Exam 19: Consumer Protection

Equal credit opportunity refers to the requirement that creditors:

The Truth-in-Lending Act allows a creditor to avoid liability for improper disclosure if the violation is corrected within fifteen days from the time it is discovered by the creditor and before the consumer gives written notification of the error.

The Food, Drug and Cosmetic Act of 1938 expanded the FDA's powers to include the power to allow it to do which of the following:

A drug that may only be used with the permission of a physician is designated as a:

The primary purpose of the Truth-in-Lending Act is to provide disclosure of basic information about the cost and terms of credit to consumer-borrowers.

The Consumer Leasing Act applies to consumer leases for all of the following except a lease:

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

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. Drugs-R-Us claims in its advertising that "tests prove" the cookies help lose weight. To avoid a charge of deceptive advertising, Drugs-R-Us must show that:

When private cases claiming misleading advertising are brought under the Lanham Act:

Leases paid by the Consumer Leasing Act must be for six months or longer and must have a contractual obligation of less than $10,000.

Under the Fair and Accurate Credit Transaction Act, the FTC has issued regulations:

The FTC may prosecute companies that solicit investments for things such as phony oil and gas wells.

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. What would be the most likely outcome of Frank's suit against Drugs-R-Us if the company argued that prior FDA approval shielded it from tort liability?

When the FTC proposes a trade regulation rule, it must be published in the Federal Register for public inspection before it becomes effective.

One reason for passage of the Pure Food and Drug Act is the high death rate of soldiers during the Spanish-American War due to impure food.

The FTC deception policy is the same, in effect, as common law fraud.

Which of the following is an example of an FTC trade regulation rule?

Which of the following is considered harassing, deceptive or unfair under the Fair Debt Collection Practice Act:

The FDA decides what drugs may be sold as well as what drugs may be sold over the counter and what drugs may be sold only by prescription.

Most states have statutes that: