Govmnt Reg of Business: Chapter 40 Flashcards
FTC
created to regulate business
Voluntary Compliance
when the FTC determine that a business has violated the law, it first asks the offender to sign a voluntary compliance affidavit promising to stop the prohibited activity
Administrative Hearings and Appeals
if the company refuses to stop voluntarily, the FTC takes the case to an administrative law judge within the agency
Consent Order
an agreement entered into by a wrongdoer and an administrative agency (such as the Securities and Exchange Commission or the FTC) in which the wrongdoer agrees not to violate the law in the future
cease and desist order
commanding the violator to stop the offending activity
What does Section 5 of the FTC Act prohibit?
“unfair and deceptive acts or practices”
The commission considers a practice to unfair if it meets all 3 tests:
it causes a substantial consumer injury, the harm of the injury outweighs any countervailing benefit, and the consumer could not reasonably avoid the injury
Can the FTC find a practice unfair without meeting the requirements of the 3 tests?
Yes
Does the FTC prohibit bait and switch?
a merchant may not advertise a product and then disparage it to consumers in an effort to sell a different item
What does Section 5 of the FTC Act?
anyone who receives unordered merchandise in the mail can treat is as a gift
FTC door to door rules?
a salesperson is required to notify the buyer that she has the right to cancel the transaction prior to midnight of the third business day thereafter
Truth In Lending Act
passed to ensure that consumers were adequately informed about credit terms before entering into a loan and could compare the cost of credit
Open-End Credit
a credit transaction in which the lender makes a series of loans that the consumer can repay at once or in installments
Closed-End Credit
in this, there is only one loan, and the borrower knows the amount and the payment schedule in advance
Home Equity Loans
used by scam artists, secured by a second mortgage to finance fraudulent repairs
Recission
consumers have the right to rescind a mortgage for up to three business days after the signing
Under TILA, how much in charges are you liable for before you notify the credit card company?
the first $50
Fair Credit Billing Act
provides additional protection for credit card holders
consumer reporting agencies
businesses that supply consumer reports to third parties
consumer report
any communication about a consumer’s creditworthiness, character, general reputation, or lifestyle that is considered as a factor in establishing credit, obtaining insurance, securing a job, acquiring a gvmnt license, or for any other legitimate business need
FCRA
Fair Credit Reporting Act to ensure that consumer credit reports are accurate
investigative reports
reports that discuss character, reputation, or lifestyle become obsolete in 3 months
FACTA
Fair and Accurate Credit Transactions Act is to reduce identity theft
National Fraud Alert System
permits consumers who fear they may be the victim of identity theft to place an alert in their credit files, warning financial institutions to investigate carefully before issuing any new credit
Gramm-Leach-Bliley Privacy Act of 1999
act in which banks, other financial institutions, and consumer reporting agencies must notify a consumer (1) before disclosing any personal info to a 3rd party or (2) if there has been unauthorized access to the consumer’s sensitive personal info
FDCPA
Fair Debt Collection Practices Act - states that “abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy”
ECOA
Equal Credit Opportunity Act - prohibits any creditor from discriminating against a borrower bacuse of race, color, religion, national origin, sex, marital statues, age, or because the borrower is receiving welfare
full warranty
the warrantor must promise to fix a defective product for a reasonable time without charge
