Deck 22: Consumer Protection Law

Question 1

Credit card companies may give out free umbrellas on campus when a student completes an application for a card.

Answer 1

False
Explanation: Credit card companies are prohibited from offering college students tangible items to induce them to apply for credit cards.

Question 2

The ________ Commission is responsible for preventing unfair and deceptive acts or practices in commercial transactions.

Answer 2

Federal Trade

Question 3

The ________ Act makes it a crime to change vehicle odometers and requires that faulty odometers be disclosed to the buyers.

Answer 3

Federal Odometer

Question 4

If Annie borrows money to pay for her kitchen upgrades from her aunt Bethany, Bethany does not need to provide required disclosures under the Truth in Lending Act.

Question 5

Once an entry becomes part of a credit report, it is permanently a part of the report.

Question 6

The Fair Debt Collection Practices Act does not prevent creditors' agents from harassing debtors or using misleading tactics.

Question 7

The Fair Debt Collection Practices Act requires that a collection agency make known certain rights of the debtor in a _____.

Question 8

The ________ Act establishes a national fraud alert system so that consumers have a timely way to guard their credit.

Question 9

Agents involved in debt collection are the only parties that are regulated by the Fair Debt Collection Practices Act.

Question 10

A deceptive practice is one that misleads a ________ consumer and that results in some sort of detriment to the consumer.

Question 11

Under the Truth in Lending Act, creditors have a week to notify consumers of their right to cancel the transaction.

Question 12

If a seller offers a written ________ warranty, the consumer transaction is subject to the Magnuson-Moss Act.

Question 13

The Equal Credit Opportunity Act is limited to regulating applications for credit and does not apply to the charging of higher interest rates based on the race of the consumer.

Question 14

Historically, the only legal protection a consumer had against a seller that engaged in deceit during a sale was a common law suit for fraud.

Question 15

The implied warranty of merchantability applies to every sale from a _______ to a buyer.

Question 16

The Fair Credit Reporting Act requires each of the credit bureaus to give consumers a free copy of their credit report at least twice a year.

Question 17

Collection agencies may threaten to put the debtor in jail in an effort to recover the money that is owed to the creditor as long as the debt is legitimate and overdue.

Question 18

The Fair Debt Collection Practices Act applies to ________ collecting debts for the creditors.

Question 19

In order to _______ a warranty, the seller must do so in a conspicuous writing such as capital letters or bold print.

Question 20

The Truth in Lending Act applies to creditors that are _______ engaged in extending credit for goods and services.

Question 21

The implied warranty of merchantability applies to sales by any seller to any buyer.

Question 22

Expressly false statements can result in breach-of-warranty lawsuits.

Question 23

The FDA has authority to bring criminal prosecutions.

Question 24

The Magnuson-Moss Act requires a label with warranty conditions regarding all products that cost $10 or more.

Question 25

The FDA enforces both specific and general standards for food safety.

Question 26

Individual consumers do not have the right to see their own credit report unless they are applying for a loan.

Question 27

Individual consumers may bring an action against a collection agency for damages suffered by collection efforts.

Question 28

The CAN SPAM Act does not address spammers who falsify the name of the sender.

Question 29

When the seller promises that a product is good for a particular activity, the seller is implying the warranty of merchantability.

Question 30

Victims of odometer tampering are eligible to receive up to triple the amount of their damages.

Question 31

Advertising coffee as "the best in the world" is prohibited by UCC rules.

Question 32

Many express warranties are made through advertisements.

Question 33

The FDA jurisdiction includes administering the Flammable Fabrics Act.

Question 34

Credit card companies must now give a 45-day notice of any rate hike.

Question 35

"The buyer agrees to take the table with all faults and as is"

Question 36

If they do it properly, sellers may limit a buyer's remedies in all situations.

Question 37

Saying that "this car is the ultimate driving experience" is an example of puffery.

Question 38

FDA regulations do not apply to the labeling of food packages.

Question 39

Magnuson-Moss requires that a seller offer a warranty to buyers.

Question 40

If a seller has not made a specific representation about a product, the buyer may still be protected by an express warranty.

Question 41

In Palmer v. Champion Mortgage, Palmer received a debt-consolidation loan from Champion. When she signed the loan agreement, she also received the required TILA disclosures. Several days later Palmer received copies of the documents and a notice of her right to cancel under TILA, which permitted her to cancel within three business days of three different dates stated in the document. Over a year later Palmer filed to cancel the transaction, claiming that the time frames given to her in the TILA disclosures were too confusing. The court held that Palmer:

A) could cancel her loan because the time disclosures were too confusing.
B) could cancel her loan because of the extended three-year time frame of the TILA.
C) could not cancel her loan because the TILA does not permit cancellation of loans.
D) could not cancel her loan because the TILA disclosures would not confuse an objectively reasonable consumer.

Question 42

The Truth in Lending Act applies to credit extensions made to:

A) consumers.
B) commercial banks.
C) merchants.
D) businesses.

Question 43

Which is not an example of a warranty?

A) merchantability
B) express
C) puffery
D) fitness for a particular purpose

Question 44

The source of warranty law is:

A) the UCC.
B) FTC regulations.
C) the Consumer Protection Act.
D) the TILA.

Question 45

Which of the following is not exempt from the Do Not Call Registry?

A) charitable organizations
B) certain political organizations
C) businesses seeking commercial contracts
D) businesses with which the consumer has past commercial contacts

Question 46

Which of the following is not an example of deceptive advertising?

A) claiming that for the price, the item is the best money can buy
B) artificially inflating the original retail price of an item so that when it is featured as a sale item, it looks more marked down than it actually is
C) using a term like "clearance price" when the item is not being sold at a reduced rate
D) misrepresenting the prices of competitors

Question 47

Who is typically empowered by the states to protect consumers from deceptive trade practices?

A) the governor
B) the state bureau of investigation
C) the local police
D) the state attorney general

Question 48

Which of the following is not a requirement for disclaiming a warranty?

A) statutory authorization
B) a conspicuous writing
C) an explanation of why the warranty is being disclaimed
D) inclusion of the word merchantability if merchantability is to be disclaimed

Question 49

The UCC permits disclaimers of warranties:

A) under no circumstances.
B) when the seller disclaims properly.
C) if the buyer was unaware of the warranties.
D) when allowed by common law.

Question 50

Victims of odometer tampering may receive:

A) actual damages.
B) double damages.
C) triple damages.
D) liquidated damages.

Question 51

Which act regulates the leasing relationship in which the consumer has possession of a motor vehicle in exchange for monthly payments?

A) Consumer Lending Act
B) Truth in Lending Act
C) Magnuson-Moss Act
D) Equal Credit Opportunity Act

Question 52

Which of the following is not one of the FDA's powers?

A) ordering mandatory recalls
B) stepping in and closing a business
C) seizing contaminated products
D) filing civil enforcement lawsuits

Question 53

In Discover Bank v. Owens, Owens received a Discover credit card with a limit of $1,900 and charged $1,460. The credit card agreement allowed Discover to add fees and increase her interest rate when Owens paid her bill late or did not pay in full. Owens became disabled and experienced severe financial difficulty. She stopped using the card and made regular payments but continued to accrue fees. She eventually paid $3,492 toward her original debt but still owed Discover $5,564 when Discover brought a collection suit against her. The court held that in this situation:

A) Owens owed $5,564 because she agreed to the terms of the credit card agreement when she used the card the first time.
B) Owens owed $5,564 because Discover did not have a duty to mitigate its damages over the six years.
C) Owens did not owe the $5,564 because her disability prevented her from having the financial means to pay the money.
D) Owens did not owe the $5,564 because the terms of the agreement were manifestly unconscionable in these circumstances.

Question 54

Which of the following is not impermissible collector contact under the Fair Debt Collection Practice Act?

A) contacting the debtor at inconvenient times or at inconvenient places
B) contacting the debtor once the debtor gives written notice of refusal to pay the debt
C) contacting the debtor once the debtor has asked the creditor not to call
D) contacting the debtor once the debtor informs the collector of attorney representation

Question 55

The Truth in Lending Act covers creditors that:

A) regularly engage in extending credit for goods and services.
B) occasionally extend credit for goods and services.
C) extend credit for real estate.
D) lend money to their relatives.

Question 56

The purpose of the FTC in relation to consumers is:

A) nonexistent, since the FTC does not apply to consumers.
B) to prevent unfair or deceptive acts in commercial transactions.
C) to ensure that the UCC is followed.
D) to promote interstate commerce.

Question 57

If a credit card is issued to a consumer under the age of 21, the credit card company is required to:

A) obtain the signature of a cosigner who has the means to repay any debt.
B) give a 60-day notice before making any rate hikes.
C) notify the cardholder's parents so they can monitor their child.
D) set reasonable spending limits.

Question 58

What is the minimum amount that a product must cost to be covered by the Magnuson-Moss Act?

A) $5
B) $10
C) $15
D) $20

Question 59

Which piece of legislation prohibits denying an applicant credit on the basis of discrimination?

A) Equal Credit Opportunity Act
B) U.S. Constitution
C) Fair Credit Act
D) Truth in Lending Act

Question 60

Sadie is shopping for a new pair of running shoes. She tells the salesperson that she is a marathoner and needs shoes for distance. The salesperson suggests that Sadie buy a pair of Mercury running shoes. Mercury shoes are actually designed for walking rather than running. On mile 21 of her first training run, the shoes start to wear through in the heel. What type of warranty has been breached?

A) express
B) merchantability
C) fitness for a particular purpose
D) none (No warranty was made in this situation.)

Question 61

Gus owes a lot of money to his creditors. Recently one of the creditors turned over Gus's account to a collection agency. The agency continually calls Gus to try to recover the debt he owes. It has started calling him at work several times a day. May the collection agency do this?

Question 62

George runs a baseball equipment supply store. He specializes in supplying batting cages with new and used pitching machines. George sold Joan a used pitching machine for her softball team. Joan signs a lengthy contract in which George disclaims all liability and sells the machine to her "as is." These terms are in the same font as the rest of the text and not bolded, underlined, or otherwise highlighted. When Joan gets the machine to her house, it catches fire and burns down her garage. Is George potentially liable for the damage?

Question 63

A car manufacturer advertises that the windshield in its cars is shatterproof and will not break even when hit with a strong impact. While an owner of one of the cars was driving home one day, a small rock hit the windshield and the windshield broke, cutting the driver. What type of warranty was breached?

A) an implied warranty
B) an express warranty
C) the Magnuson-Moss warranty
D) the warranty of fitness for a particular purpose

Question 64

The Fair Credit Reporting Act (FCRA) requires that credit bureaus remove obsolete bankruptcy filings from credit reports. A bankruptcy filing is considered to be obsolete after:

A) 7 years.
B) 8 years.
C) 13 years.
D) 14 years.

Question 65

In Hauter v. Zogarts, Hauter received, as a present, a "Golfing Gizmo" that was made by Zogarts. The device consisted of a golf ball attached to string that returned the ball to the user after it had been hit with a club. The box that it came in stated, "completely safe, ball will not hit player." Hauter had read the safety manual and used the product a dozen times, but then he hit the ball too low and it struck him in the head, causing serious injury. Hauter sued for:

A) breach of implied warranty only.
B) breach of express warranty only.
C) breach of express and implied warranty.
D) false advertising.

Question 66

Casey's identity was stolen. The thieves stole lots of money and took out a loan in Casey's name. She notified all the necessary banks and agencies as soon as she discovered the identity theft. Is Casey's credit protected in this situation?

Question 67

What is the name of the legislation enacted in response to injuries and deaths from products being sold to consumers?

A) Federal Product Act
B) Food, Drug and Cosmetic Act
C) Product Liability and Safety Reform Act
D) Consumer Product Safety Act

Question 68

What is the primary purpose of the Truth in Lending Act?

Question 69

Which part of the Truth in Lending Act requires that certain disclosures be made before a credit transaction is consummated?

A) Regulation Y
B) Regulation Z
C) Creditors' Disclosure Regulation
D) Disclosure of Key Terms Regulation

Question 70

Regarding business owners and managers, what is generally considered the most important part of the Truth in Lending Act? Why?

Question 71

In Vagias v. Woodmont Properties, Vagias wanted to buy a house in Montville. He told his real estate agent that he wanted to buy there because of the school district's reputation. The agent showed him a house in a development called "Woodmont Court at Montville." Vagias asked if the house was within the jurisdictional limits of Montville. The agent and a representative for the builder, who both knew the township boundaries, assured him it was within the city limits. Vagias bought the house but was unable to enroll his son in the school district because the property was outside the city limits. Vagias sued, claiming he paid a premium for the house based on the school district's reputation. The homebuilder argued that the misrepresentations were unintentional and that Vagias did not suffer a loss in the value of his home. The court held that:

A) Woodmont was liable because the location of the house was the basis of the bargain and the misrepresentation was affirmative, thus meeting the requirements of the New Jersey Consumer Fraud Act.
B) Woodmont was liable because the real estate agent showed Vagias a house that did not meet his requests.
C) Woodmont was not liable because the misrepresentation was not intentional.
D) Woodmont was not liable because the New Jersey Consumer Fraud Act does not apply to real estate.

Question 72

What are some of the ways that the Credit Card Accountability Responsibility and Disclosure Act attempts to protect college students from deceptive practices by credit card companies?

Question 73

Describe how the federal government is protecting consumers online regarding spam.

Question 74

Which of the following must be approved by the FDA before it can be sold to the general public?

A) eggs
B) food ingredients
C) produce
D) all products made from animals

Question 75

In the local paper, a car dealership advertises a small used car for a great price and a low interest rate loan. When Patty comes in to look at that car, the salesman steers her away from the advertised car. Instead, the salesman tries to convince her to buy a different used car with a much higher interest rate loan. What unfair sales practice might this be an example of?

A) false advertising
B) bait and switch
C) warranty breach
D) fraud

Question 76

What is puffery? Provide an example.

Question 77

Name and discuss the two categories of warranties.

Question 78

Which agency had its oversight power over credit card issuers increased by the Credit Card Accountability Responsibility and Disclosure Act of 2009?

A) Interstate Commerce Commission
B) Consumer Protection Agency
C) Securities and Exchange Commission
D) Federal Trade Commission

Question 79

Seller lists his car on Craigslist and includes the phrases "as is" and "with all faults" in bold, conspicuous letters in the advertisement. Seller knows that the brakes are faulty. Buyer purchases the car and is later injured when the brakes fail and the car is wrecked. Did Seller limit his liability against Buyer in a lawsuit by using the term "as is"?

Question 80

Regarding finance charges and APR, Regulation Z requires that their disclosure:

A) is not necessary.
B) be included with the rest of the information regarding the credit transaction.
C) be more conspicuous than other disclosures.
D) need not be seen by the consumer.