Consumer Law Quiz

1. Consumer Home Products, Inc., in its advertisements, makes claims about its products that are obvious exaggerations and claims that are false but appear to be true. Consumer Home may be subject to sanctions for

a. only the false claims that appear to be true.
b. only the obvious exaggerations.
c. both the false claims and the obvious exaggerations.
d. none of the above.

 

2. All-Rite Appliance Store advertises freezers at a "Special Low Price of $99." When Bob tries to buy one of the freezers, Cathy, the salesperson, tells him that they are all sold and no more are obtainable. Cathy adds that All-Rite has other freezers for $1,299. This is

a. a legitimate sales technique.
b. bait-and-switch advertising.
c. counteradvertising.
d. puffery.


3. A+ Goods, Inc., engages in deceptive advertising when it markets its product Best Cleaner as able to kill germs over long periods of time. In an action against A+ regarding Best, A+ is ordered to stop its false advertising of Best and other products. This is

a. a counteradvertising order.
b. a multiple product order.
c. bait-and-switch advertising.
d. excessive abuse of authority.

 

4. Home Sales, Inc., uses a prerecorded voice to solicit business from consumers over the telephone. Irma, a consumer, objects to being solicited in this way. If Irma files a suit against Home Sales, she may recover

a. up to treble the amount of any actual monetary loss.
b. up to $500 in damages for each objectionable call.
c. only an injunction against any future calls.
d. none of the above.

5. Consumer Products Corporation puts labels on its products. These labels are subject to federal labeling and packaging rules, which are enforced by the Federal Trade Commission and

a. the Environmental Protection Agency.
b. the U.S. Department of Health and Human Services.
c. the Federal Communications Commission.
d. the Bureau of Alcohol, Tobacco, and Firearms.

6. Better Products Corporation makes and markets a variety of household goods. All Better Products' product labels must identify

a. the federal agency that inspected the product.
b. the manufacturer.
c. the percentage of the product that consists of artificial substances.
d. all of the above.

7. Quality Coffee, Inc., processes and sells a variety of coffee products. Quality's product packages must include

a. the identity of the product only.
b. the net quantity of the contents only.
c. the identity of the product and the net quantity of the contents.
d. none of the above.

 

8. Fresh Food, Inc., wants to market a new snack food. On the product's label, standard nutrition facts are required by

a. the Fair Labeling Act.
b. the Health Education Act.
c. the Nutrition Labeling and Education Act.
d. none of the above.

9. Ron signs a contract with Sam, a door-to-door salesperson for Tutors, Inc., to buy a foreign-language course. To cancel the contract, Ron has up to

a. three days.
b. thirty days.
c. sixty days.
d. ninety days.



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

a. only credit terms offered by other lenders.
b. only its own credit terms.
c. credit terms offered by other lenders and its own credit terms.
d. none of the above.

11. Financial Credit Corporation's ordinary business is to lend money to consumers. Financial must disclose all credit terms in

a. all credit transactions.
b. any credit transaction in which payments are to be made in more than four installments.
c. any credit transaction in which payments are to be made in more than one installment.
d. no credit transaction.

12. Beth borrows $20,000 from City Bank to repair her home and to buy a car. Beth buys a stereo from Downtown Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

a. the car loan only.
b. the home repair loan only.
c. the retail installment sale only.
d. the car loan, the home repair loan, and the retail installment sale.


13. EZ Credit Corporation is a lender subject to the Truth-in-Lending Act. This act protects

a. only debtors who are artificial persons, such as corporations.
b. only debtors who are natural persons.
c. debtors who are artificial or natural persons.
d. none of the above.

 

14. Sue buys a car from her neighbor, Tim, for $5,000 and agrees to make monthly payments of $500 until the price is paid. This transaction is subject to

a. the Fair Credit Reporting Act.
b. the FTC's used-car dealers' "Buyer's Guide" rule.
c. the Truth-in-Lending Act.
d. none of the above.

15. Ed borrows $20,000 from First State Bank to renovate his home. This transaction is subject to

a. the Fair Credit Reporting Act.
b. the Home Equity Act.
c. the Truth-in-Lending Act.
d. none of the above.


16. Jack receives unsolicited merchandise in the mail. Jack

a. may keep the merchandise without any obligation to the sender.
b. must return the merchandise within five days to avoid payment.
c. must return the merchandise within fifteen days to avoid payment.
d. must return the merchandise within thirty days to avoid payment.

 

17. Earl's application to First National Bank for a credit card is denied. Earl can obtain information on his credit history in a credit agency's files under

a. the Equal Credit Opportunity Act.
b. the Fair Credit Reporting Act.
c. the Fair Debt Collection Practices Act.
d. none of the above.

18. Kent receives an unsolicited credit card in the mail and tosses it on his desk. Without Kent's permission, his roommate uses the card to buy a new personal computer for $1,000. Kent is

a. liable for $1,000.
b. liable for $500.
c. liable for $50.
d. not liable for any amount.

 

19. Community Bank, with which Doug took out a student loan, sends a letter to Doug, who has failed to make his scheduled payments for six months, to advise him of further action that the bank will take. This is a violation of

a. the Fair Credit Reporting Act.
b. the Fair Debt Collection Practices Act.
c. the Truth-in-Lending Act.
d. none of the above.

 

20. Frank opens an account at Electric City, and buys a DVD player, but makes no payments on the purchase. In an attempt to collect the debt, Electric City contacts Frank's parents. This is a violation of

a. the Fair Credit Reporting Act.
b. the Fair Debt Collection Practices Act.
c. the Truth-in-Lending Act.
d. none of the above.

21. The credit department of E-Electronic Stores often calls Fred at work about his overdue bill. Fred's employer objects to the calls. This is a violation of

a. the Fair Credit Reporting Act.
b. the Fair Debt Collection Practices Act.
c. the Truth-in-Lending Act.
d. none of the above.

22. Quality Products, Inc., makes and sells toys. The government agency that has the authority to remove from the market a potentially hazardous toy is

a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.

23. Superior Toy Company makes and sells toys. If a toy is believed to be hazardous, the appropriate government agency may require Superior to

a. remove the toy from the market, but not report on any items sold.
b. report on any items sold, but not remove the toy from the market.
c. remove the toy from the market and report on any items sold.
d. none of the above.


24. Green Grocer Corporation makes and markets a variety of processed food products. The federal agency responsible for enforcing health regulations concerning food is

a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.

 

25. Maria goes to CompuTech, a consumer electronics store in Houston, Texas, to buy a pocket calculator. The salesperson sells her a top-of-the-line computer system, with scanner and color printer, which Maria does not need and cannot afford. This is a violation of

a. the Fair Credit Reporting Act.
b. the Texas Deceptive Trade Practices Act.
c. the Truth-in-Lending Act.
d. none of the above.