Deck 25: Consumer Law

Question 1

A consumer law is a statute or administrative rule serving to protect consumer interests.

Answer 1

True
Explanation: Because the United States Congress recognizes the opportunities for sellers to take advantage of buyers,it creates laws that regulate consumer purchase transactions.A consumer law is a statute or administrative rule serving to protect consumer interests.

Question 2

Although the Consumer Product Safety Commission (CPSC)sometimes works with companies that are voluntarily issuing recalls for dangerous products,the CPSC usually issues product recalls on its own.

Answer 2

False
Explanation: Although the Consumer Product Safety Commission (CPSC)has the authority to issue product recalls on its own,the CPSC usually works with companies that are voluntarily issuing recalls for dangerous products.

Question 3

Puffing is the practice of advertising with claims that mislead or could mislead a reasonable consumer.

Answer 3

False
Explanation: The practice of advertising with claims that mislead or could mislead a reasonable consumer is deceptive advertising.Puffing,the use of generalities and clear exaggerations,is permissible.

Question 4

The Federal Trade Commission's Cooling-Off Rule gives consumers up to twenty-four hours to cancel purchases they make from salespeople who come to their homes.

Question 5

If a credit bureau issues a consumer credit report for a reason not specified by the Fair Credit Reporting Act,the credit bureau may be subject to a "cease-and desist" order; however,it may not be held liable for damages.

Question 6

The Federal Trade Commission is an independent federal agency whose goal is to protect consumers.

Question 7

The existence of deceptive advertisements alone is sufficient to prove damages for recovery when individual civil suits are filed for deceptive advertising.

Question 8

The Equal Credit Opportunity Act allows creditors to deny credit on the basis of whether the applicant receives public assistance benefits.

Question 9

The Food Safety Act of 1970 requires standard nutrition information to be provided on food labels.

Question 10

Used-car sales laws are uniform in every state.

Question 11

When sellers advertise a low price for an item generally unavailable to the consumer and then push the consumer to buy a more expensive item,they are engaging in "bait-and-switch" advertising.

Question 12

The Federal Hazardous Substances Act of 1960 requires all items containing dangerous substances to carry warning labels.

Question 13

The purpose of the Truth in Lending Act is to ensure that consumers receive the lowest interest rate available at the time of the credit or loan transaction.

Question 14

Similar to the standard recognized in the United States,China accepts puffery as an acceptable form of advertising.

Question 15

Ad substantiation requires advertisers to have a reasonable basis for the claims made in their advertisements.

Question 16

A consent order is a Federal Trade Commission order requiring that a company stop its illegal behavior.

Question 17

If an advertisement is a half-truth,the advertiser is deceiving the consumer.

Question 18

A multiple-product order is a form of cease-and-desist order the Federal Trade Commission issues that applies not only to the product that was the subject of its action against a company for deceptive advertising,but to other products produced by competing companies as well.

Question 19

Federal regulations prohibit the advertising of cigarettes on radio and television but allow advertisements for smokeless tobacco.

Question 20

The Federal Trade Commission decides whether an advertisement is deceptive on a case-by-case basis.

Question 21

Which of the following was the result on appeal in Richard D.Kennedy and Sally S.Kennedy v.Chase Manhattan Bank,U.S.A.,N.A.,the case in the textbook involving whether a bank may obtain an individual's credit report to determine whether to extend credit after providing a prequalified offer for a credit card?

A)The court ruled in favor of the bank on the basis that the prequalification offer revealed that credit could be denied if,after the application was returned,the bank obtained credit reports and determined that the complainants did not meet the bank's standards.
B)The court ruled in favor of the bank on the basis that banks may obtain credit reports on any loan applicant.
C)The court ruled in favor of the bank on the basis that while banks may not obtain credit reports on each and every loan applicant regardless of circumstances,because of the risk involved,banks may obtain credit reports on any applicant for a credit card.
D)The court ruled in favor of the plaintiff because the bank had extended an unqualified offer of a preapproved credit card and had no right to do a credit check.
E)The court ruled in favor of the plaintiff because although the bank had a right to conduct a credit check,it had no right to deny the credit card because it was preapproved.

Question 22

A(n)________ is a Federal Trade Commission order requiring that a company stop its illegal behavior.

A)industry guide
B)subpoena duces tecum
C)consent order
D)stop order
E)cease-and-desist order

Question 23

The United States Congress created the Federal Trade Commission (FTC)through the Federal Trade Commission Act of ________.

A)1900
B)1914
C)1929
D)1934
E)1976

Question 24

Commissioners who serve on the Federal Trade Commission are appointed by the ________ and confirmed by the ________.

A)House of Representatives; Senate
B)Senate; House of Representatives
C)Senate; president
D)president; Senate
E)president; Supreme Court

Question 25

Which of the following was the ruling by the United States Supreme Court in Food and Drug Administration Et Al.v.Brown & Williamson Tobacco Corporation Et Al.,the case in the textbook involving whether the Food and Drug Administration has jurisdiction to regulate tobacco products?

A)The Food and Drug Administration has jurisdiction over tobacco products.
B)The Food and Drug Administration has jurisdiction over tobacco products,but only to the extent that any advertisement may be directed to children.
C)The Food and Drug Administration has jurisdiction over tobacco products,but only to the extent that it may regulate warnings on packages of tobacco products.
D)The Food and Drug Administration does not have jurisdiction over tobacco products.
E)The Food and Drug Administration does not have jurisdiction over tobacco products unless deceptive advertising is involved.

Question 26

Which of the following is a correct statement regarding government regulation of tobacco industry advertising?

A)The federal government does not regulate cigarette advertising.
B)The federal government does not regulate smokeless tobacco advertising.
C)The tobacco industry's advertising is regulated through one act: the Public Health Cigarette Smoking Act of 1970.
D)The tobacco industry's advertising is regulated through two acts: the Public Health Cigarette Smoking Act of 1970 and the Smokeless Tobacco Health Education Act of 1986.
E)The federal government does not regulate cigarette or smokeless tobacco advertising; instead,tobacco advertising is subject to regulation by the individual states.

Question 27

________ is the use of generalities and clear exaggerations.

A)Constructive fraud
B)Puffing
C)Bait-and-switch advertising
D)Deceptive advertising
E)Fraud in the factum

Question 28

________ is the requirement that advertisers have a reasonable basis for claims made in their advertisements.

A)Ad substantiation
B)Ad verification
C)Puffing
D)Ad subrogation
E)Ad vilification

Question 29

________ is a requirement by the Federal Trade Commission that a company run advertisements in which the company explicitly states that formerly advertised claims were untrue.

A)Corrective advertising
B)Declaration against interests
C)Notice publication
D)Service of process
E)Constructive service of process

Question 30

When sellers advertise a low price for an item generally unavailable to the consumer and then push the consumer to buy a more expensive item,they are engaging in ________ advertising.

A)puffery
B)hook-and-ladder
C)bait-and-switch
D)art-of-the-deal
E)close-the-deal

Question 31

What type of agency is the Federal Trade Commission?

A)Executive
B)Independent
C)Collateral
D)Approved
E)Certified

Question 32

A ________ is a statement in which a company agrees with the Federal Trade Commission to stop disputed behavior but does not admit it broke the law.

A)declaration against interest
B)voluntary dismissal
C)consent order
D)gag order
E)subpoena duces tecum

Question 33

When an advertisement is true but incomplete,it is ________.

A)constructive fraud
B)fraud in the factum
C)a Rule 10b(5)violation
D)a Rule 10b(6)violation
E)a half-truth

Question 34

According to the Federal Trade Commission,a company should not refer to its product as "Made in the USA" unless:

A)all,or virtually all,of the product's components and labor are of United States origin.
B)absolutely all of the components and labor of the product are of United States origin.
C)at least 75% of the product's components and labor are of United States origin.
D)at least 50% of the product's components and labor are of United States origin.
E)at least 55% of the product's labor and components are from Canada,Mexico,or the United States.

Question 35

________ is the practice of advertising with claims that mislead or could mislead a reasonable consumer.

A)Constructive fraud
B)Ad substantiation
C)Corrective advertising
D)Deceptive advertising
E)Embezzlement

Question 36

Which of the following is a false statement regarding the Telephone Consumer Protection Act of 1991?

A)It forbids telephone solicitation using an automatic telephone dialing system.
B)It forbids telephone solicitation using a prerecorded voice.
C)It makes it illegal to transmit advertisements via fax unless the recipient agrees to the fax transmission.
D)Only the Federal Communications Commission can take action to enforce the act.
E)If a telemarketer willfully violates the act,the court can decide to triple the amount owed to the consumer.

Question 37

The Federal Trade Commission has ________ commissioners,each of whom serves a ________-year term.

A)5; 7
B)7; 3
C)9; 4
D)8; 5
E)3; 4

Question 38

Registration on the Federal Trade Commission's "Do Not Call" registry lasts ________.

A)for 31 days
B)for one year
C)for three years
D)for five years
E)forever

Question 39

The Federal Trade Commission considers ________ abusive action by telemarketers.

A)using profane or obscene language toward a customer
B)calling a person who has previously requested to be taken off the particular seller's calling list
C)calling a residence before 8 a.m.
D)using profane or obscene language toward a customer,calling a person who has previously requested to be taken off the particular seller's calling list,and calling a residence before 8 a.m.
E)using profane or obscene language toward a customer and calling a person who has previously requested to be taken off the particular seller's calling list,but not calling a residence before 8 a.m.,

Question 40

________ laws are statutes or administrative rules serving to protect consumer interests.

A)Civil rights
B)Consumer
C)Labor
D)Employment
E)Environmental

Question 41

Which of the following is not a federal law referenced in the textbook that regulates product labeling?

A)The Wool Products Labeling Act
B)The Fur Products Labeling Act
C)The Flammable Fabrics Act
D)The Nutrition Labeling and Education Act
E)The Imported Canine and Feline Fur Act

Question 42

By federal law,major credit reporting agencies are required to provide consumers with a free copy of their credit report every ________.

A)36 months
B)24 months
C)12 months
D)6 months
E)30 days

Question 43

Regarding door-to-door sales,which of the following is required by the Federal Trade Commission's Cooling-Off Rule?

A)That consumers have three days within which to cancel purchases made from salespeople who come to their homes.
B)That the salesperson notify the consumer,both verbally and in writing,that the sales transaction may be canceled.
C)That the consumer be notified in writing in the same language in which the oral negotiations were conducted.
D)That consumers have three days within which to cancel purchases made from salespeople who come to their homes; that the salesperson notify the consumer,both verbally and in writing,that the sales transaction may be canceled; and that the consumer be notified in writing in the same language in which the oral negotiations were conducted.
E)That consumers have three days within which to cancel purchases made from salespeople who come to their homes and that the salesperson notify the consumer in writing in the same language in which oral negotiations were conducted that the transaction may be canceled,but not that notification also be made verbally.

Question 44

State consumer protection laws prohibiting used-car fraud are known as ________ laws.

A)orange
B)prune
C)lemon
D)onion
E)garlic

Question 45

To be subject to the Truth in Lending Act,a loan must be for ________ unless it is secured by a mortgage on real estate.

A)$50,000 or more
B)$50,000 or less
C)$30,000 or more
D)$40,000 or less
E)$25,000 or less

Question 46

In order for a loan to come within the scope of the Truth in Lending Act,________.

A)the credit or loan must be subject to a finance charge
B)the credit or loan must have repayments of more than four installments
C)the credit or loan must have an interest rate of over 5%
D)the credit or loan must be subject to a finance charge,the credit or loan must have repayments of more than four installments,and the credit or loan must have an interest rate of over 5%
E)the credit or loan must be subject to a finance charge or have repayments of more than four installments,but there is no requirement that the loan have an interest rate of over 5%

Question 47

Which of the following is/are federal law(s)regulating the credit industry?

A)The Truth in Lending Act
B)The Fair Credit Reporting Act
C)The Fair Debt Collection Practices Act
D)The Truth in Lending Act,the Fair Credit Reporting Act,and the Fair Debt Collection Practices Act
E)The Truth in Lending Act and the Fair Credit Reporting Act,but not the Fair Debt Collection Practices Act

Question 48

________ credit permits repeated transactions and assesses a finance charge on unpaid balances.

A)Open-end
B)Closed-end
C)Debt-based
D)Uncollateralized
E)Collateralized

Question 49

Which of the following is true regarding the obligation,if any,of a consumer who discovers that a company has sent the consumer unsolicited merchandise?

A)The consumer may treat the merchandise as a gift.
B)The consumer may only treat the merchandise as a gift if it has a value of under $25; otherwise,the consumer must call the seller and ask if the seller would like to cover return postage.
C)The consumer may only treat the merchandise as a gift if it has a value of under $50; otherwise,the consumer must call the seller and ask if the seller would like to cover return postage.
D)The consumer may only treat the merchandise as a gift if it has a value of under $100; otherwise,the consumer must call the seller and ask if the seller would like to cover return postage.
E)The consumer must return the merchandise.

Question 50

If your credit card is stolen and you notify the credit card company before unauthorized charges are made,for what amount can you be held liable to the credit card company for later unauthorized charges?

A)$500
B)$300
C)$250
D)$200
E)0

Question 51

The Equal Credit Opportunity Act makes it illegal for creditors to deny credit to individuals on the basis of ________.

A)race,religion,national origin,color,sex,marital status,or age
B)race,national origin,color,sex,marital status,or age
C)race,religion,national origin,color,sex,or age
D)race,religion,national origin,color,or sex
E)race,religion,color,sex,marital status,or age

Question 52

Which of the following debt collection practices is/are prohibited by the Fair Debt Collection Practices Act?

A)Contacting a debtor at work if the debtor's employer objects
B)Misrepresenting the collection agency as a lawyer or police officer
C)Contacting a debtor before 8 a.m.or after 9 p.m.
D)Contacting a debtor at work if the debtor's employer objects,misrepresenting the collection agency as a lawyer or police officer,and contacting a debtor before 8 a.m.or after 9 p.m.
E)Contacting a debtor at work if the debtor's employer objects and misrepresenting the collection agency as a lawyer or police officer are prohibited,but not contacting a debtor before 8 a.m.or after 9 p.m.

Question 53

General credit information is considered obsolete after ________ years.

A)three
B)four
C)five
D)seven
E)eight

Question 54

Which of the following is not a requirement of the Federal Trade Commission's 1984 Used Motor Vehicle Registration Rule?

A)A dealer must attach a buyer's guide label to any used car he or she is attempting to sell.
B)The buyer's guide label must state that the car is being sold as is.
C)The buyer's guide label must warn the customer that the seller is not guaranteeing anything at all about the performance of the car.
D)The buyer's guide label must include a suggestion for the buyer to obtain an inspection of the used car before any decision to purchase.
E)The buyer's guide label must include notice of a 30-day or 3,000-mile (whichever comes first)warranty on the car.

Question 55

The ________ Act governs the issuance of credit reports.

A)Truth in Lending
B)Fair Credit Reporting
C)Fair Debt Collection Practices
D)Credit Card Fraud
E)Fair and Accurate Credit Transactions

Question 56

The Truth in Lending Act applies to ________.

A)loans to a natural person
B)loans to a natural person and to a limited partnerships
C)loans to a natural person,loans to a limited partnership,and loans to a general partnership
D)loans to a natural person,loans to a limited partnership,loans to a general partnership,and loans to a corporation
E)all loans

Question 57

A credit card company may not bill a consumer for a damaged item that is unknowingly purchased with the card if the ________.

A)consumer purchased the item in the same state as the consumer's home or within 100 miles of the consumer's home
B)consumer purchased the item in the same state as the consumer's home or within 100 miles of the consumer's home,and the item cost more than $50
C)consumer purchased the item in the same state as the consumer's home or within 100 miles of the consumer's home; the item cost more than $50; and the consumer made a good-faith effort to resolve the dispute,such as asking the store for a refund
D)consumer purchased the item in the same state as the consumer's home or within 100 miles of the consumer's home; the item cost more than $50; the consumer made a good-faith effort to resolve the dispute,such as asking the store for a refund; and the seller has a history of selling defective merchandise
E)consumer has used the item for personal reasons and/or in the ordinary course of the consumer's business.

Question 58

The Truth in Lending Act regulates ________.

A)open-end credit
B)closed-end credit
C)credit card applications and solicitations
D)open-end credit,closed-end credit,and credit card applications and solicitations
E)open-end credit and closed-end credit,but not credit card applications and solicitations

Question 59

According to the Truth in Lending Act,credit card applications must include ________.

A)the annual percentage rate (APR)
B)annual fees
C)the grace period for paying without a finance charge
D)the annual percentage rate (APR),annual fees,and the grace period for paying without a finance charge
E)the annual percentage rate (APR)and the annual fees,but not the grace period for paying without a finance charge

Question 60

If a credit card company sends you an unsolicited card in the mail and the card is stolen,for what amount can you be held liable to the credit card company?

A)$500
B)$300
C)$250
D)$200
E)0

Question 61

Mona markets a bell that she claims will automatically quiet a crying baby.Mona advertises on television that the bell has a certain tone that babies love and shows a baby suddenly stop crying when the bell is rung.She charges $50 for each bell for which she incurs $1 in manufacturing charges.The bell was very popular for a few months,but she has started to get complaints; and the Federal Trade Commission has investigated her advertisement regarding the bell.Mona claims that her advertisement is not deceptive.The Federal Trade Commission,however,claims that her advertisement satisfies the three elements necessary for a deceptive claim.What are those three elements?

Question 62

The Burial Emporium.Fred operates a funeral home called Fred's Burial Emporium.Fred likes to keep things simple.He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever.Fred also goes door-to-door selling funeral packages.He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds.He believes and informs customers that once customers sign a contract for burial services,there is no backing out.Fred also obtains a good deal of business from phone solicitation.He enjoys calling late at night,between 10 p.m.and 11 p.m.,when people are tired but before they go to bed.He believes that if people do not feel well,they are more likely to consider funeral arrangements.After some pesky consumer complaints,the Federal Trade Commission and other federal agencies investigate Fred.He hires a good lawyer with his profits in an attempt to stay out of trouble.Which of the following is true regarding Fred's practice of requiring a complete package purchase from him if the consumer desires any funeral services?

A)This practice is legal under federal law.
B)This practice is legal under federal law,so long as Fred informs customers of his requirement prior to entering into any sales talk and negotiation.
C)This practice is prohibited by federal law.
D)This practice is prohibited by federal law unless Fred gives a 10% discount compared to the average price of funeral services in his state.
E)This practice is prohibited by federal law unless Fred gives a 20% discount compared to the average price of funeral services in his state.

Question 63

Miracle Pill.Katie advertised that she had developed a pill for women that would result in weight loss,wrinkle loss,and improved vitality; and for men would result in all those things,plus hair growth.Her television advertisement showed miracle results allegedly obtained by consumers.Katie cautioned,however,that ingestion of the pill for six months was required before results would be evident.The pill was wildly popular.The Federal Trade Commission,however,investigated and determined that Katie had failed to have a reasonable basis for the claims she made in advertisements.Katie claimed that she was merely involved in the use of generalities and clear exaggerations.The Federal Trade Commission disagreed and issued a formal administrative complaint against her.After a hearing,the Federal Trade Commission issued an order requiring that Katie stop advertising and selling the pills.After losing all appeals,Katie continued selling the pills until she was fined by the Federal Trade Commission.She has since left the country and cannot be located.Which of the following are generalities and clear exaggerations allowed by the Federal Trade Commission?

A)Bait-and-switch advertising
B)Puffing
C)Hook-and-ladder advertising
D)Huffing
E)None of these,because the Federal Trade Commission does not allow generalities and clear exaggerations in advertisements.

Question 64

Convertibles.Barry,a new car dealer,advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each.He had only three Wind vehicles,however,and when those were sold,he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000.Kathy,a customer who decided to purchase one of the more expensive vehicles,needed financing in order to do so.She had $10,000 to pay on the car and sought a loan from ABC Bank for the remainder.She wanted the loan for a specific amount of time.ABC Bank offered her the loan and she agreed.The only information she received from ABC Bank was confirmation that she borrowed $15,000 at an 8% interest rate.After receiving several complaints,the Federal Trade Commission disapproved of Barry's action in regard to the Wind vehicles.Claiming that his advertisement was misleading,the Federal Trade Commission proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving Wind vehicles and any other vehicles Barry offered for sale.Under the Truth in Lending Act what type of information should Kathy have received from ABC Bank?

A)The total amount financed; and the number,amount,and due dates of payments.
B)The total amount financed; the number,amount,and due dates of payments; and the bank policy in the event of a delinquency.
C)The total amount financed; the number,amount,and due dates of payments; and the bank's policy regarding selling loans to other financial institutions.
D)The total amount financed; the number,amount,and due dates of payments; the bank policy in the event of a delinquency; and the bank's policy regarding selling loans to other financial institutions.
E)Only the information she received.

Question 65

Miracle Pill.Katie advertised that she had developed a pill for women that would result in weight loss,wrinkle loss,and improved vitality; and for men would result in all those things,plus hair growth.Her television advertisement showed miracle results allegedly obtained by consumers.Katie cautioned,however,that ingestion of the pill for six months was required before results would be evident.The pill was wildly popular.The Federal Trade Commission,however,investigated and determined that Katie had failed to have a reasonable basis for the claims she made in advertisements.Katie claimed that she was merely involved in the use of generalities and clear exaggerations.The Federal Trade Commission disagreed and issued a formal administrative complaint against her.After a hearing,the Federal Trade Commission issued an order requiring that Katie stop advertising and selling the pills.After losing all appeals,Katie continued selling the pills until she was fined by the Federal Trade Commission.She has since left the country and cannot be located.If a company violates a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts,which of the following is the fine that the Federal Trade Commission may impose?

A)Up to $3,000 per violation
B)Up to $5,000 per violation
C)Up to $10,000 per violation
D)Up to $50,000 per violation
E)Up to $100,000 per violation

Question 66

The Burial Emporium.Fred operates a funeral home called Fred's Burial Emporium.Fred likes to keep things simple.He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever.Fred also goes door-to-door selling funeral packages.He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds.He believes and informs customers that once customers sign a contract for burial services,there is no backing out.Fred also obtains a good deal of business from phone solicitation.He enjoys calling late at night,between 10 p.m.and 11 p.m.,when people are tired but before they go to bed.He believes that if people do not feel well,they are more likely to consider funeral arrangements.After some pesky consumer complaints,the Federal Trade Commission and other federal agencies investigate Fred.He hires a good lawyer with his profits in an attempt to stay out of trouble.Which of the following is true regarding Fred's practice of offering one flat price for funeral services with no itemization?

A)Federal law does not prohibit this practice.
B)This practice is prohibited under federal law in funeral home situations.
C)This practice is prohibited under federal law in funeral home situations,but only if no other funeral home is located within 20 miles.
D)This practice is prohibited under federal law in funeral home situations,but only if no other funeral home is located within 10 miles.
E)This practice is prohibited by federal law unless consumers receive a 10% discount compared to the average price of funeral services in his state.

Question 67

How can the Federal Trade Commission protect consumers if most companies within one industry are using the same unfair or deceptive practices?

Question 68

Describe the rights of appeal a company has if issued a cease-and-desist order by the Federal Trade Commission.

Question 69

________ Act was the first federal legislation regulating food and drugs.

A)The Applied Food,Drug,and Cosmetic
B)The Pure Food and Drugs
C)The Food and Drug Safety
D)The Consumer Product Safety
E)The Unadulterated Food and Drug

Question 70

Which of the following is a false statement regarding the Consumer Product Safety Commission?

A)It enforces mandatory standards regarding product safety.
B)It has no authority to require a recall of products.
C)It conducts research regarding potentially hazardous products.
D)It educates consumers about product safety.
E)It can ban consumer products from the market.

Question 71

Miracle Pill.Katie advertised that she had developed a pill for women that would result in weight loss,wrinkle loss,and improved vitality; and for men would result in all those things,plus hair growth.Her television advertisement showed miracle results allegedly obtained by consumers.Katie cautioned,however,that ingestion of the pill for six months was required before results would be evident.The pill was wildly popular.The Federal Trade Commission,however,investigated and determined that Katie had failed to have a reasonable basis for the claims she made in advertisements.Katie claimed that she was merely involved in the use of generalities and clear exaggerations.The Federal Trade Commission disagreed and issued a formal administrative complaint against her.After a hearing,the Federal Trade Commission issued an order requiring that Katie stop advertising and selling the pills.After losing all appeals,Katie continued selling the pills until she was fined by the Federal Trade Commission.She has since left the country and cannot be located.Who would have presided over the hearing involving the administrative complaint filed against Katie by the Federal Trade Commission?

A)A state circuit court judge
B)A federal district court judge
C)An administrative law judge
D)A panel of commissioners of the Federal Trade Commission
E)The full commission of the Federal Trade Commission

Question 72

Miracle Pill.Katie advertised that she had developed a pill for women that would result in weight loss,wrinkle loss,and improved vitality; and for men would result in all those things,plus hair growth.Her television advertisement showed miracle results allegedly obtained by consumers.Katie cautioned,however,that ingestion of the pill for six months was required before results would be evident.The pill was wildly popular.The Federal Trade Commission,however,investigated and determined that Katie had failed to have a reasonable basis for the claims she made in advertisements.Katie claimed that she was merely involved in the use of generalities and clear exaggerations.The Federal Trade Commission disagreed and issued a formal administrative complaint against her.After a hearing,the Federal Trade Commission issued an order requiring that Katie stop advertising and selling the pills.After losing all appeals,Katie continued selling the pills until she was fined by the Federal Trade Commission.She has since left the country and cannot be located.Which of the following is the term for the order issued by the Federal Trade Commission requiring Katie to stop advertising and selling the pills?

A)Stop-gap order
B)Subpoena duces tecum
C)Stand-and-deliver order
D)Temporary injunction
E)Cease-and-desist order

Question 73

Convertibles.Barry,a new car dealer,advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each.He had only three Wind vehicles,however,and when those were sold,he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000.Kathy,a customer who decided to purchase one of the more expensive vehicles,needed financing in order to do so.She had $10,000 to pay on the car and sought a loan from ABC Bank for the remainder.She wanted the loan for a specific amount of time.ABC Bank offered her the loan and she agreed.The only information she received from ABC Bank was confirmation that she borrowed $15,000 at an 8% interest rate.After receiving several complaints,the Federal Trade Commission disapproved of Barry's action in regard to the Wind vehicles.Claiming that his advertisement was misleading,the Federal Trade Commission proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving Wind vehicles and any other vehicles Barry offered for sale.Which of the following terms references the cease-and-desist order entered by the Federal Trade Commission involving not only Barry's sales of Wind but also his sales of all other vehicles?

A)A multiple cease-and-desist order
B)A multiple-product order
C)A combined order
D)A superlative order
E)An exceptional order

Question 74

The ________ conducts investigations into the safety of motor vehicles.

A)Automotive Safety Commission
B)United States Department of Motor Vehicles
C)National Highway Traffic Safety Administration
D)Motorized Vehicle Safety Administration
E)Transportation Security Commission

Question 75

The Burial Emporium.Fred operates a funeral home called Fred's Burial Emporium.Fred likes to keep things simple.He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever.Fred also goes door-to-door selling funeral packages.He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds.He believes and informs customers that once customers sign a contract for burial services,there is no backing out.Fred also obtains a good deal of business from phone solicitation.He enjoys calling late at night,between 10 p.m.and 11 p.m.,when people are tired but before they go to bed.He believes that if people do not feel well,they are more likely to consider funeral arrangements.After some pesky consumer complaints,the Federal Trade Commission and other federal agencies investigate Fred.He hires a good lawyer with his profits in an attempt to stay out of trouble.Which of the following is true regarding Fred's practice of making telephone solicitations late at night after people are tired?

A)Under federal law this practice is legal because any consumer who does not want to talk to him can simply hang up.
B)According to a Federal Trade Commission rule,if a telemarketer calls a residence after 9 p.m.,the telemarketer is engaging in abusive behavior; therefore,Fred is in violation.
C)According to a Federal Trade Commission rule,if a telemarketer calls a residence before 11 p.m.,the telemarketer is not engaging in abusive behavior; therefore,Fred is not in violation.
D)According to a Federal Trade Commission rule that is specific to funeral home directors,direct phone solicitation may not be made; therefore,Fred is in violation.
E)According to a Federal Trade Commission rule that is specific to funeral home directors,direct phone solicitation may not be made after 7 p.m.; therefore,Fred is in violation.

Question 76

Convertibles.Barry,a new car dealer,advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each.He had only three Wind vehicles,however,and when those were sold,he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000.Kathy,a customer who decided to purchase one of the more expensive vehicles,needed financing in order to do so.She had $10,000 to pay on the car and sought a loan from ABC Bank for the remainder.She wanted the loan for a specific amount of time.ABC Bank offered her the loan and she agreed.The only information she received from ABC Bank was confirmation that she borrowed $15,000 at an 8% interest rate.After receiving several complaints,the Federal Trade Commission disapproved of Barry's action in regard to the Wind vehicles.Claiming that his advertisement was misleading,the Federal Trade Commission proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving Wind vehicles and any other vehicles Barry offered for sale.What type of loan was Kathy seeking from ABC Bank?

A)An open-end credit line
B)A closed-end credit line
C)An approved line
D)A line of credit
E)A direct line

Question 77

________ is the agency responsible for enforcing the Federal Food,Drug,and Cosmetic Act.

A)The United States Food and Drug Administration
B)The Federal Trade Commission
C)The Consumer Product Safety Commission
D)The Uniform Commerce Commission
E)The United States Department of the Interior

Question 78

The Burial Emporium.Fred operates a funeral home called Fred's Burial Emporium.Fred likes to keep things simple.He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever.Fred also goes door-to-door selling funeral packages.He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds.He believes and informs customers that once customers sign a contract for burial services,there is no backing out.Fred also obtains a good deal of business from phone solicitation.He enjoys calling late at night,between 10 p.m.and 11 p.m.,when people are tired but before they go to bed.He believes that if people do not feel well,they are more likely to consider funeral arrangements.After some pesky consumer complaints,the Federal Trade Commission and other federal agencies investigate Fred.He hires a good lawyer with his profits in an attempt to stay out of trouble.Which of the following is true regarding Fred's door-to-door solicitation and his practice of informing customers that there is no backing out of contracts entered into for funeral services?

A)Fred's actions are legal so long as he truly gives specific notice that he will not agree to any cancellations.
B)Fred must give customers at least 24 hours within which to cancel such a contract,but that is only because funeral services are involved.
C)Fred's actions are legal even if he does not give specific notice that he will not agree to any cancellations.
D)Because door-to-door sales are involved,Fred must give consumers 24 hours within which to cancel.
E)Because door-to-door sales are involved,Fred must give consumers three days within which to cancel.

Question 79

Convertibles.Barry,a new car dealer,advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each.He had only three Wind vehicles,however,and when those were sold,he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000.Kathy,a customer who decided to purchase one of the more expensive vehicles,needed financing in order to do so.She had $10,000 to pay on the car and sought a loan from ABC Bank for the remainder.She wanted the loan for a specific amount of time.ABC Bank offered her the loan and she agreed.The only information she received from ABC Bank was confirmation that she borrowed $15,000 at an 8% interest rate.After receiving several complaints,the Federal Trade Commission disapproved of Barry's action in regard to the Wind vehicles.Claiming that his advertisement was misleading,the Federal Trade Commission proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving Wind vehicles and any other vehicles Barry offered for sale.What kind of objectionable advertising,if any,was Barry engaged in when he offered convertibles for sale for $10,000 but only had three and then tried to convince customers to purchase a much more expensive vehicle?

A)Stand-and-deliver
B)Hook-and-ladder
C)Bait-and-switch
D)Ad trickery
E)He was not engaged in any objectionable advertising,so long as he had at least one vehicle in stock at a price of $10,000.

Question 80

What is required by the Telemarketing Sales Rule of 1995?