Deck 18: Privacy and Consumer Protection

Question 1

Use and transfer of personal property by individuals in the U.S. is unrestricted.

Answer 1

False
Explanation: The exclusive legal fence of property protects us in various ways, principally in the possession, use, and transfer of what we own. Yet we cannot use or transfer what we own without limits. We must respect the equal property right of others and not interfere with the exclusive legal fence that protects what belongs to them.

Question 2

A report containing information solely as to transactions between the consumer and the person making the report is not a "consumer report" covered by the Fair Credit Reporting Act (FCRA).

Answer 2

True
Explanation: The Fair Credit Reporting Act (FCRA) provides that a report containing information solely as to transactions or experiences between the consumer and the person making the report is not a "consumer report" covered by the Act.

Question 3

Consumer protection laws arise when legislatures define an ambiguous legal boundary between certain types of sellers and buyers in ways that favor buyers.

Answer 3

True
Explanation: Consumer protection laws arise when legislatures define an ambiguous legal boundary between certain types of sellers and buyers in ways that favor buyers.

Question 4

Recording fees and taxes are not considered in a loan's finance charge.

Question 5

Congress has specified that the Fair Debt Collection Practices Act preempts any state laws regulating debt collection in an effort to standardize enforcement in the industry.

Question 6

Industry guides issued by the FTC are formal and legally binding.

Question 7

In a bankruptcy proceeding against an individual, the individual's property is liquidated under Chapter 7 of the bankruptcy law.

Question 8

Using zip codes as a factor in denying credit has been determined to be illegal by the FTC due to possible discrimination that could result.

Question 9

The FTC commissioners are appointed by the president.

Question 10

Marie is a married woman with a good job. If she applies for credit solely in her own name, the credit company may not deny her individual credit if she is creditworthy, but the credit company is permitted to ask if she is married to maintain a complete file on her.

Question 11

The Truth-in-Lending Act covers transactions in which the debtor is a corporation or a business entity,

Question 12

Under the cease and desist order issued by the Bureau of Consumer Protection, a party assents to sign an order which restrains the promotional activity deemed offensive.

Question 13

The Fair Credit Reporting Act regulates credit reports on both consumers and businesses.

Question 14

The major duty of the Magnuson-Moss Warranty Act is to require the FTC to issue rules regarding consumer product warranties.

Question 15

The Fair Debt Collection Practices Act applies only to consumer debt collections.

Question 16

A debt collector is not required to disclose his/her identity as a debt collector to delinquent customers they call when attempting to collect a legitimate, delinquent debt.

Question 17

The Consumer Financial Protection Bureau (CFPB) is run by a director appointed by the president with the advice and consent of the Senate.

Question 18

Trade practice regulation ensures fair competition by preventing those who would deceive consumers from diverting trade from those who compete honestly.

Question 19

The basic penalty for trade practice violations under the FTC Act is a civil fine of not more than $10,000 per violation.

Question 20

The Fair Debt Collection Practices Act exempts attorneys who collect consumer debts on behalf of their clients.

Question 21

Upon request by the FTC, the federal courts may assess fines for each of the following EXCEPT:

A) when companies violate the cease and desist order.
B) when companies agree to fines as part of a cease and desist order.
C) when companies knowingly violate a prior FTC order against others.
D) when companies violate a trade regulation rule.
E) when companies agree to fines as part of a consent order.

Question 22

Under the Right to Financial Privacy Act of 1978, the individual depositor has the right to challenge an agency's legal basis for seeking the financial records.

Question 23

In a bankruptcy proceeding against an individual, debts are adjusted under Chapter 13 of the bankruptcy law.

Question 24

The courts may assess fines against those found to have engaged in deceptive advertising upon request from the:

A) Bureau of Consumer Protection only.
B) Bureau of Consumer Protection and/or the Home Department.
C) Bureau of Consumer Protection, the FTC, and the Justice Department.
D) FTC or the Justice Department.
E) FTC and the Home Department.

Question 25

Under bankruptcy laws, certain creditors receive priority over others in the distribution of a debtor's assets.

Question 26

The trustee in a bankruptcy is elected by the debtor to represent the debtor's estate during the bankruptcy.

Question 27

Most cases brought by the Bureau of Consumer Protection are settled using:

A) cease and desist orders.
B) arbitration.
C) mediation.
D) injunction.
E) consent orders.

Question 28

Most of the laws which apply the concepts of privacy protect the individual from being overwhelmed by the intrusive power of the government and other large organizations.

Question 29

When the Bureau of Consumer Protection prosecutes a violator for violation of the FTC, the violator is called a(n):

A) respondent.
B) claimant.
C) appellant.
D) plaintiff.
E) pursuer.

Question 30

ECNAL Corp. manufactures bicycle parts and equipment. One of their new products, the Slipstream tire, is advertised to be 5 percent faster than the competition due to a new rubber compound used that reduces road drag and friction significantly. After receiving complaints of fraud, the FTC determines that the tire is made from rubber similar to that found in most bicycle tires and it does not, in fact, reduce road drag and friction any more than other tires on the market. The FTC has ordered ECNAL to include in their advertising the truth about the tire materials and their quality and specifically state that the Slipstream tire does not improve speed or performance. The FTC has ordered ENCAL to engage in:

A) corrective advertising.
B) cease and desist advertising.
C) comparative advertising.
D) parody advertising.
E) social advertising.

Question 31

The Federal Food, Drug and Cosmetic Act is administered by the FTC.

Question 32

The national "Do Not Call" list was created by a(n):

A) Congressional statute.
B) FTC trade regulation.
C) executive order.
D) uniform statute established on the state's level.
E) procedural law.

Question 33

Voluntary bankruptcy proceedings are filed by the creditor.

Question 34

In advising advertisers about how it determines deceptive trade practices, the Federal Trade Commission looks at all of the following EXCEPT:

A) the ad in context rather than focusing on certain words in the ad.
B) implied claims-those that are literally made in the ad.
C) what the ad does not say.
D) whether the claim would be "material."
E) whether the advertiser has sufficient evidence to support the claims in the ad.

Question 35

The regulatory center for federal consumer protection is the:

A) United States Consumer Product Safety Commission.
B) Bureau of Consumer Protection.
C) Federal Consumer Protection Agency.
D) Bureau of Consumer Trade.
E) Department of Consumer Affairs.

Question 36

In the past, courts have mainly used:

A) statutory law to resolve consumer disputes.
B) constitutional law to resolve consumer disputes.
C) administrative regulations to resolve consumer disputes.
D) principles of common law to resolve consumer disputes.
E) principles of procedural law to resolve consumer disputes.

Question 37

Section 5 of the _____ Act prohibits unfair or deceptive acts or trade practices.

A) Equal Credit Opportunity
B) Fair Credit Reporting
C) Truth-in-Lending
D) Fair Debt Collection Practices
E) Federal Trade Commission

Question 38

Bankruptcy laws are subject to regulatory interpretation.

Question 39

With regard to the Magnuson-Moss Warranty Act, under full warranties, a warrantor must replace a defective product within a reasonable time and at no charge, barring the shipping costs.

Question 40

The Fair Credit Billing Act limits a customer's liability for a thief's use of a stolen credit card to a maximum of $500.

Question 41

If there are violations of the Equal Credit Opportunity Act (ECOA), affected consumers:

A) have the right to file a petition to the president to seek redressal.
B) cannot seek public enforcement by the FTC but have the right to sue under private remedies provided in the Act.
C) have to depend on public enforcement by the FTC as they do not have the right to sue.
D) have the right to sue as well as the right to seek public enforcement by the FTC.
E) have the right to resort to intimidatory tactics against the guilty party.

Question 42

The "_____" provisions of the FCRA requires that consumers who are seeking credit for personal, family, or household purposes be informed if their application is denied because of an adverse credit report.

A) server
B) subscriber
C) access
D) content
E) user

Question 43

Which of the following regulates the consumer credit reporting industry?

A) The Equal Credit Opportunity Act
B) The Fair Credit Reporting Act
C) The Truth-in-Lending Act
D) The Fair Debt Collection Practices Act
E) The Uniform Consumer Leases Act

Question 44

The Federal Truth-in-Lending Act:

A) sets minimum and maximum interest rates for various types of loans.
B) mandates that a financing statement be prepared when credit is extended by a business to a consumer.
C) applies to personal property loans such as car or education loans, but does not apply to real property loans such as a purchase of a house.
D) regulates the advertising used by lenders to attract loan customers.
E) establishes dischargeable debts in cases of bankruptcy.

Question 45

Investigative consumer reports detailing a consumer's character, general reputation, and mode of living are:

A) allowed under the FCRA without restriction should the consumer apply for credit, insurance, or a job.
B) allowed under the FCRA with three days' advance notice to the consumer should the consumer apply for credit, insurance, or a job.
C) allowed under the FCRA with five days' advance notice to the consumer should the consumer apply for credit, insurance, or a job.
D) expressly prohibited under the FCRA because these are not credit-related issues.
E) expressly prohibited under the FCRA because it violates the right to privacy of the consumer.

Question 46

The Fair Credit Reporting Act applies to anyone who prepares or uses a credit report in connection with:

A) opening a bank account.
B) promoting an employee.
C) selling real estate.
D) granting a business license.
E) extending credit.

Question 47

Big Prime is a major lender licensed to lend only in Delaware. Big Prime finds that customers in Sussex County perform far below customers in the other counties. Assume that the county which is heavily into farming and low-paying industrial jobs is 25 percent African-American and has a 40 percent population of legal and illegal immigrants. Big Prime finds that while it is profitable overall, it is losing money on the Sussex County loans. Further research reveals that Sussex County is one of the poorest-performing customer bases nationwide and most companies doing business there are losing money. The board of directors decides not to make any more loans in Sussex County. Big Prime is violating provisions of the:

A) Federal Trade Commission.
B) Fair Credit Reporting Act.
C) Truth-in-Lending Act.
D) Fair Debt Collection Practices Act.
E) Equal Credit Opportunity Act.

Question 48

The total cost of money to a consumer is called the:

A) annual percentage rate.
B) funding charge rate.
C) commercial charge.
D) service charge.
E) finance charge.

Question 49

Although the FTC is an independent regulatory agency, the FTC commissioners often reflect the views of:

A) lawmakers of the upper house of Congress.
B) the common public who elected them to their positions.
C) the consumer products companies.
D) the executive head of the Bureau of Consumer Protection.
E) the president who appointed them.

Question 50

Private remedies for violation of the Equal Credit Opportunity Act include:

A) actual and punitive damages up to $10,000.
B) actual and punitive damages up to $10,000 and attorney's fees.
C) actual damages, punitive damages up to $10,000, and attorney's fees and legal costs.
D) attorney's fees and legal costs.
E) actual damages up to $10,000.

Question 51

Which of the following prevents discrimination in credit extension based on sex, age, race, religion, national origin, marital status, and receipt of welfare payments?

A) The Federal Trade Commission Act
B) The Fair Credit Reporting Act
C) The Truth-in-Lending Act
D) The Fair Debt Collection Practices Act
E) The Equal Credit Opportunity Act

Question 52

The Truth-in-Lending Act gives consumers the right to rescind certain transactions for a period of:

A) seven business days from the date of the transaction or from the date that notice of the right to rescind is given, whichever comes first.
B) three business days from the date of the transaction or from the date that notice of the right to rescind is given, whichever comes first.
C) three business days from the date of the transaction or from the date that notice of the right to rescind is given, whichever is later.
D) seven business days from the date of the transaction or from the date that notice of the right to rescind is given, whichever is later.
E) five business days from the date of the transaction or from the date that notice of the right to rescind is given, whichever is later.

Question 53

Infro, Inc., is a major lender licensed to lend only in Delaware. Infro tracks the payment history of its customers and finds that customers in Sussex County perform far below customers in the other counties. Assume that the county which is heavily into farming and low-paying industrial jobs is 25 percent African-American and has a 40 percent population of legal and illegal immigrants. Infro finds that while it is profitable overall, it is losing money on the Sussex County loans. Further research reveals that Sussex County is one of the poorest-performing customer bases nationwide and that most companies doing business in the county are losing money. The board of directors decides not to make any more loans in Sussex County. Which of the following is true?

A) Before Infro implements its decision, it must get permission from the FTC to do so.
B) If Infro goes through with its decision, it is engaging in redlining which is illegal.
C) If Infro goes through with its decision, it is engaging in reverse redlining which is illegal.
D) Infro, as a private company, is free to make business decisions that are advantageous to the company and has done nothing wrong.
E) If Infro goes through with its decision, it is engaging in liquorlining which is legal.

Question 54

_____ reports refer to reports on a customer's character, general reputation, mode of living, and so on, obtained by personal interviews in the consumer's community.

A) Credit
B) Policy
C) Market research
D) Demographic
E) Investigative consumer

Question 55

Which of the following is true about the penalties and remedies under the Truth-in-Lending Act?

A) There are no civil penalties for violation of Truth-in-Lending.
B) The criminal liability provisions make creditors liable to debtors for an amount equal to twice the finance charge.
C) Creditors may avoid liability in the event they make an error, provided they notify the debtor within 30 days after discovering the error.
D) If creditors avoid liability in making an error by notifying the debtor within 60 days after discovering and correcting the error, the law allows for corrections in favor of the debtor only.
E) Creditors are, in certain cases, allowed to collect finance charges in excess of those actually disclosed.

Question 56

Although the Equal Credit Opportunity Act protects each of the following from discrimination, special emphasis is aimed at preventing discrimination regarding:

A) race.
B) age.
C) sex
D) marital status.
E) religion.

Question 57

Under the FCRA, an injured consumer may only recover:

A) actual damages, attorney's fees, and in some instances speculative damages.
B) actual damages.
C) punitive damages and the attorney's fees but no actual damages.
D) actual damages, attorney's fees, and in some instances punitive damages.
E) actual damages and the attorney's fees but no punitive damages.

Question 58

Which of the following is included in the finance charge?

A) Application fees charged to all applicants for credit.
B) Charges for unanticipated late payments, exceeding a credit limit, or delinquency.
C) Charges imposed by a financial institution for paying items that overdraw an account.
D) Fees charged for participation in a credit plan.
E) Fees for appraisals.

Question 59

Which of the following statements holds true for the term "redlining"?

A) It refers to the practice in which real estate brokers guide prospective home buyers toward or away from certain neighborhoods based on their race.
B) It refers to the perceived business practice of a company providing a product or a service to only the high-value or low-cost customers of that product or service.
C) It refers to a way of encouraging white property owners to sell their houses at a loss by implying that racial minorities were moving into their previously racially segregated neighborhood, thus depressing real estate property values.
D) It refers to an organization targeting minority consumers by charging them more than would be charged to a similarly situated majority consumer.
E) It refers to the refusal of an organization to make loans at all in certain areas where property values are low.

Question 60

A subprime mortgage refers to a mortgage securing a loan that is issued:

A) to consumers at an interest rate lower than the prime interest rate established by the treasury.
B) on property that cannot pass a reasonable safety inspection.
C) to customers with excellent creditworthiness at a lower than ordinary market rate.
D) to consumers who do not qualify for ordinary market rates due to a lack of creditworthiness.
E) to consumers with excellent creditworthiness at a zero rate of interest.

Question 61

Shauna is delinquent on her car loan payment. The debt collector hired by the bank visits Shauna and verbally abuses her using highly offensive language. Shauna is annoyed. However, she has suffered no actual damages. Under the Fair Debt Collection Practices Act, the debt collector:

A) may not be ordered to pay Shauna any money because she suffered no injury.
B) may be ordered to pay up to $1,000 for using obscene language.
C) may be ordered to pay up to $10,000 for having made a house visit.
D) is not liable to Shauna, but the bank that hired the collector is liable to her.
E) is allowed to use intimidatory tactics for habitual offenders.

Question 62

The Consumer Financial Protection Bureau applies to:

A) businesses regulated by the Securities and Exchange Commission.
B) Internet service providers.
C) real estate agents and brokers.
D) insurance companies.
E) banks.

Question 63

Which of the following is considered a nondischargeable bankruptcy debt?

A) Credit card debts
B) Negligence claims
C) Medical expenses
D) Personal loans
E) Intentional torts

Question 64

Explain the concept of corrective advertising.

Question 65

The Magnuson-Moss Warranty Act applies to all consumer product warranties regarding products priced _____ or more.

A) $10
B) $15
C) $20
D) $25
E) $50

Question 66

Violations of the FDCPA entitle the debtor to sue the debt collector for:

A) contemptuous damages, plus court costs and attorney's fees.
B) punitive damages, plus court costs and attorney's fees.
C) actual damages, plus court costs and attorney's fees.
D) speculative damages, plus court costs and attorney's fees.
E) nominal damages, plus court costs and attorney's fees.

Question 67

In a bankruptcy proceeding, which of the following debts will have the lowest priority?

A) Government tax claims.
B) Employees who are owed wages earned within 90 days of filing.
C) Consumers who have paid deposits or prepayments for undelivered goods or services up to $1,800 per consumer.
D) Creditors with claims in the ordinary course of business incurred after the bankruptcy was filed.
E) Creditors with claims that arise from the costs of preserving and administering the debtor's estate.

Question 68

In what way does the Federal Trade Commission (FTC) exercise its quasi-legislative power? What is the nature and effect of this exercise?

Question 69

The Consumer Product Safety Commission may do all of the following EXCEPT:

A) issue recalls of products.
B) ban harmful consumer products.
C) research potential product hazards.
D) protect consumers against unsafe food products.
E) develop mandatory and voluntary standards.

Question 70

The Children's Online Privacy Protection Act (COPPA):

A) prohibits individuals from browsing Web sites related to children.
B) permits companies to collect information on children under the age of 10 without the consent of the parents in case of children's products.
C) prohibits market research agencies from soliciting children under the age of 10 without the consent of the federal government.
D) prohibits online advertisers from creating advertisements considered injurious to children.
E) prohibits the online collection of information on children under the age of 13 without a parent's consent.

Question 71

What are the two related ways in which the Federal Trade Commission (FTC) prosecutes businesses for committing unfair or deceptive trade practices?

Question 72

Under the Electronic Fund Transfer Act, for lost, stolen, or misused automatic teller and check cards (debit cards), the customer is liable for:

A) $600 if reported after two days but before 60 days of consumer's learning of a misuse.
B) amounts over $15 within the consumer's home state if reported within seven business days.
C) $50 if reported within two business days of consumer's learning of a misuse.
D) amounts over $15 within a 100-mile radius of the consumer's home if reported within seven business days.
E) nothing.

Question 73

The _____ places constraints on how certain kinds of information collected by the federal government can be used and limits those to whom the information may be released.

A) Fair Credit Reporting Act
B) Fair Debt Collection Practices Act
C) Right to Financial Privacy Act
D) Electronic Communications Privacy Act
E) Privacy Act

Question 74

The Fair Debt Collection Practices Act:

A) forbids class-action suits but permits individual ones against the debt collectors.
B) permits debt collectors to contact third parties; the collectors must disclose that they are pursuing a debt against the consumer but may not disclose the nature or amount of the debt.
C) permits debt collectors to contact third parties; the collectors must disclose that they are pursuing a debt against the consumer and may also disclose the nature or amount of the debt.
D) forbids debt collectors from contacting third parties regardless of the disclosure or nondisclosure of the existence of the consumer's debt.
E) permits debt collectors to contact third parties but the debt collector may not state that the consumer owes a debt.

Question 75

What are the situations in which fines related to trade practice violations under the FTC Acts are assessed by the federal court?

Question 76

_____ refers to the efforts of a debt collector to locate the debtor which may require that the collector contact third parties who know of the debtor's whereabouts.

A) Bright-line rule
B) Judicial restraint
C) Prior restraint
D) Redlining
E) Skip-tracing

Question 77

The Truth-in-Lending Simplification Act:

A) permits debt collectors to contact third parties but the debt collector may not state that the consumer owes a debt.
B) redefines the necessary items to be included in a finance statement.
C) requires the First Bank of the United States to issue model disclosure forms.
D) requires the imposition of fines for technical breaches of the Act.
E) eliminates statutory penalties for purely technical violations of the Act.

Question 78

In a bankruptcy proceeding, which of the following debts will have the highest creditor priority?

A) Government tax claims.
B) Employees who are owed wages earned within 90 days of filing.
C) Consumers who have paid deposits or prepayments for undelivered goods or services up to $1,800 per consumer.
D) Creditors with claims in the ordinary course of business incurred after the bankruptcy was filed.
E) General creditors.

Question 79

Which of the following is required in order to file a Chapter 13 bankruptcy?

A) Unsecured debts under $360,475 and/or secured debts under $1,081,400.
B) Unsecured debts over $450,000 and/or secured debts over $2,050,000.
C) Debts must simply be in excess of the debtor's assets, regardless of the amount.
D) Assets must simply be in excess of the debtor's debts, regardless of the amount.
E) More than 10 years must have lapsed after the date fixed for the repayment of the debts.

Question 80

What are the chief legal tools of the Bureau of Consumer Protection and how are they enforced?