Exam 19: Consumer Protection

The FTC sued the company that produces "Hooked on Phonics." The company claimed its products could teach users, even learning disabled users, how to read. In this case:

Before a FTC trade regulation rule can be finalized it:

Which of the following statements about the Truth-in-Lending Act is (are) true?

The Truth-in-Lending Act requires lenders to disclose the annual percentage rate of interest (APR) the same way for all transactions.

In Heintz v. Jenkins, the Supreme Court held that some attorneys may be subject to the rules of the Fair Debt Collection Practices Act.

The Truth-in-Lending Act applies to which of the following transactions?

The FTC's Red Flag Rule requires notices to consumers when interest rates are about to be increased on a credit account.

The 1962 Kefauver Amendment to the Food and Drug Act gave the FDA authority for the first time to:

About ____ new compounds make it to Phase I of the tests required to earn FDA approval for the market.

Prior to the Food and Drug Administration's creation in 1927, the ____ administered the Food and Drug Act.

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

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:

____ is a regulation written by the Federal Reserve Board specifying items that must be listed as part of consumer finance charges under the Truth-in-Lending Act.

The Fair Debt Collection Practices Act prohibits debt collectors from using harassing and deceptive debt-collection practices.

The FTC deception policy states that any deceptive practice likely to mislead any consumer will be challenged by Congress.

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 Drugs-R-Us agrees to settle a complaint that the company engaged in deceptive advertising, what is the agreement called?

A company advertises that test driving a car from New York to Los Angeles got 35 miles per gallon. That is true, but the mileage was achieved by carefully driving at the speed limit, which resulted in better mileage than the ordinary driver gets. Under the FTC deception policy, this ad is:

____ medical devices are things presenting minimal potential for harm to the user and are usually of simple design, such as bandages and gloves.

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

The Consumer Credit Protection Act was the first major federal legislation on consumer credit.