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Exam 25: Consumer Law

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Question 1

Multiple Choice

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Which of the following is required by the Federal Trade Commission Cooling-Off Rule in regard to door-to-door sales?

A) That consumers have three days in which to cancel purchases made from salespeople who come to their homes.
B) That the salesperson notify the consumer, both verbally and in writing that the sales transaction may be cancelled.
C) That the consumer be notified in writing in the same language in which the oral negotiations were conducted.
D) That consumers have three days in which to cancel purchases made from salespeople who come to their homes; that the salesperson notify the consumer, both verbally and in writing that the sales transaction may be cancelled; and that the consumer be notified in writing in the same language in which the oral negotiations were conducted.
E) That consumers have three days in which to cancel purchases made from salespeople who come to their homes and that the salesperson notify the consumer in writing in the same language in which oral negotiations were conducted that the transaction may be cancelled, but not that notification also be made verbally.

F) A) and D)
G) C) and D)

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Question 2

Multiple Choice

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Which of the following is not a federal law referenced in the text 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

F) C) and D)
G) A) and C)

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Question 3

Multiple Choice

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

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

What three key guidelines regarding mail-order sales were established by the Mail or Telephone Order Merchandise Rule of 1993 which amended the 1975 Mail-Order Rule?

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?

Reference - 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. Claiming that his advertisement was misleading, the Commission proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving Wind vehicles and also in regard to any other vehicles Barry 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?

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?

Which of the following was the ruling by a majority of the U.S. Supreme Court in Food and Drug Administration Et Al. v. Brown & Williamson Tobacco Corporation Et Al., the case in the text involving whether the Food and Drug Administration has jurisdiction to regulate tobacco products?

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

Which of the following are prohibited by the Fair Debt Collection Practices Act?

Reference - Miracle Pill. Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and 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 by the Federal Trade Commission 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 company violates a cease-and-desist order issued by the Federal Trade Commission and upheld by the courts, which of the following is the fine that the Federal Trade Commission may impose?

The Federal Trade Commission has ____________ commissioners each of whom serves a _____________-year term.

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

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

Reference - The Burial Emporium. Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He 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. 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?

Reference - Miracle Pill. Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and 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 by the Federal Trade Commission 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 does the Federal Trade Commission require if a company wishes to claim that its products are "Made in the U.S.A."?

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

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