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Exam 21: Consumer Protection

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Question 31

True/False

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Importers of food do not have to verify that the imported food meets U.S.safety standards.

A) True
B) False

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Question 32

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A business that cannot provide scientific evidence to support its marketing claims may be held liable for deceptive advertising.

A) True
B) False

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Question 33

Multiple Choice

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Leo's application to Metro Bank for a credit card is denied on the basis of what Leo believes is an inaccurate credit report.Leo should

There is a significant distinction between regulating the information dispensed about a product and regulating the product's actual content.

Federal law regulates the use of such terms as low fat on food labels.

Mary receives an unsolicited credit card in the mail and tosses it on her desk.Without Mary's permission,her roommate Nan uses the card to buy a new laptop for $1,800.Mary is liable for

Creditors that use information from credit-reporting agencies cannot be held liable for violations of the Fair Credit Reporting Act.

Quik Mart sells groceries.Rite Price sells groceries and fills prescriptions.The party with the chief responsibility to prevent unsafe food and drugs from being sold is

A creditor can always require the signature of a cosigner on a credit application.

An ad for Running Shoes Inc.states that its footwear is "The Winner's Choice." Because of this ad,the Federal Trade Commission is most likely to issue

Direct Sales Corporation sells products to consumers over the phone,through the mail,and online.Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule,the firm may be liable for failing to

Generally,online ads-unlike other ads-can be less than truthful and not every claim must be substantiated.

Federal law does not require food product labels to identify the product.

The Truth-in-Lending Act applies to a loan between two consumers because in that transaction,the lender is a person who in the ordinary course of business is extending credit.

An obviously exaggerated advertising claim will be considered deceptive even if a reasonable consumer would not believe it to be true.

Value Loan Company extends credit to consumers.Value Loan applies a variety of requirements to determine applicants' qualifications for credit,the amount,the interest rate,and other terms.Under the Equal Credit Opportunity Act,the lender cannot base its credit decisions on an applicant's

The Federal Trade Commission (FTC) receives numerous complaints that a Renewal Subscriptions Inc.ad is deceptive.The FTC's first step is to

Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics,Inc. ,wants to advertise its sweaters as having "That Wool Feel," but does not want to specify on labels that the sweaters are 100 percent polyester.Can these firms market their products as they would like? If not,why not?

Kip opens an account at Lotsa Goodies,and buys a digital music player and other items,but makes no payments on the account.To collect the debt,a Lotsa Goodies representative contacts Kip's parents.This violates

With respect to tainted foods,the focus of federal regulators has shifted from responding to incidents of contamination to preventing them.