Govmnt Reg of Business: Chapter 40

Question 1

FTC

Answer 1

created to regulate business

Question 2

Voluntary Compliance

Answer 2

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

Question 3

Administrative Hearings and Appeals

Answer 3

if the company refuses to stop voluntarily, the FTC takes the case to an administrative law judge within the agency

Question 4

Consent Order

Answer 4

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

Question 5

cease and desist order

Answer 5

commanding the violator to stop the offending activity

Question 6

What does Section 5 of the FTC Act prohibit?

Answer 6

“unfair and deceptive acts or practices”

Question 7

The commission considers a practice to unfair if it meets all 3 tests:

Answer 7

it causes a substantial consumer injury, the harm of the injury outweighs any countervailing benefit, and the consumer could not reasonably avoid the injury

Question 8

Can the FTC find a practice unfair without meeting the requirements of the 3 tests?

Answer 8

Yes

Question 9

Does the FTC prohibit bait and switch?

Answer 9

a merchant may not advertise a product and then disparage it to consumers in an effort to sell a different item

Question 10

What does Section 5 of the FTC Act?

Answer 10

anyone who receives unordered merchandise in the mail can treat is as a gift

Question 11

FTC door to door rules?

Answer 11

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

Question 12

Truth In Lending Act

Answer 12

passed to ensure that consumers were adequately informed about credit terms before entering into a loan and could compare the cost of credit

Question 13

Open-End Credit

Answer 13

a credit transaction in which the lender makes a series of loans that the consumer can repay at once or in installments

Question 14

Closed-End Credit

Answer 14

in this, there is only one loan, and the borrower knows the amount and the payment schedule in advance

Question 15

Home Equity Loans

Answer 15

used by scam artists, secured by a second mortgage to finance fraudulent repairs

Question 16

Recission

Answer 16

consumers have the right to rescind a mortgage for up to three business days after the signing

Question 17

Under TILA, how much in charges are you liable for before you notify the credit card company?

Answer 17

the first $50

Question 18

Fair Credit Billing Act

Answer 18

provides additional protection for credit card holders

Question 19

consumer reporting agencies

Answer 19

businesses that supply consumer reports to third parties

Question 20

consumer report

Answer 20

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

Question 21

FCRA

Answer 21

Fair Credit Reporting Act to ensure that consumer credit reports are accurate

Question 22

investigative reports

Answer 22

reports that discuss character, reputation, or lifestyle become obsolete in 3 months

Question 23

FACTA

Answer 23

Fair and Accurate Credit Transactions Act is to reduce identity theft

Question 24

National Fraud Alert System

Answer 24

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

Question 25

Gramm-Leach-Bliley Privacy Act of 1999

Answer 25

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

Question 26

FDCPA

Answer 26

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”

Question 27

ECOA

Answer 27

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

Question 28

full warranty

Answer 28

the warrantor must promise to fix a defective product for a reasonable time without charge