the finance charge.The term finance charge includes all costs related to the extension of credit.These costs may include loan fees and fees for credit reports.

Question 2

The Fair Credit and Charge Card Disclosure Act requires more detailed and uniform disclosure by credit and charge card issuers at the time of application by the consumers.

Answer 2

True

Question 3

"Lemon laws" apply only to car manufacturers.

Answer 3

False

Question 4

Under the Fair Credit Billing Act,if the credit card holder thinks that the card issuer has made an error on the statement,he/she has three years to report the error.

Question 5

The FTC has legal authority to assist overseas investigations to track down Internet scammers using devices such as spam and spyware.

Question 6

The FTC requires used car dealers to display a "Buyer's Guide" on each car that tells whether the car is covered by a warranty.

Question 7

The Credit Card Accountability and Disclosure Act (CARD)regulates credit card billing cycles by:

A)allowing a $30 penalty fee for late payment of credit card debts.
B)allowing penalties to exceed the minimum balance due.
C)prohibiting double-cycle billing.
D)issuing cards to applicants under 21 years without a cosigner.

Question 8

"Imminently hazardous consumer products" are those that pose an immediate and unreasonable risk of death,serious illness,or severe personal injury.

Question 9

The Holder in Due Course rule creates a warranty claim or defense where the product is sold "as is."

Question 10

The Consumer Product Safety Commission (CPSC)'s authority is limited to cosmetics and food products.

Question 11

The FTC:

A)has authority to decide whether specific marketing and sales practices are unfair or deceptive.
B)does not have power to regulate unfair and deceptive practices in cyberspace.
C)can find that a seller is engaged in unfair trade practices only if the seller violated one of the other federal laws the FTC is empowered to enforce.
D)holds no powers to order federal courts to award redress.

Question 12

The Fair Debt Collection Practices Act affects only the practices of debt collection agencies that collect consumer bills for creditors other than themselves.

Question 13

Geoffrey is a car dealer in Austin,Texas.His financial dealings with customers come directly under the jurisdiction of the Consumer Financial Protection Bureau.

Question 14

The FTC rules prohibit a telemarketer or seller from initiating an outbound call to a person whose telephone number is listed on a national "do not call" registry.

Question 15

Which of the following statements is true for gift cards?

A)They are subject to TILA regulations.
B)Recipients have 2 years to use the cards.
C)A fee can be assessed if the card has not been used within 6 months.
D)A fee can only be assessed if a customer is first notified of the fees.

Question 16

The TILA fixes interest rates.

Question 17

One of the purposes of the TILA is to enable the consumer to understand all the charges made in connection with credit.

Question 18

The Telemarketing and Consumer Fraud and Abuse Prevention Act:

A)prohibits calling between 9:00 AM and 5:00 PM.
B)requires that all disclosures must be made before the customer pays for the goods or services.
C)prohibits customers from demanding disclosure if the solicitation pertains to a prize promotion.
D)allows telemarketers and sellers to deny a person the right to be placed on the do-not-call registry.

Question 19

The Equal Credit Opportunity Act prohibits discrimination in credit transactions based on wealth.

Question 20

The FTC does not prohibit pre-recorded telemarketing sales calls.

Question 21

According to TILA,charges on a stolen credit card that exceed $50:

A)would have to be paid by the cardholder.
B)would not have to be paid by the cardholder if the loss is reported within 2 days.
C)would not have to be paid by the cardholder.
D)would have to be recovered from the person who stole the card.

Question 22

The Wagners entered into a contract with Crummy Construction under which Crummy agreed to do $33,000 worth of remodeling of the Wagner home.Crummy agreed that the contract price could be paid in installments,and that to secure these payments,Crummy would take out a second mortgage on the Wagner home.The day after signing the contract,the Wagners had second thoughts and immediately hand-delivered a written notice to Crummy stating that they wanted to rescind the contract.Can they do so?

A)Yes,under the rescission right of the Truth in Lending Act.
B)No,because the transaction involved more than $25,000 and was,therefore,not covered by the rescission right in the Truth in Lending Act.
C)No,because the rescission right in the Truth in Lending Act does not apply to transactions in which the creditor takes a mortgage to secure the loan.
D)Yes,under the rescission right provided by TILA as their house wasn't used as collateral.

Question 23

The Equal Credit Opportunity Act:

A)is designed to protect consumers from unfair or inaccurate credit reporting.
B)requires online ads for free credit reports to disclose whether the consumer must buy credit monitoring or other products or services to get the report.
C)prohibits discrimination in credit transactions on grounds of sex,marital status,race,color,religion,national origin,and age.
D)sets forth basic privacy protections that must be provided by financial institutions and requires them to respect the privacy of their customers' nonpublic personal information.

Question 24

Harry and Rebecca are both 63 years old and have a flourishing business.They decide to purchase a beach house and seek a 15-year mortgage.In this situation:

A)the mortgage company may deny them credit based on their age and possibility of loss of income at retirement.
B)the mortgage company may deny them credit based on the Equal Credit Opportunity Act because their application,when compared to more youthful applicants,is not "equal".
C)the mortgage company cannot deny them credit,based on the Equal Credit Opportunity Act.
D)the mortgage company is well-within its rights to deny them credit,based on the Equal Credit Opportunity Act,but must do so within 50 days.

Question 25

Henry applied for a loan from First Bank and was denied the loan two weeks later.He discovered that the reason behind the denial was that the bank considered him a poor credit risk because a credit report stated that he was an alcoholic.Henry claimed that this information was not true.Which of the following Acts will allow Henry to approach First Bank for reconsideration of his loan application?

A)Equal Credit Opportunity Act
B)Fair Debt Collection Practices Act
C)Fair Credit Billing Act
D)Fair Credit Reporting Act

Question 26

The Consumer Leasing Act:

A)requires the creditor to disclose the aggregate costs of leasing consumer goods.
B)does not require the lease agreement to define the consumer's liability.
C)applies to leases of consumer goods only if the leases are for more than five years.
D)applies to leases of consumer goods if the total contractual obligation exceeds $25,000.

Question 27

Which of the following acts has provisions for combating identity theft?

A)The Fair Credit Billing Act.
B)The Fair Credit and Charge Card Disclosure Act.
C)The Fair and Accurate Credit Transactions Act.
D)The Gramm-Leach-Bliley Act.

Question 28

The Holder in Due Course rule:

A)alters statutes of limitations or other state-created limitations on the consumer's enforcement of claims and defenses.
B)states that all defenses available to the purchaser against the seller can also be available against the holder in due course.
C)eliminates rights that the consumer may have as a matter of federal,state,or local law.
D)creates a warranty claim or defense where the product is sold "as is."

Question 29

What is the "right of rescission"?

A)Correction of outdated or wrong information and its notification to credit information recipients.
B)A cancellation right for three business days after the purchase on credit or after the creditor makes the required disclosure.
C)Rights to the creditor to accept or reject consumer applications within 30 days.
D)A cardholder's right to limited liability for unauthorized use of a credit card.

Question 30

According to the Fair Credit Billing Act (FCBA),if the credit card holder thinks that the card issuer has made an error on the statement:

A)he has 90 days from the time the card was issued to report,in writing,the error.
B)he has 30 days from the time the statement was mailed to report the error.
C)he has 60 days from the time the statement was mailed to report,in writing or orally,the error.
D)he has 60 days from the time the statement was mailed to report,in writing,the error.

Question 31

The Fair Debt Collection Practices Act:

A)covers all retail stores,banks,or businesses that collect their own debts in their own name.
B)prohibits harassment by debt collectors,including late-night phone calls and threats of violence.
C)protects applicants from being discriminated on grounds of sex,marital status,race,color,religion,national origin,and age.
D)ensures that information concerning a person's credit background supplied to his/her creditors is both up-to-date and accurate.

Question 32

Which of the following statements is true for Consumer Product Safety Act (CPSA)of 1972?

A)This act can regulate consumer products but does not have the power to ban any products.
B)The Consumer Product Safety Commission created by it is the main federal agency concerned with product safety.
C)Its authority covers products such as motor vehicles and equipment,firearms,aircraft,boats,drugs,cosmetics,and food products.
D)It cannot bring suit in federal district court to eliminate the dangers presented by imminently hazardous consumer products.

Question 33

____ is defined as use by a person who lacks express,implied,or apparent authority to use a credit or debit card.

A)Authorized use
B)Rescissionary use
C)Undisclosed use
D)Unauthorized use

Question 34

A debtor may rescind a contract under the Truth in Lending Act:

A)only if the debtor's home is used as collateral.
B)only in the instance of a first mortgage on his home.
C)by way of oral notification to the creditor.
D)within 30 days after the purchase on credit.

Question 35

The Fair Credit Reporting Act (FCRA)covers credit information supplied to potential ____.

A)dealers
B)employers
C)debtors
D)brokers

Question 36

Under the Fair Credit Billing Act:

A)a card issuer may report a cardholder's delinquency to a credit reporting agency at any time deemed reasonable by it.
B)a card issuer must inform the cardholder of the reporting agency to which the issuer sends its reports.
C)the seller cannot offer discounts if the buyer pays cash for a purchase rather than using a credit card.
D)the consumer has the right to have a credit report withheld from anyone not having a legitimate business need for the information.

Question 37

The Consumer Product Safety Commission's authority is applicable to ___.

A)firearms
B)drugs
C)cosmetics
D)lawn mowers

Question 38

The Consumer Product Safety Commission:

A)may file suit in federal court against manufacturers of imminently hazardous consumer products in an effort to eliminate the danger posed by such products.
B)has authority to issue product safety standards,but does not have the authority to file suit in federal court against manufacturers of imminently hazardous consumer products.
C)has authority to issue product safety standards,but does not have the authority to order a manufacturer to submit a plan for corrective action with regard to a product that poses a substantial hazard to the public.
D)has authority to issue product safety standards,but does not require manufacturers,distributors,and retailers to notify the CPSC if they have reason to know that their products present a substantial product hazard.

Question 39

According to Congress,the Fair Credit and Charge Card Disclosure Act:

A)would enable consumers to shop around for the best cards.
B)would prevent unauthorized use of credit cards.
C)would challenge the authority of the FTC.
D)would compel issuers to process customer applications faster.

Question 40

Under the Fair Credit Reporting Act,a consumer who has been denied credit:

A)cannot compel the credit reporting agency to delete any inaccurate or obsolete information from the file.
B)is entitled to disclosure of the name and address of the credit reporting agency that made the report.
C)can file compel the credit reporting agency to delete disputed information without an investigation.
D)is not entitled to a reinvestigation of the disputed information in the report made by the credit reporting agency.

Question 41

How do the new rules of the Credit Card Accountability and Disclosure Act (CARD)help consumers deal with credit card debt?

Question 42

Discuss the product safety standards issued by the Consumer Product Safety Act (CPSA).Also,list at least three products which,although consumer goods,do not come under the authority of CPSA.

Question 43

Remedies under "lemon laws" include:

A)suing for injunctive relief or the seizure of products to enforce various provisions of the law.
B)return of the purchase price of the product,even if the defect is minor and not covered by a warranty.
C)replacement of the defective product with a new one.
D)offering extra credit benefits for the purchase of a new product from the same manufacturer.

Question 44

What are the main goals of the Fair Credit Reporting Act (FCRA)? Under what conditions is this act not applicable?

Question 45

The CPSC and the ____ may sue for injunctive relief or the seizure of products to enforce various provisions of the Consumer Product Safety Act (CPSA).

A)U.S President
B)U.S Chief Justice
C)U.S Attorney General
D)U.S Secretary of State

Question 46

What is the main idea behind the Holder in Due Course rule?

Question 47

____ laws were passed to provide some relief to customers having complaints against auto dealers.

A)Credit
B)Equal opportunity
C)Fair credit
D)Lemon Next to homes,vehicles are the most expensive purchase most consumers make.Unfortunately for many,vehicles often came with significant problems that the consumers were unable to get their dealers to fix.By 1981,complaints about auto dealers were first on the list of consumer complaints received by the FTC.In response,a majority of states have now passed "lemon laws" that are designed to provide more appropriate relief.

Question 48

The Consumer Product Safety Act (CPSA):

A)provides civil penalties against those who knowingly and willfully violate CPSC rules even after being issued notification by it.
B)allows only the U.S.attorney general to sue for injunctive relief or the seizure of products to enforce various provisions of the act.
C)permits any private party to sue for an injunction to enforce any CPSC rule or order,if,at the time of the suit,the commission or the attorney general has begun an action based on the alleged violation.
D)allows those injured because of a knowing and willful violation of a CPSC rule or order to sue for damages if the amount in controversy exceeds $100,000.

Question 49

Describe the Gramm-Leach-Bliley Act of 1999 (GLBA).

Question 50

Arbitration of "lemon laws" under state statute:

A)is not required by most statutes.
B)is usually binding on the consumer,not the manufacturer.
C)is usually binding on the manufacturer,not the consumer.
D)is not binding on either the manufacturer or consumer.