Question 1

According to the FTC, which of the following things would indicate a unfair act or practice:

Accepted Answer

A)  the act or practice causes substantial harm to consumers 
B)  consumers cannot reasonably avoid injury 
C)  the injury from the act or practice is harmful in its net effects 
D)  all of the other specific choices are correct 
E)  none of the other specific choices are correct 
A)  the act or practice causes substantial harm to consumers 
B)  consumers cannot reasonably avoid injury 
C)  the injury from the act or practice is harmful in its net effects 
D)  all of the other specific choices are correct 
E)  none of the other specific choices are correct

Question 2

The Consumer Leasing Act would apply to which of the following leases:

Accepted Answer

A)  living room furniture for three months 
B)  an apartment for a year 
C)  a car for a week 
D)  a Hilton Hotel in Hawaii for six months 
E)  none of the other choices 
A)  living room furniture for three months 
B)  an apartment for a year 
C)  a car for a week 
D)  a Hilton Hotel in Hawaii for six months 
E)  none of the other choices

Question 3

The "Mail Order Rule" states that if a company:

Accepted Answer

A)  buys products through the mail it must use the U.S. Postal Service, and not a private courier system 
B)  buys products through the mail from a foreign country, it must register with the FTC 
C)  sells products through the mail it must ship the product within 14 business days 
D)  sells products through the mail is must provide toll-free 800 phone numbers for its customers to use so that they do not spend additional money placing an order 
E)  none of the other choices are correct 
A)  buys products through the mail it must use the U.S. Postal Service, and not a private courier system 
B)  buys products through the mail from a foreign country, it must register with the FTC 
C)  sells products through the mail it must ship the product within 14 business days 
D)  sells products through the mail is must provide toll-free 800 phone numbers for its customers to use so that they do not spend additional money placing an order 
E)  none of the other choices are correct

Question 4

Which of the following is an example of a class III medical device:

Accepted Answer

A)  bandages 
B)  wheelchairs 
C)  x-ray machines 
D)  surgical materials 
E)  heart valves 
A)  bandages 
B)  wheelchairs 
C)  x-ray machines 
D)  surgical materials 
E)  heart valves

Question 5

The ____ prohibits the sale of any drug until the FDA approves the application submitted by the manufacturer.

Accepted Answer

A)  Food and Medicine Act 
B)  Drug Control Act 
C)  Food and Drug Regulation Act 
D)  Regulation of Food and Drug Act 
E)  none of the other choices are correct 
A)  Food and Medicine Act 
B)  Drug Control Act 
C)  Food and Drug Regulation Act 
D)  Regulation of Food and Drug Act 
E)  none of the other choices are correct

Question 6

Under the Fair and Accurate Credit Transaction Act, credit reporting services must:

Accepted Answer

A)  allow consumers to see their credit reports annually for free 
B)  allow consumers to see their credit reports upon request for free 
C)  allow consumers to see their credit reports for $10 
D)  notify consumers any time their credit reports have been accessed by an outside party 
E)  none of the other choices 
A)  allow consumers to see their credit reports annually for free 
B)  allow consumers to see their credit reports upon request for free 
C)  allow consumers to see their credit reports for $10 
D)  notify consumers any time their credit reports have been accessed by an outside party 
E)  none of the other choices

Question 7

The Federal Reserve Board has written a regulation to implement the Equal Credit Opportunity Act, it is:

Accepted Answer

A)  Regulation Z 
B)  Regulation B 
C)  Regulation A 
D)  Regulation J 
E)  none of the other choices 
A)  Regulation Z 
B)  Regulation B 
C)  Regulation A 
D)  Regulation J 
E)  none of the other choices

Question 8

Fact Pattern 19-2
Jayme's Best produced a new line of pasta sauce (Herbal Health), intending for it to have extra nutritional benefits. Using the freshest ingredients, Jayme's added special herbs to the tomato paste and spices, as the herbs are believed by some Tibetan monks to have the power to prevent cancer. Jayme's marketed the sauce in grocery stores and health food stores. Jayme's advertisements said that Herbal Health may help prevent cancer and taste a lot better than the competition. Based on these facts, answer the following questions.
-Refer to Fact Pattern 19-2. If Jayme's production plant is found to be contaminated with viruses and bacteria due to poor sanitation on several inspections, then, even if no one can be shown to have been made ill by the problem:

Accepted Answer

A)  consumers have a cause of action for damages under tort law 
B)  consumers have a cause of action for damages under the Food, Drug and Cosmetic Act 
C)  the head of Jayme's could be convicted of a criminal offense 
D)  all of the other specific choices 
E)  none of the other choices 
A)  consumers have a cause of action for damages under tort law 
B)  consumers have a cause of action for damages under the Food, Drug and Cosmetic Act 
C)  the head of Jayme's could be convicted of a criminal offense 
D)  all of the other specific choices 
E)  none of the other choices

Question 9

The Equal Credit Opportunity Act makes it illegal for a creditor to take into account whether or not the person applying for credit receives public benefits (welfare).

Accepted Answer

A) True 
 B)False

Question 10

The Equal Credit Opportunity Act prohibits credit discrimination on the basis of all except:

Accepted Answer

A)  the race of the applicant 
B)  if the applicant has a checking account 
C)  if the applicant receives public assistance 
D)  the marital status of the applicant 
E)  all of the other choices are legitimate concerns 
A)  the race of the applicant 
B)  if the applicant has a checking account 
C)  if the applicant receives public assistance 
D)  the marital status of the applicant 
E)  all of the other choices are legitimate concerns

Question 11

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

Accepted Answer

A)  Free Trade Act 
B)  True and Fair Credit Transactions Act 
C)  Fair and Open Credit Act 
D)  Fair Credit Reporting Act 
E)  none of the other choices are correct 
A)  Free Trade Act 
B)  True and Fair Credit Transactions Act 
C)  Fair and Open Credit Act 
D)  Fair Credit Reporting Act 
E)  none of the other choices are correct

Question 12

About ____ of new compounds initially tested in the lab make it to the market.

Accepted Answer

A)  1 in 2,000 
B)  1 in 50 
C)  1 in 60,000 
D)  1 in a million 
E)  1 in 100 
A)  1 in 2,000 
B)  1 in 50 
C)  1 in 60,000 
D)  1 in a million 
E)  1 in 100

Question 13

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

Accepted Answer

A)  Free Trade Act 
B)  Fair and Accurate Credit Transactions Act 
C)  Fair and Open Credit Act 
D)  Fair Credit Reporting Act 
E)  True and Fair Credit Transactions Act 
A)  Free Trade Act 
B)  Fair and Accurate Credit Transactions Act 
C)  Fair and Open Credit Act 
D)  Fair Credit Reporting Act 
E)  True and Fair Credit Transactions Act

Question 14

In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive. When the consumer sued, the courts held that:

Accepted Answer

A)  the FTC acted against the company on behalf of similarly affected consumers and won warranty enforcement for all such consumers 
B)  the company proved that its warranty was not "lifetime" as to ordinary maintenance, so the consumer's claim was rejected 
C)  the company violated the state deceptive practices act and was liable under that 
D)  the attorney general could sue on behalf of all similarly affected consumers in the state 
E)  none of the other choices 
A)  the FTC acted against the company on behalf of similarly affected consumers and won warranty enforcement for all such consumers 
B)  the company proved that its warranty was not "lifetime" as to ordinary maintenance, so the consumer's claim was rejected 
C)  the company violated the state deceptive practices act and was liable under that 
D)  the attorney general could sue on behalf of all similarly affected consumers in the state 
E)  none of the other choices

Question 15

A noteworthy change at the FDA in recent years is its:

Accepted Answer

A)  greater reluctance to approve drugs for use in life-threatening situations due to high toxicity of such drugs 
B)  regulation of the sale of fish and shellfish 
C)  increased inspection of foreign fruit shipments 
D)  dropping the quarantine requirements that apply to animals brought into the U.S. 
E)  none of the other choices 
A)  greater reluctance to approve drugs for use in life-threatening situations due to high toxicity of such drugs 
B)  regulation of the sale of fish and shellfish 
C)  increased inspection of foreign fruit shipments 
D)  dropping the quarantine requirements that apply to animals brought into the U.S. 
E)  none of the other choices

Question 16

A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make the chunky stuff in the soup be near the top. This ad was:

Accepted Answer

A)  illegal in the U.S. and probably illegal in most advanced European nations and in Japan 
B)  legal in the U.S., but probably illegal as being deceptive in much of Europe and in Japan 
C)  illegal in the U.S., but would probably be legal in most of Europe and in Japan 
D)  legal in the U.S. and would probably be legal in most of Europe and in Japan since it does not injure consumers 
E)  none of the other choices 
A)  illegal in the U.S. and probably illegal in most advanced European nations and in Japan 
B)  legal in the U.S., but probably illegal as being deceptive in much of Europe and in Japan 
C)  illegal in the U.S., but would probably be legal in most of Europe and in Japan 
D)  legal in the U.S. and would probably be legal in most of Europe and in Japan since it does not injure consumers 
E)  none of the other choices

Question 17

The Food Quality Protection Act holds that a substance may be approved for use in food if:

Accepted Answer

A)  there is "no risk" 
B)  there is "no risk" it could induce cancer in humans 
C)  there is an "acceptable risk" 
D)  there is a "de minimus risk" of cancer in man or animals 
E)  none of the other choices 
A)  there is "no risk" 
B)  there is "no risk" it could induce cancer in humans 
C)  there is an "acceptable risk" 
D)  there is a "de minimus risk" of cancer in man or animals 
E)  none of the other choices

Question 18

The Consumer Leasing Act:

Accepted Answer

A)  applies to most apartment leases 
B)  only applies to leases for less than $25,000 
C)  only applies to leases lasting longer than four months 
D)  applies to leases for less than $25,000 and applies to leases lasting longer than four months 
E)  applies to leases for less than $25,000 and applies to leases lasting longer than four months and applies to most apartment leases 
A)  applies to most apartment leases 
B)  only applies to leases for less than $25,000 
C)  only applies to leases lasting longer than four months 
D)  applies to leases for less than $25,000 and applies to leases lasting longer than four months 
E)  applies to leases for less than $25,000 and applies to leases lasting longer than four months and applies to most apartment leases

Question 19

Advertising controls are extremely strict in Europe compared to in the U.S.

Accepted Answer

A) True 
 B)False

Question 20

Fact Pattern 19-1
In 1999, the Drugs-R-Us began testing its new drug, Reduceo, a medicine to help people lose weight. Tests looked promising and, in 2006, the company applied to the FDA for approval to market Reduceo as a prescription drug. In March 2009, the FDA granted Drug-R-Us approval to market Reduceo. Reduceo was sold with some "diet enhancing" cookies that contained no drugs but were claimed to help dieting with Reduceo.
Frank saw an ad for the new drug. The Reduceo ad stated that it was a "wonder drug" and "tests prove it is the safest weight reduction drug on the market today!" Frank was interested and made an appointment to see his doctor.
Frank's physician prescribed the new drug for his patient. Frank had no success using other weight-loss drugs, and dieting and exercise seemed ineffective. Frank took Reduceo from June until the end of August and lost 25 lbs. He also ate Reduceo's cookies. He was delighted with his weight loss, but was concerned because dots appeared before his eyes, causing disorientation. One day, the dots appeared before Frank's eyes while he was driving. He became disoriented and hit a tree and was seriously injured. He sued Drugs-R-Us, alleging negligence in manufacturing and inadequate warning of possible effects, as well as for deceptive advertising.
-Refer to Fact Pattern 19-1. If it turns out that Frank had a vision problem before he started taking Reduceo, and the instructions with the drug told doctors not to prescribe it in such cases, Drugs-R-Us:

Accepted Answer

A)  would still be likely to be liable to Frank for his injuries as strict liability applies 
B)  would still be liable to Frank for his injuries if it could be shown that the firm was negligent in the way it prepared the warning statement 
C)  would probably not be liable due to the learned intermediary doctrine 
D)  would not be liable due to FDA approval which shields the drug maker 
E)  none of the other choices 
A)  would still be likely to be liable to Frank for his injuries as strict liability applies 
B)  would still be liable to Frank for his injuries if it could be shown that the firm was negligent in the way it prepared the warning statement 
C)  would probably not be liable due to the learned intermediary doctrine 
D)  would not be liable due to FDA approval which shields the drug maker 
E)  none of the other choices

According to the FTC, which of the following things would indicate a unfair act or practice:

The Consumer Leasing Act would apply to which of the following leases:

The "Mail Order Rule" states that if a company:

Which of the following is an example of a class III medical device:

The ____ prohibits the sale of any drug until the FDA approves the application submitted by the manufacturer.

Under the Fair and Accurate Credit Transaction Act, credit reporting services must:

The Federal Reserve Board has written a regulation to implement the Equal Credit Opportunity Act, it is:

The Equal Credit Opportunity Act makes it illegal for a creditor to take into account whether or not the person applying for credit receives public benefits (welfare).

The Equal Credit Opportunity Act prohibits credit discrimination on the basis of all except:

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

About ____ of new compounds initially tested in the lab make it to the market.

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive. When the consumer sued, the courts held that:

A noteworthy change at the FDA in recent years is its:

A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make the chunky stuff in the soup be near the top. This ad was:

The Food Quality Protection Act holds that a substance may be approved for use in food if:

The Consumer Leasing Act:

Advertising controls are extremely strict in Europe compared to in the U.S.

Todays Business Environment: Law and Ethics

The Court Systems

Trials and Resolving Disputes

The Constitution: Focus on Application to Business

Criminal Law and Business

Elements of Torts

Business Torts and Product Liability

Real and Personal Property

Intellectual Property

Contracts

Domestic and International Sales

Business Organizations

Negotiable Instruments, Credit, and Bankruptcy

Agency and the Employment Relationship

Employment and Labor Regulations

Employment Discrimination

The Regulatory Process

Securities Regulation

Antitrust Law

Environmental Law

The International Legal Environment of Business

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Exam 19: Consumer Protection

According to the FTC, which of the following things would indicate a unfair act or practice:

The Consumer Leasing Act would apply to which of the following leases:

The "Mail Order Rule" states that if a company:

Which of the following is an example of a class III medical device:

The ____ prohibits the sale of any drug until the FDA approves the application submitted by the manufacturer.

Under the Fair and Accurate Credit Transaction Act, credit reporting services must:

The Federal Reserve Board has written a regulation to implement the Equal Credit Opportunity Act, it is:

The Equal Credit Opportunity Act makes it illegal for a creditor to take into account whether or not the person applying for credit receives public benefits (welfare).

The Equal Credit Opportunity Act prohibits credit discrimination on the basis of all except:

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

About ____ of new compounds initially tested in the lab make it to the market.

Under the ____, credit reporting services must allow consumers to see their credit reports annually for free.

In Schuchmann v. Air Services Heating and Air Conditioning a home owner bought a heating and A/C unit with a lifetime warranty. After five years the company refused to honor the warranty because it was too expensive. When the consumer sued, the courts held that:

A noteworthy change at the FDA in recent years is its:

A soup company once a television ad for a soup in which marbles were put in the bottom of the soup bowl to make the chunky stuff in the soup be near the top. This ad was:

The Food Quality Protection Act holds that a substance may be approved for use in food if:

The Consumer Leasing Act:

Advertising controls are extremely strict in Europe compared to in the U.S.

Todays Business Environment: Law and Ethics

The Court Systems

Trials and Resolving Disputes

The Constitution: Focus on Application to Business

Criminal Law and Business

Elements of Torts

Business Torts and Product Liability

Real and Personal Property

Intellectual Property

Contracts

Domestic and International Sales

Business Organizations

Negotiable Instruments, Credit, and Bankruptcy

Agency and the Employment Relationship

Employment and Labor Regulations

Employment Discrimination

The Regulatory Process

Securities Regulation

Antitrust Law

Environmental Law

The International Legal Environment of Business

Filters