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Business Law Final - Ch 17 Questions with Solutions
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Business Law Final - Ch 17
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Business Law Final - Ch 17What are natural persons who incur debt "primarily for personal, family or household
purposes"? - answer a consumer
Star automobile dealership buys a television set for its waiting room. Is star a
consumer? explain. - answer star is not a consumer in most states because it did not
buy the TV for personal, family, household or industrial purposes.
Explain the difference between a cease-and-desist order and a consent order. which
type of order is used most frequently at the FTC for fro consumer protection? Why do
you suppose this type of order is most often used? - answer a cease-and-desist order
comes from an administrative law judge and is mandatory. A consent order is legally
binding but is agreed to between the FTC and a respondent (individual or company
accused). The consent order is used most frequently at the FTC because it is too
inefficient and time- consuming to take every case before an administrative law judge.
What is a trade regulation rule? - answer it is an official interpretation of the FTC act by
the Commission. It has the the force of law. it ensures fair competition by preventing
those who would decieve consumers from diverting trade from those who compete
honestly
The FTC's consumer protection is further covered under what practices? -
answeradvisory opinions- furnished a good idea about how the FTC views the legality of
a given trade practice.
industry guides- FTC specifies its view of the legality of a particular industries trade
practices.
When a company has advertised deceptively, the FTC can require it to run ads that
admit the prior errors and fix erroneous information, a concept known as what? -
answercorrective advertising
Readers digest sent out some 17 million sweepstakes promotions to consumers that
featured "travel checks" and "cash convertible bonds" that the FTC claimed were
deceptive and violated a previous consent order as well. what potnential fine did the
digest face? - answerreaders digest faced a potential fine of 10,000 per offense with
each of the 17 million promotions being a separate offense. In actuality the the readers
digest was fined $2 for some 4 million letters it mailed
What are other remedies used by the FTC in certain circumstances? - answer1)
recission of contracts (each party returns what they got form each other)
2) refund of money or return of property
3) payment of damages to consumers
, 4) public notification of trade practice violations
What does the FTC look at to determine deception? - answer-point of view of the
"reasonable customer"
-both "expressed" and "implied" claims
-what the ad does not say
-whether or not the claim would be "material"
-whether the advertiser has sufficient evidence to support the claims in the ad
The mosquito No Company claims that its electronic mosquito device will "eliminate all
mosquito problems within a one-half acre area" Actually, the device will only work if
there is no standing water on the half acre. explain how the FTC will evaluate this
advertising for deception. - answerthe FTC will evaluate this advertising and likely
determine it deceptive for failing to disclose that the claim only applies to areas where
there is not standing water.
What are the political aspects of the FTCs enforcements? - answerThe views of the
FTC commissioner reflect the president who appointed them, commissioners are
promoted for four year terms.
congress annually approves FTC budget.
congress can also cut budget if it disapproves of the rules made and the cases brought
by the FTC.
What does the ECOA prevent? - answer(equal credit opportunity act) discrimination
based on sex, marital status, race, color, age, religion, national orgin or receipt of
welfare in consumer credit transaction. most focused on sex discrimination.
Jane Thomas applies for automobile financing at kenwood Cars inc. a used- car
dealership. The dealership obtains a credit report on her. on the basis of this report, the
dealership denies her credit. the manager informs her that she will have to get her
husband to cosign he application if she wants dealership financing. she refuses, and
sues Kenwood under the ECOA (equal credit opportunity act) What was the result and
why? - answerjane will win under the ECOA because the manager informed her that
she would have to get her husband to cosign. the proper thing for the manager to have
done would have been to tell her she would have to get "someone else" to cosign with
her.
What is redlining? - answera refusal to make a loan which leads to discriminatory
practice. ( refusing to make loans in certain areas where property values are low)
The ABC department store refuses credit to Mary Jane. Mary Jane has a good job and
no debts. She cannot understand the refusal. What would you suggest Mary Jane do?
Explain. - answerMary jane should check her credit rating and should determine
whether the department store refused her credit on the basis of a credit report. The
store may be liable if it failed to identify that it had refused her credit on the basis of an
ADVERSE credit report
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