Mann_BLRB 9_TB_Ch45

Business Law and the Regulation of Business

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Chapter 45—Consumer Protection TRUE/FALSE 1. Deception may occur either through false representation or material omission. ANS: T MSC: AACSB Analytic 2. The FTC has the power to seek in a federal district court a preliminary injunction, pending completion of administrative proceedings, whenever the agency has reason to believe that a person has been viol- ating FTC rules. ANS: T MSC: AACSB Analytic 3. The Gramm-Leach-Bliley Financial Modernization Act is administered and enforced solely through two federal agencies: the SEC and FTC. ANS: F MSC: AACSB Analytic 4. A misrepresentation or material omission that is likely to mislead a consumer to the consumer's detri- ment is grounds for a claim of deception under FTC rules. ANS: T MSC: AACSB Analytic 5. Ad substantiation does not require advertisers to have a reasonable basis for their claims at the time the claims were made. ANS: F MSC: AACSB Analytic 6. The Magnuson-Moss Act applies to all sales of goods covered by the Uniform Commercial Code. ANS: F MSC: AACSB Analytic 7. When first established, the Consumer Product Safety Commission promulgated a number of mandat- ory safety standards. ANS: T MSC: AACSB Analytic 8. One difference between a full and a limited warranty is that in a limited warranty, the manufacturer may, if reasonable, limit the duration of the warranty of merchantability. ANS: T MSC: AACSB Analytic 9. If a manufacturer of a consumer product tells a buyer that he is selling it with no warranties, there is a violation of the Magnuson-Moss Act. ANS: F MSC: AACSB Analytic 10. On Monday, Bill agreed to buy aluminum siding for his home from Al, a door-to-door salesman. On Wednesday, he can rescind the contract with no liability for breach of contract. ANS: T MSC: AACSB Analytic
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11. The Truth-in-Lending Act requires disclosure of the cost of credit as an annual percentage rate, which may be calculated in one of three different ways. ANS: F MSC: AACSB Analytic 12. The NHTSA has the authority to set motor vehicle safety standards that promote crash prevention. ANS: T MSC: AACSB Analytic 13. The United States Postal Service plays an important role in consumer protection as it files many cases to close down mail fraud operations. ANS: T MSC: AACSB Analytic 14. A warranty creates a duty on the seller's part that the goods and services she sells will conform to cer- tain qualities, characteristics, or conditions. ANS: T MSC: AACSB Analytic 15. A collection agency may not personally contact the debtor if the debtor has engaged a lawyer to rep- resent him. ANS: T MSC: AACSB Analytic 16. An employer must notify a job applicant or current employee that a credit report may be used and must obtain the applicant's consent prior to requesting an individual's credit report from a credit bureau. ANS: T
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Mann_BLRB 9_TB_Ch45 - Chapter 45-Consumer Protection...

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