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Exam 45: Consumer Law

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Question 31

Multiple Choice

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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

F) A) and B)
G) B) and E)

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Question 32

Multiple Choice

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"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.

F) B) and E)
G) A) and B)

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Question 33

True/False

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

What is required by the Telemarketing Sales Rule of 1995?

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?

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.

"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?

"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?

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

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

"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?

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?

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

"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?

The Equal Credit Opportunity Act makes it illegal for creditors to deny credit to individuals on the basis of ____.

"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?

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

When was the Federal Trade Commission created by Congress?

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

Which of the following is false regarding the Telephone Consumer Protection Act of 1991?