Question 1

The FTC was created by Congress to help enforce antitrust laws and deal with deceptive business practices.

Accepted Answer

A) True 
 B)False  True

Question 2

According to FDA standards, food that is labeled as "low fat" must:

Accepted Answer

A)  have fewer than 2 grams of fat per serving 
B)  have fewer than 40 calories per serving 
C)  not have been processed in more than one way 
D)  not contain trans fats 
E)  none of the other choices are correct 
A)  have fewer than 2 grams of fat per serving 
B)  have fewer than 40 calories per serving 
C)  not have been processed in more than one way 
D)  not contain trans fats 
E)  none of the other choices are correct E

Question 3

Before passage of the 1938 Food, Drug and Cosmetic Act there were no such things as prescription drugs. That is, people could buy any legal drug.

Accepted Answer

A) True 
 B)False  True

Question 4

The main reason that drug companies today produce only about half as many new drugs each year compared to previous decades is:

Accepted Answer

A)  there are fewer diseases that drugs can be made for 
B)  people are turning to natural medicine rather than drugs 
C)  the high cost and long time frame involved in clearing all the FDA hurdles to market a new drug 
D)  the lack of science majors graduating in the United States 
E)  the economic downturn 
A)  there are fewer diseases that drugs can be made for 
B)  people are turning to natural medicine rather than drugs 
C)  the high cost and long time frame involved in clearing all the FDA hurdles to market a new drug 
D)  the lack of science majors graduating in the United States 
E)  the economic downturn

Question 5

In Heintz v. Jenkins, the Supreme Court held that the Fair Debt Collection Practices Act:

Accepted Answer

A)  applies to people who have at least $4,000 worth of debt 
B)  applies only to collection agencies located outside the U.S. 
C)  applies only to debts over $1,000 
D)  applies only to collection agencies with more than 50 employees 
E)  none of these is correct 
A)  applies to people who have at least $4,000 worth of debt 
B)  applies only to collection agencies located outside the U.S. 
C)  applies only to debts over $1,000 
D)  applies only to collection agencies with more than 50 employees 
E)  none of these is correct

Question 6

Under the Equal Credit Opportunity Act, a creditor is permitted to:

Accepted Answer

A)  request any information they think necessary to make a decision about a credit applicant 
B)  discriminate against an applicant based on marital status 
C)  consider information about indirect credit history of an applicant 
D)  ask questions about applicant's plans to have children in order to calculate impact on future income 
E)  none of the other choices 
A)  request any information they think necessary to make a decision about a credit applicant 
B)  discriminate against an applicant based on marital status 
C)  consider information about indirect credit history of an applicant 
D)  ask questions about applicant's plans to have children in order to calculate impact on future income 
E)  none of the other choices

Question 7

If company A engages in false advertising that lures customers away from company B, and company B sues, under the Lanham Act it may collect:

Accepted Answer

A)  the value of damage to its trademark reputation 
B)  the cost of counter advertising needed to overcome the false advertising 
C)  treble the value of profits lost due to false advertising 
D)  nothing; the Lanham Act does not apply in such cases 
E)  none of the other choices 
A)  the value of damage to its trademark reputation 
B)  the cost of counter advertising needed to overcome the false advertising 
C)  treble the value of profits lost due to false advertising 
D)  nothing; the Lanham Act does not apply in such cases 
E)  none of the other choices

Question 8

The FTC investigates a wide range of practices suspected to be unfair and deceptive.

Accepted Answer

A) True 
 B)False

Question 9

Under the Equal Credit Opportunity Act, lenders can:

Accepted Answer

A)  not discriminate on religion even if people of that religion frequently default on their loans 
B)  discriminate against persons who receive welfare 
C)  discriminate against persons because of race 
D)  not discriminate against persons with low income 
E)  not discriminate by charging different debtors different interest rates 
A)  not discriminate on religion even if people of that religion frequently default on their loans 
B)  discriminate against persons who receive welfare 
C)  discriminate against persons because of race 
D)  not discriminate against persons with low income 
E)  not discriminate by charging different debtors different interest rates

Question 10

The ____ provides standard terms for leases.

Accepted Answer

A)  Truth-in-Lending Act 
B)  Consumer Leasing Act 
C)  Consumer Buying Act 
D)  Consumer Renting Act 
E)  Consumer Lease Regulation Act 
A)  Truth-in-Lending Act 
B)  Consumer Leasing Act 
C)  Consumer Buying Act 
D)  Consumer Renting Act 
E)  Consumer Lease Regulation Act

Question 11

The intent of the Nutrition Labeling and Education Act is to:

Accepted Answer

A)  make people eat healthier food 
B)  make people buy more packaged food 
C)  help companies sell their food products 
D)  prevent consumers from making informed purchases 
E)  none of the other choices are correct 
A)  make people eat healthier food 
B)  make people buy more packaged food 
C)  help companies sell their food products 
D)  prevent consumers from making informed purchases 
E)  none of the other choices are correct

Question 12

Which of the following is NOT a prohibited basis under the Equal Credit Opportunity Act:

Accepted Answer

A)  marital status 
B)  sex 
C)  age 
D)  religion 
E)  all of the other specific choices are prohibited bases 
A)  marital status 
B)  sex 
C)  age 
D)  religion 
E)  all of the other specific choices are prohibited bases

Question 13

A company mails consumers cards telling them they have won valuable prizes. When a consumer attempts to collect her prize, she discovers that she must pay $500 to collect the goods. In this case the FTC is likely to:

Accepted Answer

A)  seek a consent decree to end the practice 
B)  only allow consumers to use credit cards, not cash, to purchase the goods 
C)  have nothing to do with this case, it falls with the jurisdiction of the FBI 
D)  any of the other choices 
E)  none of the other choices are correct 
A)  seek a consent decree to end the practice 
B)  only allow consumers to use credit cards, not cash, to purchase the goods 
C)  have nothing to do with this case, it falls with the jurisdiction of the FBI 
D)  any of the other choices 
E)  none of the other choices are correct

Question 14

The Food, Drug, and Cosmetic Act as passed in 1938:

Accepted Answer

A)  repealed the 1906 Pure Food and Drug Act 
B)  gave the FDA responsibility to restrict the levels of food additives used 
C)  required the FDA to monitor nutrition information on food products 
D)  allowed the FDA to prohibit drugs not demonstrated to be effective 
E)  none of the other choices 
A)  repealed the 1906 Pure Food and Drug Act 
B)  gave the FDA responsibility to restrict the levels of food additives used 
C)  required the FDA to monitor nutrition information on food products 
D)  allowed the FDA to prohibit drugs not demonstrated to be effective 
E)  none of the other choices

Question 15

Which of the following would be a "red flag" under the FTC's Red Flag Rule:

Accepted Answer

A)  an alert from a consumer reporting agency 
B)  a suspicious document related to credit accounts 
C)  a notice from a customer about possible identity theft 
D)  a peculiar address 
E)  all of the other specific choices are correct 
A)  an alert from a consumer reporting agency 
B)  a suspicious document related to credit accounts 
C)  a notice from a customer about possible identity theft 
D)  a peculiar address 
E)  all of the other specific choices are correct

Question 16

Which of the following health claims may NOT be made on food labels without sufficient documentation by the seller:

Accepted Answer

A)  the connection between calcium and the prevention of osteoporosis 
B)  the connection between fat and heart disease 
C)  the connection between fiber and reduced risk of heart disease 
D)  the connection between fat and cancer 
E)  all of the other specific choices may be mentioned on food labels without any extra documentation 
A)  the connection between calcium and the prevention of osteoporosis 
B)  the connection between fat and heart disease 
C)  the connection between fiber and reduced risk of heart disease 
D)  the connection between fat and cancer 
E)  all of the other specific choices may be mentioned on food labels without any extra documentation

Question 17

It costs an average of about a billion dollars to develop one new drug and clear all FDA rules before marketing the product.

Accepted Answer

A) True 
 B)False

Question 18

For the Truth-in-Lending Act to apply, the debtor must be a business organization.

Accepted Answer

A) True 
 B)False

Question 19

Under the Fair Debt Collection Practices Act a debt collector has the right to tell a consumer that if the validity of a debt is not disputed within 30 days, then it is presumed to be a valid debt.

Accepted Answer

A) True 
 B)False

Question 20

The average cost of developing a new drug and clearing all FDA regulations to get the drug to market are about a billion dollars and are:

Accepted Answer

A)  paid by the FDA only if the drug is approved 
B)  paid by the FDA only if the drug is not approved 
C)  paid by the FDA whether or not the drug is approved 
D)  paid by the drug companies 
E)  paid by the National Institute of Health 
A)  paid by the FDA only if the drug is approved 
B)  paid by the FDA only if the drug is not approved 
C)  paid by the FDA whether or not the drug is approved 
D)  paid by the drug companies 
E)  paid by the National Institute of Health

Exam 19: Consumer Protection

The FTC was created by Congress to help enforce antitrust laws and deal with deceptive business practices.

According to FDA standards, food that is labeled as "low fat" must:

Before passage of the 1938 Food, Drug and Cosmetic Act there were no such things as prescription drugs. That is, people could buy any legal drug.

The main reason that drug companies today produce only about half as many new drugs each year compared to previous decades is:

In Heintz v. Jenkins, the Supreme Court held that the Fair Debt Collection Practices Act:

Under the Equal Credit Opportunity Act, a creditor is permitted to:

If company A engages in false advertising that lures customers away from company B, and company B sues, under the Lanham Act it may collect:

The FTC investigates a wide range of practices suspected to be unfair and deceptive.

Under the Equal Credit Opportunity Act, lenders can:

The ____ provides standard terms for leases.

The intent of the Nutrition Labeling and Education Act is to:

Which of the following is NOT a prohibited basis under the Equal Credit Opportunity Act:

A company mails consumers cards telling them they have won valuable prizes. When a consumer attempts to collect her prize, she discovers that she must pay $500 to collect the goods. In this case the FTC is likely to:

The Food, Drug, and Cosmetic Act as passed in 1938:

Which of the following would be a "red flag" under the FTC's Red Flag Rule:

Which of the following health claims may NOT be made on food labels without sufficient documentation by the seller:

It costs an average of about a billion dollars to develop one new drug and clear all FDA rules before marketing the product.

For the Truth-in-Lending Act to apply, the debtor must be a business organization.

Under the Fair Debt Collection Practices Act a debt collector has the right to tell a consumer that if the validity of a debt is not disputed within 30 days, then it is presumed to be a valid debt.

The average cost of developing a new drug and clearing all FDA regulations to get the drug to market are about a billion dollars and are:

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