Question 1

Which of the following is the fine that the Federal Trade Commission may impose if a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts is violated?

Accepted Answer

A)  $10,000 per violation
B)  $5,000 per violation
C)  $50,000 per violation
D)  $3,000 per violation
E)  $100,000 per violationF) None of the above
G) C) and D)

Question 2

Billy's Widgets has been accused of deceptive advertising.He disagrees with the accusations but just wants the FTC to leave him alone so he can move on and keep running his business.How might he resolve the pending FTC action against him in a timely manner?

Accepted Answer

A)  Approved acknowledgement
B)  Agreed order
C)  Consent order
D)  Command order
E)  Agreed stoppageF) C) and D)
G) None of the above

Question 3

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

Accepted Answer

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;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.
C)  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.
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.F) B) and D)
G) A) and B)

Question 4

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?

Accepted Answer

A)  Acknowledgement of ad veracity
B)  Ad verification
C)  Ad substantiation
D)  Proof of ad veracity
E)  Illustration of ad veracityF) A) and D)
G) None of the above

Question 5

What type of loan was Rosa seeking from XYZ Bank?

Accepted Answer

A)  A closed-end credit line
B)  An approved line
C)  A line of credit
D)  An open-end credit line
E)  A direct lineF) None of the above
G) C) and E)

Question 6

What is the FTC's next step if a company refuses to enter into a consent agreement and the FTC wants to move forward?

Accepted Answer

A)  Protecting meetings
B)  Issuing a command order
C)  A negotiated settlement
D)  A federal court appeal
E)  A formal administrative complaintF) A) and E)
G) A) and B)

Question 7

Regarding Owen's practice of telling potential customers on the telephone costs in small increments without revealing the total price,which of the following statements is true?

Accepted Answer

A)  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,Owen is in violation.
B)  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.
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 Owen to call when people are tired and less likely to ask questions.
D)  According to a rule of the Federal Trade Commission,a telemarketer must tell the total price of goods being sold.
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,Owen is in violation.F) A) and C)
G) A) and B)

Question 8

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

Accepted Answer

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A drug company has a diabetes drug which is FDA approved only to treat diabetes.The company runs ads implying that the drug is very good for treating seizures.Which of the following is true of the drug company's actions:

Accepted Answer

A)  The company has violated the law but can face penalties only if someone was hurt or killed by using the drug to treat seizures.
B)  The company has not violated the law because the claim the drug could treat seizures is an example of puffing.
C)  The company has violated the law because federal drug advertising can promote only federally approved uses of a drug.
D)  The company has not violated the law as long as the drug is actually effective at treating seizures
E)  The company has not violated the law as long as the statement on treating seizures is not exaggeratedF) A) and B)
G) B) and E)

Question 11

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?

Accepted Answer

A)  Notice publication
B)  Repeal advertising
C)  Notice advertising
D)  Corrective advertising
E)  Action publicationF) C) and E)
G) A) and B)

Question 12

An advertisement that is true but incomplete is known as which of the following?

Accepted Answer

A)  Rule 8a. violation
B)  Half-truth
C)  Significant untruth
D)  Inaccurate truth
E)  Rule 3 violationF) B) and E)
G) A) and B)

Question 13

Which of the following is not a federal law regulating product labeling?

Accepted Answer

A)  The Imported Canine and Feline Fur Act
B)  The Nutrition Labeling and Education Act
C)  The Fur Products Labeling Act
D)  The Flammable Fabrics Act
E)  The Wool Products Labeling ActF) All of the above
G) A) and B)

Question 14

Which of the following types of information should Rosa have received from XYZ Bank,according to the Truth-in-Lending Act?

Accepted Answer

A)  The total amount financed;the number,amount,and due dates of payments;and the bank's policy regarding selling loans to other financial institutions.
B)  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.
C)  The total amount financed;and the number,amount,and due dates of payments.
D)  The total amount financed;the number,amount,and due dates of payments;and the bank policy in the event of a delinquency.
E)  Only the information she received.F) B) and E)
G) A) and D)

Question 15

The issuance of credit reports is governed by which of the following?

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

[Convertibles] Oscar,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.Rosa,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 XYZ Bank for the remainder.She wanted the loan for a specific amount of time.XYZ Bank offered her the loan and she agreed.The only information she received from XYZ Bank was confirmation that she borrowed $15,000 at an 8 percent interest rate.After receiving several complaints,the Federal Trade Commission disapproved of Oscar's action in regard to the Wind vehicles.After appropriate proceedings,the Commission proceeded to issue acease-and-desist order involving Oscar's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he offered for sale.
-Oscar was engaged in what kind of objectionable advertising,if any,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?

Accepted Answer

A)  Claim-and-refuse
B)  Ad trickery
C)  Bait-and-switch
D)  Advertise-and-deny
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.F) All of the above
G) None of the above

Question 18

XL Sandwich Shop wants to publish an advertisement in the local news and run a similar ad on TV.The company wants to make sure it can follow all rules and regulations set forth by the FTC.What guide could XL Sandwich Shop make use of to get a detailed explanation of the rules?

Accepted Answer

A)  Consumer recommendations
B)  Industry guides
C)  Business requirements
D)  Consumer guides
E)  Industry interpretationsF) C) and D)
G) None of the above

Question 19

When a consumer purchases a product from a door-to-door sales person,how long does the Cooling-Off Rule give consumers to cancel the purchase?

Accepted Answer

A)  One day
B)  Two days
C)  Three days
D)  Four days
E)  Five daysF) C) and E)
G) A) and D)

Question 20

A judge has determined that Billy's Widgets has engaged in deceptive advertising.What is the FTC's next step?

Accepted Answer

A)  Issuing a cease and desist order
B)  Pressing criminal charges
C)  Filing a formal administrative complaint
D)  Issuing a command order
E)  Initiating a civil lawsuitF) A) and D)
G) A) and E)

Exam 45: Consumer Law

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

Correct Answer
verified

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

Correct Answer
verified

A drug company has a diabetes drug which is FDA approved only to treat diabetes.The company runs ads implying that the drug is very good for treating seizures.Which of the following is true of the drug company's actions:

Correct Answer
verified

When a consumer purchases a product from a door-to-door sales person,how long does the Cooling-Off Rule give consumers to cancel the purchase?

Correct Answer
verified

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?

Correct Answer
verified

Billy's Widgets has been accused of deceptive advertising.He disagrees with the accusations but just wants the FTC to leave him alone so he can move on and keep running his business.How might he resolve the pending FTC action against him in a timely manner?

Correct Answer
verified

What type of loan was Rosa seeking from XYZ Bank?

Correct Answer
verified

XL Sandwich Shop wants to publish an advertisement in the local news and run a similar ad on TV.The company wants to make sure it can follow all rules and regulations set forth by the FTC.What guide could XL Sandwich Shop make use of to get a detailed explanation of the rules?

Correct Answer
verified

Which of the following types of information should Rosa have received from XYZ Bank,according to the Truth-in-Lending Act?

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

The issuance of credit reports is governed by which of the following?

Correct Answer
verified

Regarding Owen's practice of telling potential customers on the telephone costs in small increments without revealing the total price,which of the following statements is true?

Correct Answer
verified

A judge has determined that Billy's Widgets has engaged in deceptive advertising.What is the FTC's next step?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is the fine that the Federal Trade Commission may impose if a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts is violated?

Correct Answer
verified

An advertisement that is true but incomplete is known as which of the following?

Correct Answer
verified

What is the FTC's next step if a company refuses to enter into a consent agreement and the FTC wants to move forward?

Correct Answer
verified

Correct Answer
verified

Which of the following is not a federal law regulating product labeling?

Correct Answer
verified

Exam 45: Consumer Law

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A drug company has a diabetes drug which is FDA approved only to treat diabetes.The company runs ads implying that the drug is very good for treating seizures.Which of the following is true of the drug company's actions:

Correct AnswerverifiedShow Answer

When a consumer purchases a product from a door-to-door sales person,how long does the Cooling-Off Rule give consumers to cancel the purchase?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Billy's Widgets has been accused of deceptive advertising.He disagrees with the accusations but just wants the FTC to leave him alone so he can move on and keep running his business.How might he resolve the pending FTC action against him in a timely manner?

Correct AnswerverifiedShow Answer

What type of loan was Rosa seeking from XYZ Bank?

Correct AnswerverifiedShow Answer

XL Sandwich Shop wants to publish an advertisement in the local news and run a similar ad on TV.The company wants to make sure it can follow all rules and regulations set forth by the FTC.What guide could XL Sandwich Shop make use of to get a detailed explanation of the rules?

Correct AnswerverifiedShow Answer

Which of the following types of information should Rosa have received from XYZ Bank,according to the Truth-in-Lending Act?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The issuance of credit reports is governed by which of the following?

Correct AnswerverifiedShow Answer

Regarding Owen's practice of telling potential customers on the telephone costs in small increments without revealing the total price,which of the following statements is true?

Correct AnswerverifiedShow Answer

A judge has determined that Billy's Widgets has engaged in deceptive advertising.What is the FTC's next step?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the fine that the Federal Trade Commission may impose if a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts is violated?

Correct AnswerverifiedShow Answer

An advertisement that is true but incomplete is known as which of the following?

Correct AnswerverifiedShow Answer

What is the FTC's next step if a company refuses to enter into a consent agreement and the FTC wants to move forward?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a federal law regulating product labeling?

Correct AnswerverifiedShow Answer

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