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Exam 24: Consumer Protection

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Question 21

Multiple Choice

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Consumer Staples Inc. includes in its advertising obvious exaggerations, vague generalities, and puffery about its products. The firm may be subject to sanctions for

A) obvious exaggerations.
B) vague generalities.
C) puffery.
D) none of the choices.

E) None of the above
F) A) and D)

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Question 22

True/False

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

A) True
B) False

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Question 23

True/False

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

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

Credit Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Credit Loan must inform potential borrowers of

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

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

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

QT Collection Agency calls Rob several times a day, and in the middle of the night, about an overdue bill that Standard Credit Company turned over to QT for collection. This is a violation of

Shipping times promised in ads are estimates-merchants are not required to notify consumers when orders cannot be shipped as timely as promised.

Spicy Salsa Inc. complains to the Federal Trade Commission (FTC) about an ad broadcast by Tangy Taco Sauce Company, Spicy's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to

A false statement or unjustified claim about a competitor's products can result in liability for deceptive advertising.

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

The Federal Food, Drug, and Cosmetic Act protects consumers against contaminated and misbranded food and drugs.

Tia takes out a loan from Urban Bank. When she fails to make the scheduled payments, the lender advises her of further action that it will take. This violates

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

Credit can be denied solely on the basis of national origin.

The credit department of Mega-Mart often calls Nora at work about an overdue bill over the objection of Nora's employer. This is a violation of

Home Made Inc. advertises a variety of household products online. In this context, the company's ads must be

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.