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Exam 21: Consumer Protection

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Question 1

True/False

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If an advertisement is proven to be deceptive, it may be subject to a cease-and-desist order.

A) True
B) False

Correct Answer

verified

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Question 2

True/False

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When a credit card is lost, the cardholder is not liable for any unauthorized charges after the time of the loss and before the cardholder notifies the credit card company that the card is lost.

A) True
B) False

Correct Answer

verified

False

Question 3

Essay

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The Federal Trade Commission (FTC) learns that Chuck's Automotive Stores engages in deceptive advertising practices. What actions can the FTC take against Chuck's?

Soundbyte Corporation sells phones. Soundbyte's ad states that on its phones voice comes through as "clear as the sky on a cloudless day." The Federal Trade Commission would consider this claim

False or deceptive advertising may arise from a false statement or claim about a company's own products.

Bob has a credit card from Credible Cards, Inc. Credible Cards wants to change the terms. Credible

Federal law does not require food labels to provide standard nutrition facts.

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

Vague generalities and obvious exaggerations constitute deceptive advertising.

Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. The company may violate the Federal Trade Commission's Mail or Telephone Order Merchandise Rule if it

Federal law regulates the definition and use of the term " fresh " on food labels.

Merchants are not required to issue a refund within a specified period of time when a consumer cancels a mail or telephone order.

Elliptical Company advertises Fitness Step, an exercise machine, online. There are several disclosures that Fitness Step needs to make, including shipping costs, surcharges for shipping the large machine, and warnings about the use of the machine by people with certain health conditions. In this context, the company must

Mac n' Cheese Company wants to make and market new processed pasta and sauce products. On each product's label, standard nutrition facts are

The government agency that has the authority to order a company to remove a product from the market that poses an unreasonable risk of harm is

Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit dis-crimination based on

False or deceptive advertising may arise from a false statement or claim about a competitor's products.

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

Lawn Company and Mowers Inc. both make yard tools. Both companies use only steel produced in the United States. Lawn's ad claims, "We use only U.S. steel, while our competitor uses inferior foreign steel!" This statement is

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. If done systematically, this is