Deck 18: Consumer Protection

Question 1

The Fair Credit Reporting Act protects the consumer by limiting the amount of interest charged on credit card accounts.

Answer 1

False

Question 2

Unsolicited merchandise sent by U.S.mail may be kept by the recipient without incurring any obligation to the sender.

Answer 2

True

Question 3

A car loan is an example of a closed-end credit transaction.

Answer 3

True

Question 4

If a used car is sold without a warranty,the label must state that the car is being sold "as is."

Question 5

State may regulate odometer tampering,but there is no federal law that does so.

Question 6

The U.S.Supreme Court has ruled that compounded drugs are illegal.

Question 7

The Wool Products Labeling Act is an example of a federal law regulating the labeling of clothing.

Question 8

In general,consumer protection law at the state level is more stringent than federal law.

Question 9

In some cases,even if a manufacturer provides warnings as mandated by the Food and Drug Administration,it may still be fund liable under state product liability law for failure to warn if reasonable manufacturers would have done more.

Question 10

The labeling of medical devices is under the jurisdiction of the Food and Drug Administration.

Question 11

Congress has made it a federal crime to engage in the extortionate extension of credit.

Question 12

The Food and Drug Administration has the authority to require that certain drugs be available only by prescription.

Question 13

The Fair Debt Collection Practices Act applies only to third-party debt collectors.

Question 14

The Fair Credit Reporting Act does not give consumers a right to have corrected copies of their credit reports sent to creditors.

Question 15

The Truth-in-Lending Act limits credit card liability to $50 per card for unauthorized charges made before a card issuer is notified of a lost or stolen card.

Question 16

Executive branch regulatory agencies are located in cabinet departments.

Question 17

The Truth-in-Lending Act (TILA)is intended to assure a truthful loan application by the consumer.

Question 18

Courts usually consider advertisements to be only an offer to deal.

Question 19

The Federal Commerce Commission has adopted guidelines specifying when manufacturers and marketers can label their products "Made in USA."

Question 20

Under the Magnuson-Moss Warranty Act,a seller who offers a written warranty on goods must provide a full warranty.

Question 21

The _________ requires financial institutions to provide privacy protections to consumers.

A)Privacy Protection Act
B)Smith-Davis Financial Institutions Act
C)Glover Privacy in Action Act
D)None of the responses are correct.

Question 22

The Consumer Credit Protection Act limits the garnishment of wages to the lesser of _____ of the debtor's disposable earnings for the week or the amount by which disposable earnings for the week exceed _____ times the current federal minimum hourly wage..

A)10%,30
B)25%,30
C)30%,25
D)35%,40

Question 23

Which of the following are not required under federal law to carry nutrition information?

A)Plain coffee
B)Bulk food
C)Delicatessen items
D)All of the responses are correct

Question 24

The Equal Credit Opportunity Act originally intended to prevent discrimination against ________ in the advancement of credit.

A)religion
B)age
C)women
D)color

Question 25

Caveat emptor means,

A)"let the buyer beware."
B)"let the buyer prevail."
C)"let the market decide."
D)"let the seller beware."

Question 26

The FTC now requires used car sellers to affix a ________ to the cars that they sell.

A)fixed price
B)buyer's guide
C)base price
D)discount price

Question 27

In a _________,the seller offers the buyer a commission,rebate,or discount for furnishing the seller with a list of additional prospective customers.

A)pyramid sale
B)referral sale
C)commission sale
D)rebate sale

Question 28

The _________ has the primary responsibility for regulating the packaging and labeling of commodities other than food,drugs,medical devices,and cosmetics.

A)Federal Commerce Commission
B)Federal Interstate Regulating Commission
C)Federal Trade Commission
D)Uniform Commodity Commission

Question 29

Which of the following qualifies as a food additive?

A)Any insect
B)Pesticide residue
C)Added substances from packaging
D)Both pesticide residue and any added substances from packaging

Question 30

Venditur emptor means,

A)"let the buyer beware."
B)"le the buyer prevail."
C)"let the market decide."
D)"let the seller beware."

Question 31

Under the Fair Credit Billing Act,open-end consumer credit plans must make certain disclosures

A)annually.
B)when the account is opened.
C)in periodic billing statements.
D)all of the responses are correct

Question 32

Which of the following are roles of the Department of Agriculture?

A)Inspecting facilities engaged in the slaughtering or processing of meat,poultry,and egg products.
B)Preventing the sale of mislabeled meat or poultry products.
C)Offering producers a voluntary grading program for various agricultural products.
D)All of the responses are correct.

Question 33

The Truth-in-Lending Act provides consumers a right of ________ whenever their home is used as collateral for credit except for original construction or acquisition.

A)rescission
B)redemption
C)new mortgage
D)refinance

Question 34

Before implementing a mandatory safety standard,the Consumer Product Safety Commission must find that ________ are inadequate.

A)voluntary standards
B)safety guidelines
C)product designs
D)warnings

Question 35

Which of the following areas is not regulated by consumer protection laws?

A)Debt collection practices.
B)Consumer spending.
C)Health and safety.
D)Unfairness and deception.

Question 36

Which of the following categories of drugs cannot be approved by the Food and Drug Administration?

A)Schedule 1
B)Schedule C
C)Schedule 2
D)ScheduleD.

Question 37

The ________ has the power to issue cease and desist orders to advertisers.

A)Food and Drug Administration
B)Consumer Product Safety Commission
C)Federal Communications Commission
D)Federal Trade Commission

Question 38

The Food and Drug Administration shares with the _________ the responsibility for regulating pesticide residues on food.

A)Department of Agriculture.
B)Department of Insecticide.
C)Federal Trade Commission.
D)Environmental Protection Agency.

Question 39

The Federal Trade Commission has ________commissioners who serve for _______-year terms.

A)seven,four
B)ten,five
C)six,six
D)five,seven

Question 40

The ________ forbids the use of any false "description or representation" in connection with any goods or services.

A)Consumer Protection Act
B)Lanham Trademark Act
C)Fair Credit Transaction Act
D)Electronic Representation Act

Question 41

The ________ controls the disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available and avoid the uninformed use of credit.

A)Fair Credit Billing Act
B)Equal Credit Opportunity Act
C)Fair Credit Reporting Act
D)Truth-in-Lending Act

Question 42

Discuss the purpose of the purpose of the Consumer Product Safety Commission and the process by which it sets mandatory safety standards.Discuss fully.

Question 43

There is much controversy regarding genetically modified food.What potential problems are involved with the use of genetically modified food? Discuss the pros and cons.What laws have been proposed in this country regarding genetically modified food? What action has the European Parliament taken regarding generically modified food?

Question 44

The ________ has primary responsibility for regulating the labeling of food

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

Question 45

The first step in the FDA approval process for new drugs is their classification by the ________ based on currently accepted medical use and potential for abuse.

A)National Institute of Health
B)The Consumer Product Safety Commission
C)Drug Enforcement Agency
D)Congress

Question 46

Fact pattern 18-1
Cream X has been approved by the Food and Drug Administration for the treatment of eczema.Dr.Glover discovers,however,that it is also great for a number of other things including the removal of wrinkles and cellulite.The cream is applied to the skin,not ingested.He starts prescribing it for those purposes and has a great increase in patients.Dr.Smith starts to loose a number of patients to Dr.Glover and becomes grumpy when she hears why Dr.Smith is gaining in popularity.Dr.Smith decides to complain about the practice but does not know quite what to do about it.
Refer to fact pattern 18-1.Which of the following is true regarding the legality of Dr.Glover prescribing Cream X for the elimination of wrinkles and cellulite?

A)It is legal,and the Food and Drug Administration would take no action against him.
B)It is legal only because the cream is not ingested.
C)It is legal only if Dr.Glover refrains from advertising his use of the drug.
D)It is illegal.

Question 47

Drug companies provide financial support to academic researchers in the form of employment or consulting fees,research funds,Money to attend symposiums,and speaking honoraria.Do you believe that this is ethical? Why or why not? What standards to you believe should be in place?

Question 48

Which of the following is not true regarding the Fair Credit Reporting Act?

A)It requires credit bureaus to investigate disputed information in credit reports.
B)It imposes no duties upon third persons who furnish information to credit reporting agencies.
C)It contains restrictions on reports that contain information on character and reputation.
D)It gives consumers a right to have corrected copies of their credit reports sent to creditors.

Question 49

Fact pattern 18-2
Janie is a pharmacist in Small City.She begins mixing up a mixture to treat indigestion that is ordered by several of the local physicians.She advertises the mixture,and she and prescribing physicians see a large increase in business.Other pharmacists who do not want to bother with mixing begin to complain.Janie takes the position that it is a free country,and she can do as she pleases since there is no evidence that the mixture is harmful; and it is particularly helpful for those individuals who have had reactions to other indigestion medication.
Refer to fact pattern 18-2.Is it legal for her to advertise the product?

A)No
B)Only if it has been approved by the Food and Drug Administration
C)Only if it is sold for under $50
D)Yes

Question 50

Bobby develops a way to clone catfish.He finds that this is a very economical way to run his fish business.He begins selling the catfish to grocers in the area.Other fish producers,who do not know how to clone the fish,are very annoyed with Bobby and start to complain.They tell Bobby that he is violating federal law by not placing a label on his fish notifying consumes that the fish are cloned.Is Bobby in violation of the law?

A)Bobby is not in violation of federal law,but he should check to see if his state has such a requirement because labeling legislation has been introduce in some states.
B)Bobby is not in violation of federal law nor have any states made any effort to require notification of cloned products.
C)Bobby is in violation of federal law by not notifying consumers through labeling of the cloning.
D)Bobby is in violation of federal law by not notifying consumers through labeling of the cloning only if there is evidence that the nutritional value of the fish is less than that of noncloned fish.

Question 51

Which of the following Acts is not part of the Consumer Credit Protection Act?

A)Truth-in-Lending Act.
B)Interstate Land Sales Full Disclosure Act.
C)Fair Credit Billing Act.
D)Electronic Fund Transfer Act.

Question 52

The FTC has the authority to issue ________ to advertisers who employ deceptive claims or false testimonials in violation of Section 5 of the Federal Trade Commission Act.

A)cease and desist orders
B)consent decrees
C)caveat emptor
D)citations

Question 53

Facto markets a prescription drug for depression called New Life.In a television advertisement they claim that the product will make a person "feel like a kid again." At the close of the advertisement,a disclaimer runs at the bottom of the screen in small print stating "use only as directed by a physician," and "call for details." The product has effectiveness disclaimers and warnings printed on the product package,such as "may cause weight gain" and "may cause heart valve problems," but these don't appear in any of the media advertising.No further information regarding the company or ways to provide information regarding the drug was given.What are the restrictions placed on prescription advertising by the FDA? Did Facto comply with those restrictions? What are the ethical considerations? Discuss fully.

Question 54

When Congress passed the Food and Drug Administration Modernization Act,it did not

A)affect the testing of new drugs on humans.
B)speed up the approval of new drugs and medical devices.
C)permit the FDA to use outside reviewers to evaluate medical devices.
D)include protections for distribution of some information concerning off-label uses of drugs.

Question 55

Which of the following buyer's protections is not required by a "full" warranty under the Magnuson-Moss Warranty Act?

A)The right to free repair of the product within a reasonable time.
B)The right to elect either a full refund or replacement after a reasonable number of attempts to fix the product.
C)The warrantor may not exclude or limit damages for breach of warranty unless such exclusions are conspicuous on the face of the warranty.
D)All the above are required by a "full" warranty under the Act.

Question 56

Fact pattern 18-1
Cream X has been approved by the Food and Drug Administration for the treatment of eczema.Dr.Glover discovers,however,that it is also great for a number of other things including the removal of wrinkles and cellulite.The cream is applied to the skin,not ingested.He starts prescribing it for those purposes and has a great increase in patients.Dr.Smith starts to loose a number of patients to Dr.Glover and becomes grumpy when she hears why Dr.Smith is gaining in popularity.Dr.Smith decides to complain about the practice but does not know quite what to do about it.
Refer to fact pattern 18-1.Which of the following is the appropriate term for Dr.Glover's prescribing of Cream X for the elimination of wrinkles and cellulite?

A)Compounding use
B)Non-acknowledged use
C)Derivative use
D)Off-label use

Question 57

What is the purpose of the Truth in Lending Act.When does it apply? Set forth two typical transactions covered by the law.

Question 58

________ is the legal procedure by which a creditor may collect a debt by attaching a portion of a debtor's weekly wages.

A)Rescission
B)Garnishment
C)Joinder
D)Attachment

Question 59

Under the Fair Credit Reporting Act (FCRA)as amended by the Fair and Accurate Credit Transactions Act of 2003 (FACT Act),consumers can request information about themselves except

A) the source of the information.
B) credit information.
C) medical information.
D) any recent recipients of a report.

Question 60

Fact pattern 18-2
Janie is a pharmacist in Small City.She begins mixing up a mixture to treat indigestion that is ordered by several of the local physicians.She advertises the mixture,and she and prescribing physicians see a large increase in business.Other pharmacists who do not want to bother with mixing begin to complain.Janie takes the position that it is a free country,and she can do as she pleases since there is no evidence that the mixture is harmful; and it is particularly helpful for those individuals who have had reactions to other indigestion medication.
Refer to fact pattern 18-2.Which of the following is the term that best describes the process Janie uses in preparing the drug?

A)Combining
B)Compounding
C)Integrating
D)Servicing

Question 61

When does an advertiser violate the Federal Trade Commission bait and switch advertising rules?