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Quiz 45 :

Environmental Protection

Quiz 45 :

Environmental Protection

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Credit-Card Rules Maria Ochoa receives two new credit cards on May 1. She has solicited one of them from Midtown Department Store, and the other arrives unsolicited from High-Flying Airlines. During the month of May, Ochoa makes numerous credit-card purchases from Midtown Department Store, but she does not use the High-Flying Airlines card. On May 31, a burglar breaks into Ochoa's home and steals both credit cards, along with other items. Ochoa notifies the Midtown Department Store of the theft on June 2, but she fails to notify High-Flying Airlines. Using the Midtown credit card, the burglar makes a $500 purchase on June 1 and a $200 purchase on June 3. The burglar then charges a vacation flight on the High-Flying Airlines card for $1,000 on June 5. Ochoa receives the bills for these charges and refuses to pay them. Discuss Ochoa's liability for the charges.
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Yes. Section 5 of the Federal Trade Commission Act says that if a door-to-door salesman fails to give consumers a three day opportunity to cancel their sale, he has committed a violation of the section. This protects consumers from savvy salesmen.
Here, the G family attempted to cancel the sale within that three day period, so RB was required by law to allow the G family to do so. Their failure constitutes a violation of Section 5.

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A QUESTION OF ETHICS: Debt-Collection Practices. After graduating from law school-and serving time in prison for attempting to collect debts by posing as an FBI agent-Bany Sussman theorized that if a debt-collection business collected only debts that it owned as a result of buying checks written on accounts with insufficient funds (NSF checks), it would not be subject to the Federal Debt Collection Practices Act (FDCPA). Sussman formed Check Investors, Inc., to act on his theory. Check Investors bought more than 2.2 million NSF checks, with an estimated face value of about $348 million, for pennies on the dollar. Check Investors added a fee of $125 or $130 (more than the legal limit in most states) to the face amount of each check and aggressively pursued its drawer to collect. The firm's employees were told to accuse drawers of being criminals and to threaten them with arrest and prosecution. The threats were false. Check Investors never took steps to initiate a prosecution. The employees contacted the drawers' family members and used "saturation phoning"-phoning a drawer numerous times in a short period. They used abusive language, referring to drawers as "deadbeats," "retards," "thieves," and "idiots." Between January 2000 and January 2003, Check Investors netted more than $10.2 million from its efforts. [ Federal Trade Commission v. Check Investors, Inc., 502 F.3d 159 (3d Cir. 2007)] (a) The Federal Trade Commission filed a suit in a federal district court against Check Investors and others, alleging, in part, violations of the FDCPA. Was Check Investors a "debt collector," collecting "debts," within the meaning of the FDCPA? If so, did its methods violate the FDCPA? Were its practices unethical? What might Check Investors argue in its defense? Discuss. (b) Are "deadbeats" the primary beneficiaries of laws such as the FDCPA? If not, how would you characterize debtors who default on their obligations?
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(a) The Fair Debt Collection Practices Act (FDCPA) protects consumers from overzealous debt collectors. Under this Act, debt collectors are ones that work for an authorized collection agency. These debt collectors cannot contact the consumer at work if the employer objects, contact the debtor at inconvenient times, contact third parties, or harass or intimidate the debtor.
Although CI can claim they are not an authorized collection agency, they are representing themselves as such to debtors. CI also applies usury fees to their collections. Furthermore, they are harassing the debtors by calling them names and calling them frequently. The court will probably will probably find CI in violation of the act.
(b) The FDCPA protects all consumers from possibly unsavory practices of collection agencies. Debtors who have debts that are sent to collection agencies are not necessarily dead beats, nor should they be characterized as such. Some individuals face extenuating circumstances that may make it difficult to pay back debts, despite their best efforts.

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QUESTION WITH SAMPLE ANSWER: Sales. On June 28, a salesperson for Renowned Books called on the Gonchars at their home. After a very persuasive sales pitch by the agent, the Gonchars agreed in writing to purchase a twenty-volume set of historical encyclopedias from Renowned Books for a total of $299. A down payment of $35 was required, with the remainder of the cost to be paid in monthly payments over a one-year period. Two days later, the Gonchars, having second thoughts, contacted the book company and stated that they had decided to rescind the contract. Renowned Books said this would be impossible. Did Renowned Books violate any consumer law by not allowing the Gonchars to rescind their contract? Explain.
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Yes. Section 5 of the Federal Trade Commission Act says that if a door-to-door salesman fails to give consumers a three day opportunity to cancel their sale, he has committed a violation of the section. This protects consumers from savvy salesmen.
Here, the G family attempted to cancel the sale within that three day period, so RB was required by law to allow the G family to do so. Their failure constitutes a violation of Section 5.

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CAS PROBLEM WITH SAMPLE ANSWER: Food Labeling. The Nutrition Labeling and Education Act (NLEA) requires packaged food to have a "Nutrition Facts" panel that sets out "nutrition information," including "the total number of calories" per serving. Restaurants are exempt from this requirement. The NLEA also regulates nutritional content claims, such as "low sodium," that a purveyor might choose to add to a label. The NLEA permits a state or city to require restaurants to disclose nutrition information about the food they serve, but expressly preempts state or local attempts to regulate nutritional content claims. New York City Health Code Section 81.50 requires 10 percent of the restaurants in the city, including McDonald's, Burger King, and KFC, to post calorie content information on their menus. The New York State Restaurant Association (NYSRA) filed a suit in a federal district court, contending that the NLEA preempts Section 81.50. (Under the U.S. Constitution, state or local laws that conflict with federal laws are preempted.) Is the NYSRA correct? Explain. [ New York State Restaurant Association v. New York City Board of Health, 556 F.3d 114 (2d Cir. 2009)]
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Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $1,699. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $2,199 and would sell her one for $1,999. Sage was disappointed but decided to purchase the FX model. When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk about that. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the following questions. What organization has the authority to ban the sale of scooters based on safety concerns? DEBATE THIS: Laws against bait-and-switch advertising should be abolished because no consumer is ever forced to buy anything.
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Debt Collection 55th Management Corp. in New York City owns residential property that it leases to various tenants. In June 2000, claiming that one of the tenants, Leslie Goldman, owed more than $13,000 in back rent, 55th retained Jeffrey Cohen, an attorney, to initiate nonpayment proceedings. Cohen fi led a petition in a New York state court against Goldman, seeking recovery of the unpaid rent and at least $3,000 in attorneys' fees. After receiving notice of the petition, Goldman fi led a suit in a federal district court against Cohen. Goldman contended that the notice of the petition constituted an initial contact that, under the Fair Debt Collection Practices Act (FDCPA), required a validation notice. Because Cohen did not give Goldman a validation notice at the time, or within five days, of the notice of the petition, Goldman argued that Cohen was in violation of the FDCPA. Should the fi ling of a suit in a state court be considered "communication," requiring a debt collector to provide a validation notice under the FDCPA? Why or why not? [Goldman v. Cohen, 445 F.3d 152 (2d Cir. 2006)]
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Food Labeling One of the products that McDonald's Corp. sells is the Happy Meal®, which consists of a McDonald's food entree, a small order of french fries, a small drink, and a toy. In the early 1990s, McDonald's began to aim its Happy Meal marketing at children aged one to three. In 1995, McDonald's began making nutritional information for its food products available in documents known as "McDonald's Nutrition Facts." Each document lists each food item that the restaurant serves and provides a nutritional breakdown, but the Happy Meal is not included. Marc Cohen fi led a suit in an Illinois state court against McDonald's, alleging, among other things, that the defendant had violated a state law prohibiting consumer fraud and deceptive business practices by failing to adhere to the Nutrition Labeling and Education Act (NLEA) of 1990. The NLEA sets out different requirements for products specifically intended for children under the age of four-generally, the products' labels cannot declare the percent of daily value of nutritional components. Would this requirement be readily understood by a consumer who is not familiar with nutritional standards? Why or why not? Should a state court impose such regulations? Explain. [Cohen v. McDonald's Corp., 347 Ill.App.3d 627, 808 N.E.2d 1, 283 Ill.Dec. 451 (1 Dist. 2004)]
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Deceptive Advertising Brian Cleary and Rita Burke filed a suit against the major cigarette maker Philip Morris USA, Inc., seeking class-action status for a claim of deceptive advertising. Cleary and Burke claimed that "light" cigarettes, such as Marlboro Lights, were advertised as safer than regular cigarettes, even though the health effects are the same. They contended that the tobacco companies concealed the true nature of light cigarettes. Philip Morris correctly claimed that it was authorized by the government to advertise cigarettes, including light cigarettes. Assuming that is true, should the plaintiffs still be able to bring a deceptive advertising claim against the tobacco company? Why or why not? [ Cleary v. Philip Morris USA, Inc., 683 F.Supp.2d 730 (N.D.III. 2010)]
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Unsolicited Merchandise Andrew, a resident of California, received an advertising circular in the U.S. mail announcing a new line of regional cookbooks distributed by the Every-Kind Cookbook Co. Andrew didn't want any books and threw the circular away. Two days later, Andrew received in the mail an introductory cookbook entitled Lower Mongolian Regional Cookbook , as announced in the circular, on a "trial basis" from Every-Kind. Andrew was not interested but did not go to the trouble to return the cookbook. Every-Kind demanded payment of $20.95 for the Lower Mongolian Regional Cookbook. Discuss whether Andrew can be required to pay for the book.
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To watch this chapter's video, Advertising Communication Law: Bait and Switch, go to www.cengagebrain.com and register your access code that came with your new book or log in to your existing account. Select the link for the "Business Law Digital Video Library Online Access" or "Business Law CourseMate." Click on "Complete Video List," view Video 48, and then answer the following questions: (a) Is the auto dealership's advertisement for the truck in the video deceptive? Why or why not? (b) Is the advertisement for the truck an offer to which the dealership is bound? Does it matter if Betty detrimentally relied on the advertisement? (c) Is Tony committed to buying Betty's trade-in truck for $3,000 because that is what he told her over the phone?
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Credit-Card Protection James A. McCoy held a credit card issued by Chase Bank USA, N.A. McCoy's cardholder agreement with Chase stated that he would receive preferred rates (lower interest rates) if he met certain conditions, such as making at least the required minimum payments when due. Without informing McCoy in advance of the increase, Chase raised the rates on McCoy's card when he defaulted on a payment. McCoy fi led a complaint in a California state court against Chase for increasing the interest rate and applying that increase retroactively. Chase removed the action to the federal district court. McCoy claimed that Chase had violated Regulation Z by failing to notify him of the increase until after it had taken effect. He argued that he was entitled to notice from Chase before it raised the interest rate on his credit card due to his delinquency or default. In 2009, Congress enacted credit-card rules that amended the Truth in Lending Act (TILA) to require forty-five days' advance notice of most increases in credit-card annual percentage rates. Chase, however, had increased McCoy's interest rate before the new rules were enacted. Before the 2009 amendments to TILA's credit-card rules took effect, did Regulation Z require a lender to provide a cardholder with a change-in- terms notice before raising the cardholder's interest rate following delinquency or default? Explain. How did the amendments change the law? [Chase Bank USA, N.A. v. McCoy, ___U.S. ___, 131 S.Ct. 871, 178 L.Ed.2d 716 (2011)]
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Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $1,699. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $2,199 and would sell her one for $1,999. Sage was disappointed but decided to purchase the FX model. When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk about that. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the following questions. Suppose that Sage had ordered the scooter through the dealer's Web site but that the dealer had been unable to deliver it by the date promised. What would the FTC have required the merchant to do in that situation? DEBATE THIS: Laws against bait-and-switch advertising should be abolished because no consumer is ever forced to buy anything.
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Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $1,699. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $2,199 and would sell her one for $1,999. Sage was disappointed but decided to purchase the FX model. When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk about that. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the following questions. Assuming that the clerk required a cosigner based on Sage's race or gender, what act prohibits such credit discrimination? DEBATE THIS: Laws against bait-and-switch advertising should be abolished because no consumer is ever forced to buy anything.
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Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $1,699. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $2,199 and would sell her one for $1,999. Sage was disappointed but decided to purchase the FX model. When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk about that. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the following questions. Did the dealer engage in deceptive advertising? Why or why not? DEBATE THIS: Laws against bait-and-switch advertising should be abolished because no consumer is ever forced to buy anything.
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