Deck 45: Consumer Law

Question 1

Which of the following are interpretations of consumer laws created by the Federal Trade Commission to encourage businesses to stop unlawful behavior?

A) Consumer guides
B) Consumer recommendations
C) Industry interpretations
D) Industry guides
E) Business requirements

Answer 1

Industry guides

Question 2

Under the Equal Credit Opportunity Act, creditors may require that a spouse cosign a loan application regardless of the credit worthiness of the applicant.

Answer 2

False

Question 3

A ______ scheme involves websites attracting users by having them click on ads that appear to be, but are actually not, from well-known brands with the sites then installing spyware or viruses on computers.

A) Click-and-install
B) Bait-and-switch
C) Bait-and-click
D) Deceptive-click
E) Click-to-deceit

Answer 3

Bait-and-click

Question 4

In Quebec all public signs and advertisements must be solely in French.

Question 5

The Can-Spam Act prohibits sending consumers e-mail messages with no option concerning whether they receive messages in the future.

Question 6

Which of the following was the result at the Supreme Court level in Food and Drug Administration v. Brown & Williamson Tobacco Corporation, the case in the text involving whether the Federal Food, Drug, and Cosmetic Act (FFDCA) authorized the Food and Drug Administration (FDA) to regulate tobacco?

A) The Court ruled that the FDA had the authority to regulate tobacco because nicotine, one of its main components, is a drug.
B) The Court ruled that the FDA had the authority to regulate tobacco because cigarettes and smokeless tobacco are drug delivery devices of the drug nicotine.
C) The Court ruled that the FDA had the authority to regulate tobacco because the FFDCA implies that the FDA retains the discretion to determine items within its sphere of regulation.
D) The Court ruled that the FDA had the authority to regulate tobacco because nicotine, one of its main components, is a drug but that the FDA exceeded the scope of its regulatory powers in the issuance of excessively strict regulations regarding the marketing of tobacco.
E) The Court ruled that the FDA lacked the authority to regulate tobacco because Congress had enacted its own legislation regulating tobacco and had not extended that right to the FDA.

Question 7

When was the Federal Trade Commission created by Congress?

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

Question 8

State laws in regard to protection of purchasers of used cars are preempted by federal law.

Question 9

Which of the following was the result in Federal Trade Commission v. Check Investors Inc., the case in the text involving whether, in an effort to collect bad check charges, the defendant violated the Fair Debt Collections Act through tactics such as telling check writers that they would be arrested and prosecuted?

A) That the defendant did not violate the act because only truthful statements were made in that the check writers were subject to arrest and prosecution.
B) That the defendant did not violate the act because the check writers committed theft and were not, therefore, classified as consumers protected by the act.
C) That the defendant did not violate the act because the act specifically exempts collection of bad checks.
D) That the defendant violated the act because it could only legally collect payments on checks, not determine whether check writers were criminals and then employ law enforcement tactics to collect.
E) That the defendant violated the act because it failed to inform the check writers that they were constitutionally entitled to a jury trial before incarceration.

Question 10

Which of the following 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) Agreed stoppage
B) Command order
C) Consent order
D) Agreed order
E) Approved acknowledgement

Question 11

Under the FTA, the existence of deceptive advertisements is enough alone to prove damages for recovery when individual civil suits are filed for deceptive practices.

Question 12

Canada's cigarette labeling requirements are less strict than those in the U.S.

Question 13

What type of agency is the Federal Trade Commission?

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

Question 14

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

Question 15

Federal Trade Commission regulations outlaw ads that exert a moral pressure to purchase a product or service.

Question 16

If a person believes that she is a victim of identity theft, she may contact the FTC and an alert will be placed in her credit files.

Question 17

Under the Equal Credit Opportunity Act, creditors may not deny credit on the basis of whether the applicant receives public assistance benefits.

Question 18

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 19

Which of the following was the result on appeal in Gotlin v. Lederman, the case in the text involving whether the defendants misrepresented the effectiveness of a particular form of cancer treatment, Fractionated Stereotactic Radiosurgery (FSR), in violation of New York's consumer protection law?

A) The court ruled that plaintiff was unable to recover because there was no evidence of deceptive statements made on the part of the defendants.
B) The court ruled that the plaintiff was unable to recover because the consumer protection law at issue did not apply to the provision of medical services.
C) The court ruled that the plaintiff was unable to recover because of the absence of expert medical testimony establishing that the treatment was ineffective.
D) The court ruled that as a matter of law the plaintiff was entitled to recover because evidence indicating the ineffectiveness of the treatment was presented.
E) The court ruled that the case was wrongfully dismissed prior to trial because issues of material fact were presented regarding the plaintiff's injuries and whether the marketing of the treatment was deceptive treatment.

Question 20

Which of the following is true regarding regulation of advertising in China?

A) China does not regulate advertising.
B) A draft law lessens restrictions on advertising.
C) For many years, China did not regulate advertising, but a new law is in effect imposing strict restrictions on advertising meant to protect consumers.
D) For many years, China did not regulate advertising, but a new law is in effect imposing strict restrictions on advertising meant to protect consumers as well as businesses.
E) A new draft law in China does not specify the type of person that a deceptive advertisement would affect, such as a reasonable consumer.

Question 21

If a credit card company sends a person an unsolicited card in the mail and the card is stolen, for how much can the person be held liable to the credit card company?

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

Question 22

Under which of the following circumstances may a credit card company not bill a consumer for a damaged item that is unknowingly purchased with the card?

A) The consumer purchased the item in the same state as the consumer's home or within 100 miles of the consumer's home.
B) The 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) The 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) The 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 had a history of providing defective merchandise.
E) The credit card company may always charge the consumer, and it is up to the consumer to get a refund from the merchant.

Question 23

Which of the following is not a federal law regulating 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 24

Which of the following is the term used when an advertisement is true but incomplete?

A) Inaccurate truth
B) Rule 8(a) violation
C) Rule 3 violation
D) Significant untruth
E) Half-truth

Question 25

If a person notifies the credit card company of a stolen card before unauthorized charges are made, for how much can the person be held liable to the credit card company?

A) $500
B) $300
C) $250
D) $50
E) 0

Question 26

Which of the following does the Federal Trade Commission require if a company wishes to claim that its products are "Made in the U.S.A."?

A) That the claim not be used unless all, or virtually all, of the product's components and labor are of U.S. origin.
B) That the claim not be used unless absolutely all of the components and labor of the product are of U.S. origin.
C) That the claim not be used unless at least 75% of the product's components and labor are of U.S. origin.
D) That the claim not be used unless at least 50% of the product's components and labor are of U.S. origin.
E) That the claim not be used unless at least 55% of the product's labor and components are from Canada, Mexico, or the United States.

Question 27

To which of the following loans does the Truth-in Lending Act apply?

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 natural person, loans to a limited partnership, loans to a general partnership, and loans to a corporation
E) All loans

Question 28

Which of the following governs the issuance of credit reports?

A) The Prohibited Report Act
B) The Fair Credit Reporting Act
C) The Unfair Reporting Act
D) The Loan Reporting Act
E) The Credit Protection Act

Question 29

State consumer protection laws prohibiting used-car fraud may be known as ______ laws.

A) Orange
B) Prune
C) Lemon
D) Onion
E) Lime

Question 30

How does NAFTA define "Made in the U.S.A."?

A) As a product for which at least 55 percent of the labor and components are from Canada, Mexico, or the United States.
B) As a product for which "all or virtually all" of the components and labor are of U.S. origin.
C) As a product for which at least 50 percent of the components and labor are of U.S. origin.
D) As a product for which at least 75 percent of the components and labor are of U.S. origin.
E) As a product for which at least 75 percent of the components and labor are of from Canada, Mexico, or the United States.

Question 31

In order to come within the scope of the Truth-in-Lending Act, a loan must be in the amount of ______ 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 32

Which of the following is the term used for the requirement of the Federal Trade Commission that advertisers have a reasonable basis for claims made in advertisements?

A) Ad substantiation
B) Ad verification
C) Proof of ad veracity
D) Illustration of ad veracity
E) Acknowledgement of ad veracity

Question 33

Which of the following permits repeated transactions and assesses a finance charge on unpaid balances?

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

Question 34

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 35

Which of the following is the appropriate term for 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) Repeal advertising
C) Notice publication
D) Notice advertising
E) Action publication

Question 36

Which of the following is not expressly prohibited by the Fair Debt Collection Practices Act?

A) Using obscene language toward a customer.
B) Contacting a debtor who has notified the collection agency that he or she wants no contact with the agency.
C) Contacting the debtor after 8 p.m.
D) Contacting the debtor before 8 a.m.
E) Misrepresenting the collection agency as a lawyer or a police officer.

Question 37

For how long does registration on the Federal Trade Commission's "Do Not Call" registry last?

A) Two years
B) Three years
C) Four years
D) Five years
E) There is no set expiration date

Question 38

Which of the following was passed in response to the growing number of identity theft cases?

A) The Identity Crisis Act
B) The Fair and Accurate Credit Transactions Act
C) The Fair Credit Billing Act
D) The Credit Card Fraud Act
E) The Fair Credit Reporting Act

Question 39

Which of the following is false 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 40

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 through the U.S. mail?

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 41

"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. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Barry's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he 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 42

"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. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Barry's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he 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 43

"Miracle Pill." Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and that 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 Commission disagreed and issued a formal administrative complaint against her. After a hearing, an order was issued 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 ordering that Katie stop advertising and selling the pills?

A) A stop gap order
B) An approved order
C) An agency acknowledged order
D) An agency requirements order
E) A cease-and-desist order

Question 44

"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. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Barry's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he 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) Advertise-and-deny
B) Claim-and-refuse
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 45

Which of the following is false regarding the regulation of tobacco?

A) Congress has given the FDA authority to regulate tobacco use.
B) The Public Health Cigarette Smoking Act prohibits radio cigarette advertisements.
C) The Public Health Cigarette Smoking Act prohibits television cigarette advertisements.
D) The Smokeless Tobacco Act prohibits radio cigarette advertisements.
E) The Smokeless Tobacco Act prohibits television cigarette advertisements.

Question 46

Which of the following is the agency responsible for enforcing the Federal Food, Drug, and Cosmetic Act?

A) The U.S. Food and Drug Administration
B) The Federal Consumer Administration
C) The Federal Consumption Administration
D) The Federal Safety Commission
E) The U.S. Uniform Drug Commission

Question 47

"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. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Barry's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he offered for sale.

-Under the Truth-in-Lending Act which of the following types 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 48

"The Burial Emporium." Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He generally 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 there has been a recent death 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. Sometimes, Fred varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. 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) There is no problem with Fred's actions 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 in which to cancel such a contract, but that is only because funeral services are involved.
C) There is no problem with Fred's actions 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 in which to cancel.
E) Because door-to-door sales are involved, consumers must have three days in which to cancel purchases.

Question 49

Major credit reporting agencies are now required to provide consumers with a free copy of their credit reports every ____.

A) Three years
B) Two years
C) 18 months
D) 12 months
E) 6 months

Question 50

Which of the following is false regarding the Consumer Product Safety Act?

A) It enforces mandatory standards regarding product safety.
B) It usually issues product recalls on its own without the involvement of the companies involved.
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 51

"The Burial Emporium." Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He generally 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 there has been a recent death 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. Sometimes, Fred varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. 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 tactic of offering one flat price for funeral services with no itemization?

A) Federal law does not prohibit that practice.
B) That practice is prohibited under federal law in funeral home situations.
C) That practice is prohibited under federal law in all situations involving a mix of goods and services.
D) That practice is prohibited under federal law in all situations involving a mix of goods and services costing $5,000 or more.
E) That practice is prohibited by federal law unless consumers receive a 10% discount as compared to the average price of funeral services in his state.

Question 52

Which of the following was the first federal legislation passed regulating food and drugs?

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

Question 53

"The Burial Emporium." Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He generally 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 there has been a recent death 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. Sometimes, Fred varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. 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 telling potential customers on the telephone costs in small increments without revealing the total price?

A) Under federal law there is no problem with his practice because any consumer who does not want to talk to him can simply hang up.
B) According to a rule of the Federal Trade Commission, a telemarketer must tell the total price of goods being sold.
C) According to a rule of the Federal Trade Commission, a telemarketer must only give the total price if the consumer directly inquires about that matter. Therefore, it is smart for Fred to call when people are tired and less likely to ask questions.
D) According to a rule of the 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 rule of the Federal Trade Commission that is specific to funeral home directors, direct phone solicitation must include the total price of any services offered; therefore, Fred is in violation.

Question 54

"Miracle Pill." Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and that 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 Commission disagreed and issued a formal administrative complaint against her. After a hearing, an order was issued 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 cease-and-desist order issued by the Federal Trade Commission and upheld by the courts is violated, which of the following is the fine that the Federal Trade Commission may impose?

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

Question 55

"Miracle Pill." Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and that 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 Commission disagreed and issued a formal administrative complaint against her. After a hearing, an order was issued 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) All the commissioners of the Federal Trade Commission

Question 56

"The Burial Emporium." Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He generally 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 there has been a recent death 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. Sometimes, Fred varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. 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) There is no problem with that practice under federal law.
B) There is no problem with that practice under federal law so long as Fred informs customers of that prior to entering into any sales talk and negotiation.
C) That practice is prohibited by federal law.
D) That practice is prohibited by federal law unless Fred gives a 10% discount as compared to the average price of funeral services in his state.
E) That practice is prohibited by federal law unless cremation services are involved in which case Fred may link the cremation services with the purchase of other goods and services because cremation in and of itself results in little profit.

Question 57

Which of the following is the only authorized site for government-required free credit reports from the three major reporting agencies?

A) AnnualCreditReport.com
B) FreeReport.com
C) AnnualCredit.edu
D) GovCredit.gov
E) KnowRights.org

Question 58

"Miracle Pill." Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and that 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 Commission disagreed and issued a formal administrative complaint against her. After a hearing, an order was issued 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 a term for Katie's defense involving generalities and clear exaggerations allowable by law?

A) Exaltation
B) Puffing
C) Crowing
D) Swelling
E) Boasting

Question 59

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

Question 60

Which of the following conducts investigations into the safety of motor vehicles?

A) The Vehicle Investigation Commission
B) The Vehicle Safety Administration
C) The National Highway Safety Administration
D) The Motorized Safety Administration
E) The Transportation Safety Commission

Question 61

What is required by the Telemarketing Sales Rule of 1995?

Question 62

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

Question 63

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 64

What is required by federal law in regard to mail-order sales by the 1975 Mail-Order rule as amended by the Mail or Telephone Order Merchandise rule of 1993?