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Business Law
Q:
A company charged with deceptive advertising must go through a hearing to resolve the complaint.
Q:
An ad that contains a "half truth"information that is true but incompleteis not deceptive.
Q:
Puffing is prohibited.
Q:
The test for whether an ad is deceptive is whether a reasonable consumer would be deceived.
Q:
A credit agency may not issue a credit report to any creditor without first obtaining the borrower's permission.
Q:
Those who lease consumer goods in the ordinary course of their business are not subject to the Truth-in-Lending Act.
Q:
An individual who loses a credit card is limited to liability of $500 per card for unauthorized charges made before the issuer is notified.
Q:
Regulation Z applies to any installment sales contract.
Q:
Under the Truth-in-Lending Act, credit terms must be clearly and conspicuously disclosed.
Q:
Under federal law, persons who receive unsolicited merchandise can use it but must pay for it.
Q:
Every food product label must include a warning of the possible effects of the product on consumer health.
Q:
Package labels must use words that the ordinary consumer understands.
Q:
Telephone solicitation using an automatic dialing system is prohibited.
Q:
It is generally illegal to send an ad via fax without the recipient's permission.
Q:
The Federal Trade Commission is charged with preventing unfair and deceptive trade practices.
Q:
Advertising that appears to be based on factual evidence, even if it is not, will not be deemed deceptive.
Q:
A deceptive advertisement is one that is false or misleading.
Q:
Ace Tobacco Corporation (ATC) sells tobacco products. On the packages of its smokeless tobacco products, must ATC include anything?
Q:
Mike wants to go into the business of direct merchandise sales. What are the legal problems that Mike might encounter in telemarketing? In selling door-to-door? In marketing over the Internet? In soliciting sales through the mail?
Q:
Fiona goes to GreatNuTech, a consumer electronics store in Houston, Texas, to buy a pocket calculator. Ilsa, the salesperson, sells Fiona a top-of-the-line computer system, which Fiona does not need and cannot afford. This is a violation of
a. no federal or state law.
b. the Consumer Sales Act.
c. the Texas Deceptive Trade Practices Act.
d. the Truth-in-Lending Act.
Q:
Fun-E Products, Inc., makes and sells toys. The government agency that has the authority to remove a potentially hazardous toy from the market is
a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Q:
Green Grocer Corporation makes and markets a variety of processed food products. The federal agency responsible for enforcing health regulations concerning food is
a. the Consumer Product Safety Commission.
b. the Federal Reserve Board of Governors.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Q:
Dave opens an account at an Enuf E-Stuf Store, and buys an iPod and other items, but makes no payments on the account. To collect the debt, Enuf E-Stuf contacts Dave's parents. 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.
Q:
Dina takes out a student loan from Eagle Bank. When she fails to make the scheduled payments for six months, Eagle advises her of further action that it will take. 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.
Q:
Ace Payments Agency harasses Britney in an attempt to collect payment for a shipment of CDs that she returned to Central Music Company four months earlier. This is a violation of
a. no federal law.
b. the Fair Credit Reporting Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Q:
Fact Pattern 44-1
Leo opens a credit card account with Macro Credit, Inc., and later marries Nina. After they divorce, Macro attempts to collect the outstanding balance on the card from Nina. She disputes the debt. Macro reviews its files to confirm the amount of the debt, and leaves the information on her credit report.Refer to Fact Pattern 44-1. According to the court in Case 44.2, Johnson v. MBNA America Bank, N.A., the law that applies in these circumstances uses the term "investigation" to include
a. a means by which consumers can correct inaccurate information in their credit reports.
b. a system by which creditors can avoid responding to consumers who dispute clearly legitimate debts.
c. supercilious requests by consumers.
d. superficial inquiries by creditors.
Q:
Fact Pattern 44-1
Leo opens a credit card account with Macro Credit, Inc., and later marries Nina. After they divorce, Macro attempts to collect the outstanding balance on the card from Nina. She disputes the debt. Macro reviews its files to confirm the amount of the debt, and leaves the information on her credit report.Refer to Fact Pattern 44-1. According to the court in Case 44.2, Johnson v. MBNA America Bank, N.A., Macro
a. conducted a reasonable investigation.
b. conducted an unreasonable investigation.
c. exceeded the requirements of the Fair Credit Reporting Act.
d. met the standards of the applicable state deceptive practices law.
Q:
Beth's application to Community Bank for a credit card is denied. Beth can obtain information on her credit history in a credit agency's files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
Q:
Sue buys a car from her neighbor, Tim, for $5,000 and agrees to make monthly payments of $500 until the price is paid. This transaction is subject to
a. the Fair Credit Reporting Act.
b. the FTC's used-car dealers' "Buyer's Guide" rule.
c. the Truth-in-Lending Act.
d. none of the above.
Q:
EZ Credit Corporation is a lender subject to the Truth-in-Lending Act. This act protects
a. debtors who are artificial or natural persons.
b. only debtors who are artificial persons, such as corporations.
c. only debtors who are natural persons.
d. only debtors who are not creditors.
Q:
Financial Credit Corporation's ordinary business is to lend money to consumers. Financial must disclose all credit terms in
a. all credit transactions.
b. any credit transaction in which payments are to be made in more than four installments.
c. any credit transaction in which payments are to be made in more than one installment.
d. no credit transaction.
Q:
Jack receives unsolicited merchandise in the mail. Jack
a. may keep the merchandise without any obligation to the sender.
b. must return the merchandise within five days to avoid payment.
c. must return the merchandise within fifteen days to avoid payment.
d. must return the merchandise within thirty days to avoid payment.
Q:
Business Corporation is subject to Regulation Z, which applies to
a. business advertising.
b. credit transactions.
c. labeling and packaging.
d. online sales of goods.
Q:
Luscious Treats, Inc., wants to market a new snack food. On the product's label, standard nutrition facts are
a. mandated by the U.S. Chamber of Commerce.
b. required by the Nutrition Labeling and Education Act.
c. strictly voluntary.
d. warranted by the nature of the food.
Q:
Quality Coffee, Inc., processes and sells a variety of coffee products. Quality's product packages must include
a. neither the identity of the product nor the net quantity of the contents.
b. the identity of the product and the net quantity of the contents.
c. the identity of the product only.
d. the net quantity of the contents only.
Q:
Eagle Corporation labels its products. Federal labeling and packaging rules are enforced by the Federal Trade Commission and
a. the U.S. Department of Commerce.
b. the U.S. Department of Health and Human Services.
c. the U.S. Department of Justice.
d. the U.S. Department of the Treasury.
Q:
Miracle Products, Inc., engages in deceptive advertising when it markets its product Weight-Off as able to help consumers lose weight in their sleep. Miracle is ordered to include in all future advertising of Weight-Off the statement, "Weight-Off will not cause anyone to lose weight in their sleep." This is
a. a counteradvertising order.
b. a multiple product order.
c. bait-and-switch advertising.
d. excessive abuse of authority.
Q:
Consumer Products, Inc. (CPI), in its ads, makes claims about its products that are obvious exaggerations and claims that are false but appear to be true. CPI may be subject to sanctions for
a. neither the false claims nor the obvious exaggerations.
b. only the false claims.
c. only the obvious exaggerations.
d. the false claims and the obvious exaggerations.
Q:
All-Rite Appliance Store advertises freezers at a "Special Low Price of $99." When Bob tries to buy one of the freezers, Cathy, the salesperson, tells him that they are all sold and no more are obtainable. Cathy adds that All-Rite has other freezers for $1,299. This is
a. a legitimate sales technique.
b. bait-and-switch advertising.
c. counteradvertising.
d. puffery.
Q:
State laws often provide more significant protections for the consumer than do federal laws.
Q:
The Consumer Product Safety Commission prohibits manufacturers from marketing products that are not marked with its "seal of approval."
Q:
Drugs must be shown to be effective and safe before they can be marketed.
Q:
The major credit reporting agencies must provide consumers with free copies of their own credit reports every twelve months.
Q:
If a debt is unpaid for more than thirty days, a creditor can use any means to collect.
Q:
The Fair Debt Collection Practices Act applies to anyone who tries to collect a debt.
Q:
A business that reports information to credit agencies and does not respond adequately to a customer complaint may be liable for damages.
Q:
Omega Company operates a computer chip production plant. Paula is the president of Omega. Ron, a representative of the Occupational Safety and Health Administration, inspects the plant and, citing a certain regulation, orders Omega to take specified steps immediately to improve sanitation at the plant. Paula believes that Ron is either exceeding his authority or that the regulation Ron claims to be enforcing is excessive. Can Omega ask a court for an order to stop enforcement of the regulation? If not, what can Omega do?
Q:
A-Plus Battery Company (ABC) makes batteries for motor vehicles. The Occupational Safety and Health Administration (OSHA) proposes a safety rule governing the handling of acids in the workplace, including chemicals ABC uses in its operations. ABC concludes that the rule will involve substantial compliance costs without significantly increasing workplace safety. ABC sends a letter to OSHA indicating its objections to the proposed rule and enclosing research reports and other data supporting those objections. Does OSHA have any obligation to consider these objections? What procedures must OSHA follow when it makes new rules, such as this one?
Q:
Fact Pattern 43-1
Alpha, Inc., markets "Beta Calling," a Voice over Internet Protocol service. Colorado State Agency concludes that Beta is a phone service and orders Alpha to pay state phone taxes. Alpha files a suit against Colorado to stop the order.Refer to Fact Pattern 43-1. Under the reasoning of the court in Case 43.3, Vonage Holdings Corp.v. Minnesota Public Utilities Commission, if federal policy is to encourage certain conduct, state law discouraging that conduct must
a. be preempted.
b. override policy considerations.
c. take precedence.
d. weigh equally in the balance.
Q:
Fact Pattern 43-1
Alpha, Inc., markets "Beta Calling," a Voice over Internet Protocol service. Colorado State Agency concludes that Beta is a phone service and orders Alpha to pay state phone taxes. Alpha files a suit against Colorado to stop the order.Refer to Fact Pattern 43-1. According to the court in Case 43.3, Vonage Holdings Corp.v. Minnesota Public Utilities Commission, federal policy is to
a. discourage state taxation of telecommunications services.
b. encourage state taxation of telecommunications services.
c. preserve a competitive market for interactive computer services.
d. uphold state agency decisions unfettered by their effect on a market.
Q:
The U.S. Social Security Administration is a federal agency. The Iowa Department of Social Services is a parallel state agency. If these agencies' actions conflict
a. the federal agency's actions will prevail.
b. the state agency's actions will prevail.
c. the two agencies' actions will be given equal weight.
d. the two agencies' actions will cancel each other.
Q:
Closed meetings of the Federal Communications Commission and other federal administrative agencies are permitted when
a. the subject of the meeting concerns accusing a person of a crime.
b. open meetings would frustrate the implementation of future agency actions.
c. the subject of the meeting involves matters relating to future litigation or rulemaking.
d. all of the above.
Q:
A failure of the Federal Bureau of Investigation to comply with a request under the Freedom of Information Act (FOIA) may be challenged in
a. a federal district court.
b. a hearing before the U.S. Freedom of Information Agency.
c. a meeting with Congress's FOIA subcommittee.
d. a special conference with the president of the United States.
Q:
Jay seeks information about Kim and other well-known businesspersons under the Freedom of Information Act. To obtain the information, Jay must
a. agree not to reveal any trade secrets.
b. describe the information.
c. get a court order.
d. have Kim's and the others' permission.
Q:
In reviewing the actions of the Environmental Protection Agency and other agencies, the courts
a. are usually reluctant to review questions of fact.
b. rarely defer to the technical expertise of administrative agencies.
c. often rule on the merits of policy determinations.
d. all of the above.
Q:
Digital Corporation wants to have a U.S. Department of Commerce regulation reviewed. Before a court will hear Digital's request for review, the company must
a. appeal simultaneously to the agency and the court.
b. bypass all administrative remedies and appeal directly to the court.
c. exhaust all administrative remedies.
d. ignore the regulation and wait for an agency to try to enforce it.
Q:
Regional Distributors, Inc., has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board. A significant difference between a trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during administrative hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. all of the above.
Q:
The functions of the Environmental Protection Agency, like those of most administrative agencies, include
a. adjudication.
c. declaration.
b. enunciation.
d. pronunciation.
Q:
The National Credit Union Administration (NCUA) discovers that Out-State Credit Union is violating an NCUA regulation. If this situation is resolved like most such disputes, the outcome will be
a. a negotiated settlement.
b. a trial and a fine.
c. a trial and an appeal to a higher authority.
d. a trial and the dissolution of the business.
Q:
The U.S. Bureau of Alcohol, Tobacco and Firearms conducts searches of certain businesses. This agency and other administrative agencies can conduct warrantless searches in
a. all industries.
b. highly regulated industries.
c. no industries.
d. newly regulated industries only.
Q:
Dina is a witness in a controversy involving the Environmental Protection Agency. Dina can be compelled to appear before an administrative law judge if she is served with
a. an order for specific performance.
b. a rule for parol evidence.
c. a subpoena ad testificandum.
d. a subpoena duces tecum.
Q:
The Internal Revenue Service (IRS) wants to review the financial reports of Jewel Corporation. The IRS can gain access to the reports through
a. a subpoena only.
b. Jewel's consent only.
c. Jewel's consent or a subpoena.
d. neither Jewel's consent nor a subpoena.
Q:
Alpha Corporation challenges a demand by the U.S. Bureau of Immigration Services (BIS) for some of Alpha's business records on the basis that it is too burdensome to make copies of the documents. Alpha will probably be
a. allowed to ignore the demand.
b. ordered to comply with the demand.
c. penalized by the BIS for impeding the investigation.
d. required to double the number of copies to review the challenge.
Q:
The Consumer Product Safety Commission issues a rule. Like the rules of other federal administrative agencies, this rule is compiled in
a. the Administrative Register of the Federal Government.
b. the Code of Federal Regulations.
c. the Federal Rules of Civil Procedure.
d. the United States Code.
Q:
The National Highway Traffic Safety Administration utilizes notice-and-comment rulemaking. This process begins with
a. a request to Congress to enact enabling legislation.
b. the filing of a complaint against a charged party.
c. the publication of a notice of proposed rulemaking.
d. the solicitation of public comments.
Q:
Congress leaves it to the Bureau of Land Management (BLM) to oversee the promulgation of detailed regulations in areas under the BLM's jurisdiction. This is
a. divine right.
b. the delegation doctrine.
c. gap-filling power.
d. unconstitutional conduct.
Q:
The Securities and Exchange Commission, like other federal administrative agencies, is part of the government's
a. administrative branch.
b. executive branch.
c. judicial branch.
d. legislative branch.
Q:
Persons who favor the creation of a National Biotech Agency to regulate the production of genetically altered agricultural products should concentrate their lobbying efforts on
a. Congress.
b. federal administrative agencies that oversee agricultural products.
c. the United States Supreme Court.
d. the president of the United States.
Q:
State and local agency actions prevail over federal agency operations.
Q:
The Government-in-the-Sunshine Act is also known as the "open meeting law."
Q:
The president of the United States has the power to appoint and remove federal officers from administrative agencies.
Q:
Any party may appeal the order of an administrative law judge directly to the United States Supreme Court.
Q:
Most administrative agencies do not have adjudicatory powers.
Q:
An administrative agency cannot conduct a search without a warrant.
Q:
There are no limits on the information that an administrative agency can demand as part of an investigation.
Q:
A subpoena ad testificandum is an order to an individual or organization to hand over certain records, papers, or books.
Q:
Administrative agencies must rely on the voluntary statements of third parties to fulfill the agencies' fact-gathering function.
Q:
Administrative process is the administration of law by an administrative agency.
Q:
Most administrative agencies do not have rule-making and adjudicatory powers.
Q:
In many ways, administrative agencies function independently of the rest of the government.