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Consumers who are charged more for credit or insurance than others ordinarily would be because of their credit reports must be notified of that fact.​

A) True
B) False

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Cleaners & Solvents, Inc. (CSI) , falsely claims in its ads that its products kill germs "forever." In an action against CSI, the firm is ordered to stop its false advertising. This is​


A) ​a counteradvertising order.
B) ​a multiple product order.
C) ​a "cooling-off" law.
D) ​a validation notice.

E) B) and D)
F) None of the above

Correct Answer

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To generate sales, Golden Investments, Inc., uses phone solicitation. Under federal law, in soliciting business, Golden's telemarketers must disclose​


A) ​all material facts related to a sale.
B) ​only the seller's name.
C) ​only facts directly related to a potential customer's request.
D) ​only facts needed to make a sale.

E) A) and B)
F) B) and D)

Correct Answer

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A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.​

A) True
B) False

Correct Answer

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In a transaction subject to the Truth-in-Lending Act, the terms of a credit instrument must be fully disclosed.​

A) True
B) False

Correct Answer

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Cutting Edge Inc. makes and sells tools. One of the tools is believed to be hazardous. The firm may be required to​


A) ​export the tool and sell it only abroad.
B) ​increase the price to cover the cost of any injuries or damage.
C) ​reduce the price to indicate the hazard to consumers.
D) ​remove the tool from the market.

E) A) and B)
F) B) and C)

Correct Answer

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The Federal Reserve Board of Governors has issued a regulation that governs credit provisions associated with sales contracts-Regulation Z.​

A) True
B) False

Correct Answer

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The Truth-in-Lending Act applies to persons who, in the ordinary course of their business, lend money, sell on credit, or arrange for the extension of credit.​

A) True
B) False

Correct Answer

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Greg signs an installment contract with Home Appliance Store to finance the purchase of new kitchen appliances. This transaction is subject to​


A) ​no federal law.
B) ​the Fair Credit Reporting Act.
C) ​the Telecommunications Act.
D) ​the Truth-in-Lending Act.

E) A) and D)
F) A) and C)

Correct Answer

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Counteradvertising occurs when a salesperson lures a consumer into a store by advertising a low-priced item in order to switch the consumer to a more expensive item.​

A) True
B) False

Correct Answer

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QT Collection Agency calls Rob several times a day, and sometimes 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​


A) ​no federal law.
B) ​the Fair and Accurate Credit Transactions Act.
C) ​the Fair Debt Collection Practices Act.
D) ​the Truth-in-Lending Act.

E) None of the above
F) A) and B)

Correct Answer

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Corner Market sells groceries. Deli & Drug Store sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is​


A) ​Corner Market and Deli & Drug.
B) ​Deli & Drug only.
C) ​the Federal Trade Commission.
D) ​the Food and Drug Administration.

E) B) and C)
F) None of the above

Correct Answer

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Through careless manufacturing practices, Plastics Company makes and sells products that are unsafe to consumers. This may be subject to sanctions under​


A) ​federal and state law.
B) ​federal law only.
C) ​no law, according to the principles of freedom to contract.
D) ​state law only.

E) A) and B)
F) B) and C)

Correct Answer

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Under federal law, the calorie content of the food on a menu must be posted by Great Harvest, LLC, if the firm is​


A) ​a restaurant chain with twenty or more locations.
B) ​a food distributor with twenty or more customers.
C) ​a food maker with twenty or more products.
D) ​a food producer with twenty or more acres.

E) A) and B)
F) B) and D)

Correct Answer

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Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to​


A) ​no federal law.
B) ​the Consumer Leasing Act.
C) ​the Consumer Product Safety Act.
D) ​the Truth-in-Lending Act.

E) C) and D)
F) None of the above

Correct Answer

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Manufacturers are required to report on any products intended for sale if the products have proved to be hazardous.​

A) True
B) False

Correct Answer

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A sanction known as bait-and-switch advertising requires a company to advertise the products of its competitor to counter its own false claims.​

A) True
B) False

Correct Answer

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A credit-card company may increase the interest rate on a customer's credit-card balance at any time.​

A) True
B) False

Correct Answer

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


A) ​intelligence.
B) ​education.
C) ​income.
D) ​race.

E) All of the above
F) C) and D)

Correct Answer

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Package labels must use words that the ordinary consumer understands.​

A) True
B) False

Correct Answer

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