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Exam 24: Consumer Protection

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Question 1

Multiple Choice

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Consumer Finance Corporation (CFC) extends credit to consumers. CFC applies several criteria to decide customers' "suitability" for credit. Under the Equal Credit Opportunity Act, CFC cannot base its decision on a customer's

A) intelligence.
B) education.
C) culture.
D) race.

E) A) and B)
F) A) and C)

Correct Answer

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D

Question 2

True/False

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Deceptive advertising occurs if a reasonable consumer believes an advertising claim.

A) True
B) False

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Question 3

True/False

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Regulation Z was issued by the Federal Reserve Board of Governors to implement the disclosure requirements of the Truth-in-Lending Act.

Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to

A deceptive ad for a product involving wrongful charges to consumers may result in an award of damages of a defendant's unjust gains and consumers' losses.

Lu's application to Metro Bank for a credit card is denied. Lu can obtain information on his credit history in a credit agency's files under

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

Whole Grains Company wants to make and market new processed bread and cereal products. On each product's label, standard nutrition facts are

Advertising will be deemed deceptive if it includes a claim that omits a material fact about a product.

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

Labels must be accurate and use words easily understood by the ordinary consumer.

ChemCo Inc. makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is

The government cannot remove a product from the market simply because it is considered imminently hazardous.

The Lanham Act protects against the deceptive use of trademarks but does not cover false advertising claims.

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

An ad is more likely to be considered fair if its benefit to consumers or the competition outweighs any injury it might cause to the interests of consumers.

The quality and safety of food may be important to consumers, but food labels that provide standard nutrition facts are a seller's option, not a requirement.

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

Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should

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