Deck 15: Consumer Protection

Question 1

Banning a product from the market is usually the first remedy sought by the Consumer Product Safety Commission (CPSC).

Answer 1

False
Explanation: In cases of severe and imminent hazards,the Consumer Product Safety Commission (CPSC) has the power to enforce its decisions by seeking a court order to remove a product from the market.Only a few products,such as drop-side cribs,have actually been banned from the market by the Commission.

Question 2

Under the Fair Credit Billing Act,a creditor must acknowledge receipt of a consumer complaint regarding an erroneous bill within 90 days.

Answer 2

False
Explanation: The Fair Credit Billing Act (FCBA) provides a mechanism to deal with the billing errors that accompany credit card and certain other "open-end" credit transactions.Under the Act,a cardholder who receives an erroneous bill must complain in writing to the creditor within 60 days of the time the bill was mailed.The creditor must acknowledge receipt of the complaint within 30 days.

Question 3

The federal Fair Debt Collection Practices Act forbids debt collectors from contacting debtors during "inconvenient" hours.

Answer 3

True
Explanation: The federal Fair Debt Collection Practices Act forbids debt collectors from contacting debtors during "inconvenient" hours.For debtors who are employed during "normal" working hours,the period from 9 pm to 8 am (realizing it's probably irrelevant,but in the text,the am/pm letters are in small caps) would probably be considered inconvenient.

Question 4

For a debtor to be protected under the Truth in Lending Act (TILA),the credit obtained must be above $25,000.

Question 5

The Equal Credit Opportunity Act (ECOA) is designed to combat bias in lending.

Question 6

Chapter 13 of the Bankruptcy Act permits only voluntary bankruptcies and is restricted to those with steady incomes and somewhat limited debts.

Question 7

Based on Julia's credit history,TrueMoney Bank denies her a loan.In this case,the bank need not notify Julia and tell her where it secured her credit information.

Question 8

The heart of the Truth in Lending Act (TILA) is the required conspicuous disclosure of the amount financed,the finance charge,the annual percentage rate,and the number of payments.

Question 9

Chapter 11 of the Bankruptcy Act keeps creditors from a debtor's assets while the debtor,under the supervision of the court,works out a financial reorganization plan and continues to pay creditors.

Question 10

The Federal Trade Commission's primary legislative direction is in issuing trade regulation rules to enforce the intent of broadly drawn congressional legislation.

Question 11

If a consumer claims that his or her credit file contains inaccurate information,the concerned credit reporting agency (CRA) merely has to verify that it took the information accurately from the original source and has no duty to investigate further.

Question 12

The federal Fair Debt Collection Practices Act (FDCPA) extends to creditors who are themselves trying to recover money owed to them.

Question 13

Innocent misrepresentation differs from fraud only in that the falsehood was intentional in the former.

Question 14

Jones sold a wooden chair to Amy,claiming it to be an antique.However,Jones recently acquired the chair from a carpenter who specializes in reproducing antique furniture.When Amy showed the chair to an antique collector,he pointed out that it was a fake.Thus,Amy was a victim of _____.

A)innocent misrepresentation
B)libel
C)slander
D)fraud

Question 15

To enforce its policies and decisions,the Consumer Product Safety Commission (CPSC) holds both compliance and enforcement powers.

Question 16

Mere foolishness or want of knowledge constitutes the grounds for unconscionability of contracts.

Question 17

Under the Fair Credit Billing Act (FCBA),a credit cardholder who receives an erroneous bill must complain in writing to the creditor within 60 days of the time the bill was mailed.

Question 18

The Federal Trade Commission (FTC) has the authority to impose criminal sanctions on businesses that engage in unfair and deceptive trade practices.

Question 19

Under Chapter 13 of the Bankruptcy Act,individual debtors are prohibited from voluntarily seeking the protection of a court to arrange a debt adjustment plan.

Question 20

Lemon laws govern the export and sale of agricultural produce.

Question 21

Which of the following is true of the Federal Trade Commission?

A)It has the authority to impose criminal sanctions on those found guilty as soon as a citizen complaint is filed.
B)It operates as a miniature government with powerful quasi-legislative (rule-making) and quasi-judicial (adjudication) roles.
C)It does not have the authority to enforce privacy provisions in laws addressing the use of consumer credit reports.
D)It is solely responsible for enforcing many finance laws,including the Electronic Fund Transfer Act,the Equal Credit Opportunity Act,and the Fair Credit Billing Act.

Question 22

Which of the following elements must be proved to judge a situation as fraud?

A)The injured party suffered a loss of at least $25,000.
B)The misrepresentation was unintentional.
C)The injured party ignored the misrepresentation.
D)The misrepresented facts resulted in injury.

Question 23

Catalina buys a car on loan from Elko Automobiles.She pays the car loan over four years in monthly installments.Yet,her bank sends inaccurate information to Citizen Safe,a local credit reporting agency (CRA),claiming that the installments were not made on time.As a result,Catalina is denied a home loan by another bank.In the context of the Fair Credit Reporting Act,which of the following can be concluded from this scenario?

A)Catalina has no right to find out the information in her credit report.
B)If Catalina files a complaint against Citizen Safe,the agency will have up to 90 days to correct and remove the inaccurate information from Catalina's credit report.
C)Citizen Safe must change Catalina's credit report immediately upon her request.
D)If Catalina informs Citizen Safe about the inaccurate information,the agency must investigate her complaint and give her a written report.

Question 24

Which of the following is the federal agency charged with protecting consumers from "unreasonable risks of injury and death" from products such as toys,lawn mowers,washing machines,bicycles,fireworks,pools,portable heaters,and household chemicals?

A)The Consumer Product Safety Commission
B)The Consumer Goods Forum
C)The Consumer Financial Protection Bureau
D)The Federal Trade Commission

Question 25

When is a contract unconscionable?

A)When foolishness exists on the part of one of the parties to the contract
B)When one party is spectacularly clever and the other is not
C)When some contracts are so unfair or oppressive as to demand court intervention
D)When a want of knowledge exists on the part of one of the parties to the contract

Question 26

HealthPro Pharma Inc.released a new medicine that promised to cure heart diseases.A few months later,it was found that patients who regularly took the medicine faced a high risk of obesity and other related side effects.In this scenario,which of the following federal agencies is empowered to remove the medicine from the market?

A)The Consumer Product Safety Commission
B)The Consumer Goods Forum
C)The Food and Drug Administration
D)The Federal Trade Commission

Question 27

Which of the following is a primary fear associated with the Consumer Financial Protection Bureau's role in the finance market?

A)Increased government regulation is likely to reduce the availability of credit.
B)Increased government regulation is likely to reduce the cost of credit.
C)Increased government interference will increase the money supply in the market.
D)Increased government interference will increase consumer spending.

Question 28

Which of the following federal agencies is primarily responsible for enforcing the finance laws such as the Electronic Fund Transfer Act and the Fair Credit Billing Act?

A)The Chief Financial Officers Council
B)The American Federation of Labor
C)The Consumer Financial Protection Bureau
D)The Consumer Product Safety Commission

Question 29

Which of the following consumer protection agencies in the United States is charged with providing financial education,thereby promoting Americans' financial literacy?

A)The Consumer Product Safety Commission
B)The Consumer Financial Protection Bureau
C)The Education Resources Information Center
D)The Chief Financial Officers Council

Question 30

In the context of lemon laws,a new vehicle would be considered a lemon if it has been:

A)damaged due to negligence on the part of a consumer.
B)returned to the manufacturer or dealer three or four times to repair the same defect.
C)sold by a dealer who is not registered in the state where the vehicle was purchased.
D)stolen and resold to a new buyer.

Question 31

Which of the following is true of procedural unconscionability in the context of contracts?

A)It usually arises from lack of knowledge or a lack of choice.
B)It is a situation where the clause is so clearly unfair as to "shock the conscience of the court."
C)It is a situation in which both the parties of a contract have equal bargaining power.
D)It occurs when one party in a contract is spectacularly clever and the other is not.

Question 32

Which of the following is true of substantive unconscionability?

A)It primarily arises from lack of knowledge or lack of choice.
B)It occurs when a clause or contract does not provide a remedy for a breach.
C)It primarily arises when the parties to a contract have equal bargaining power.
D)It occurs when one party in a contract is spectacularly clever and the other is not.

Question 33

Which of the following credit reporting protections is offered by the federal Fair Credit Reporting Act?

A)In all cases,negative information more than seven years old must be reported in a consumer's credit report.
B)All inaccurate information must be corrected or removed from a consumer's credit file,usually within 30 days.
C)Consumers cannot sue a credit reporting agency or a bank for damages even if their rights under the act have been violated.
D)Anyone using information from a credit reporting agency to deny a consumer credit cannot reveal the source of information to the consumer.

Question 34

Which of the following is true of credit reporting protections provided to consumers under the federal Fair Credit Reporting Act (FCRA)?

A)In case of inaccurate information in a credit file,the concerned credit reporting agency must make the correction,usually within 90 days.
B)If a person makes a request,the concerned credit reporting agency must give the person a list of all those who have recently sought information about him or her.
C)Credit reporting agencies do not need a written consent from a person to provide information to the person's employer or prospective employer.
D)Negative information more than two years old must not be reported in a consumer's credit file.

Question 35

Which of the following is true of lemon laws?

A)Very few states protect consumers through lemon laws.
B)The determination about whether a car is a lemon is usually handled by an arbitration panel.
C)They typically cover used cars for ten years or up to 100,000 miles after purchase.
D)Lemon laws are the same in every state.

Question 36

Which of the following is one of the key provisions of the Credit Card Accountability,Responsibility,and Disclosure Act of 2009?

A)Lenders can issue credit cards to those under age 21 without any objections.
B)Interest rates,with some exceptions,cannot be raised in the first year.
C)Credit card issuers can charge interest on bills paid on time.
D)Credit card companies can increase the annual percentage rate on all existing account balances.

Question 37

Identify a true statement about the Food and Drug Administration (FDA).

A)The FDA is empowered to impose fines although it does not have the authority to remove dangerous drugs from the market.
B)The FDA can regulate tobacco ingredients,including nicotine,but the agency is not yet exercising that power.
C)The 2011 Food Safety and Modernization Act reduced the food safety powers of the FDA.
D)The food safety burden for imported food lies primarily with customers as it does not come under the FDA's jurisdiction.

Question 38

Which of the following best states the purpose of the Federal Trade Commission (FTC)?

A)It was created to ensure that the American economy imports more than it exports.
B)It was created to prevent "unfair methods of competition and unfair or deceptive acts or practices in and affecting commerce."
C)It provides a mechanism to deal with the billing errors that accompany credit card and certain other "open-end" credit transactions.
D)It was designed to shield debtors from unfair debt collection tactics by collection agencies and attorneys who routinely operate as debt collectors.

Question 39

Which of the following standards determines the Truth in Lending Act's applicability?

A)The debtor must be an organization.
B)The amount secured as credit must be above $25,000.
C)The purpose of the credit must not be personal.
D)The credit must be subject to a finance charge.

Question 40

The _____,authorized by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act,is charged with writing and enforcing rules covering consumer financial products and services including mortgages,credit cards,payday loans,loan servicing,check cashing,debt collection,and others.

A)Consumer Product Safety Commission
B)Consumer Financial Protection Bureau
C)American Federation of Labor
D)Bureau of Public Debt

Question 41

List the methods used by the Consumer Product Safety Commission (CPSC) to enforce its rules.

Question 42

Which of the following Acts was passed mostly as a response to anger over discriminating treatment of women in the financial marketplace?

A)The Fair Debt Collection Practices Act
B)The Social Security Act
C)The Equal Credit Opportunity Act
D)The Mortgage Finance Act

Question 43

Lucy uses her credit card to make purchases for her new house.She bills a sum of $2,000 and repays $1,200 within a month.However,she is not able to repay the remaining $800 for about a year.The debt collection partner of her bank repeatedly calls her during odd hours and threatens to seize her property if she fails to repay the outstanding amount along with an unreasonable late fee in a week's time.In the context of the federal Fair Debt Collection Practices Act (FDCPA),which of the following statements holds true in this scenario?

A)The act extends only to creditors who are themselves trying to recover money owed to them.
B)Lucy is not protected under the act unless the debt collection agency uses physical force on her.
C)Lucy is protected under the act as it prohibits creditors from making contact with a debtor during inconvenient hours.
D)The act allows debt collection agencies to employ any tactic to recover the outstanding debt from a consumer.

Question 44

Describe the requirements to prove that a vehicle is a "lemon" and the remedies generally provided under lemon laws.

Question 45

In the context of the Bankruptcy Act,a _____ can be voluntarily filed in federal court by a debtor,or creditors can seek an involuntary bankruptcy judgment.

A)Chapter 11 reorganization lawsuit
B)Chapter 15 class action lawsuit
C)Chapter 13 adjustment of debts petition
D)Chapter 7 liquidation petition

Question 46

Under the _____,liability for misuse of missing cards is capped at $50 if the consumer provides notice within two business days after learning of the loss.

A)Fair Debt Collection Practices Act
B)Electronic Fund Transfer Act
C)Fair Credit Billing Act
D)Equal Credit Opportunity Act

Question 47

Chapter 13 of the Bankruptcy Act provides the opportunity to seek the protection of the court to arrange a debt adjustment plan for _____.

A)general partnerships
B)creditors
C)individual debtors
D)corporations

Question 48

Explain the purpose of the Electronic Fund Transfer Act (EFTA).

Question 49

Describe the issues that led to the passing of the Equal Credit Opportunity Act (ECOA) and identify how the Act handles these issues.

Question 50

Briefly describe the three important forms of bankruptcy action.

Question 51

Describe the elements generally adopted by the legal community in defining fraud.

Question 52

Under Chapter 11 of the Bankruptcy Act:

A)debtors may voluntarily seek reorganization.
B)creditors cannot participate in bankruptcy procedures.
C)creditors cannot petition for an involuntary action.
D)debtors have to cease their business operations as soon as a petition is filed.

Question 53

Which of the following debt collection practices would be legal under the federal Fair Debt Collection Practices Act?

A)Using physical force on a debtor to recover debt
B)Making repeated phone calls to a debtor with the intent to harass
C)Contacting a debtor in an unfair,abusive,or deceptive manner
D)Contacting third parties for the purpose of locating a debtor

Question 54

Briefly describe the doctrine of unconscionability.

Question 55

Describe in brief the functions of the Consumer Financial Protection Bureau (CFPB).