Question 1

The Equal Credit Opportunity Act applies to all businesses that regularly extend credit,including financial institutions,retail stores,and credit-card issuers.

Accepted Answer

The Equal Credit Opportunity Act (ECOA) applies to all businesses which regularly extend credit, including financial institutions, retail stores, and credit-card issuers. The ECOA's purpose is to prevent discrimination in credit extension.
Multiple Choice Questions

Question 2

The Consumer Financial Protection Bureau regulates insurance companies.

Accepted Answer

The Consumer Financial Protection Bureau does not regulate insurance companies, Internet service providers, real estate agents and brokers, lawyers, car dealers, or persons and businesses regulated by the Securities and Exchange Commission. It applies to banks and other financial businesses that extend credit or service loans, provide real estate settlement or appraisal services, take deposits, transmit funds, cash or guarantees checks, provide financial data processing services, provide consumer report information such as credit bureaus, and collect debts.

Question 3

Under bankruptcy laws,certain creditors receive priority over others in the distribution of a debtor's assets.

Accepted Answer

Under bankruptcy laws, certain creditors receive priority over others in the distribution of a debtor's assets. The law divides creditors into priority classes.

Question 4

The Federal Food,Drug,and Cosmetic Act is administered by the Federal Trade Commission.

Accepted Answer

The Federal Food, Drug, and Cosmetic Act is administered by the Food and Drug Administration (FDA). This Act and the rules established under it by the FDA establish that prescription drugs must be proven effective and safe by extensive testing before they can be sold.

Question 5

______ ensures fair competition by preventing those who would deceive consumers from diverting trade from those who compete honestly.

Accepted Answer

Trade practice regulation ensures fair competition by preventing those who would deceive consumers from diverting trade from those who compete honestly. The Federal Trade Commission furthers consumer protection through trade practice regulation in several ways.

Question 6

The familiar telemarketing sales rule that established the national "Do Not Call" list is an example of a(n)______.

Accepted Answer

The familiar telemarketing sales rule that established the national Do Not Call list is an example of a trade regulation rule. At the recommendation of the Bureau of Consumer Protection, the five-member Commission adopts trade regulation rules in exercising its quasi-legislative power.

Question 7

In a bankruptcy proceeding against an individual,the individual's property can be liquidated under Chapter 7 of the bankruptcy law.

Accepted Answer

In a bankruptcy proceeding against an individual, the individual's property either will be liquidated under Chapter 7 of the bankruptcy law and the debts discharged, or the debts will be adjusted under Chapter 13. Under Chapter 13, individuals who have secured debts of less than $1,081,400 and unsecured debts of less than $360,475 can have their debts adjusted by the court for repayment.

Question 8

The bankruptcy laws are subject to regulatory interpretation.

Accepted Answer

The Federal Trade Commission does not administer all consumer protection laws. The bankruptcy laws are not subject to regulatory interpretation and depend upon assertion by private debtors, both in their capacity as consumers and in business.

Question 9

Among the costs frequently paid by debtors that are not included in the finance charge are recording fees and taxes.

Accepted Answer

Among the costs frequently paid by debtors which are not included in the finance charge are recording fees and taxes, such as a sales tax, which are not usually included in the listed selling price. These are items of a fixed nature, the proceeds of which do not go to a creditor.

Question 10

In a bankruptcy proceeding,the debts are either liquidated under Chapter 7 or adjusted under Chapter 13 of the bankruptcy law.

Accepted Answer

In a bankruptcy proceeding, an individual's property either will be liquidated under Chapter 7 of the bankruptcy law and the debts discharged, or the debts will be adjusted under Chapter 13.

Question 11

The regulatory center for federal consumer protection is the ______.

Accepted Answer

Although the Federal Trade Commission Act protects businesses as well as consumers, the consumer protection mission of the Federal Trade Commission (FTC) is promoted by a special bureau called the Bureau of Consumer Protection. This body within the FTC is the regulatory center for federal consumer protection.

Question 12

The Fair Debt Collection Practices Act exempts attorneys who collect consumer debts on behalf of their clients.

Accepted Answer

The Fair Debt Collection Practices Act applies to the Internal Revenue Service and attorneys who collect consumer debts on behalf of their clients. Due to complaints that some debt-collection agencies used techniques of harassment, deception, and personal abuse to collect debts, Congress in 1978 passed the Fair Debt Collection Practices Act.

Question 13

In a bankruptcy proceeding,a voluntary petition is one filed by a creditor.

Accepted Answer

In a bankruptcy proceeding, a voluntary petition is one filed by a debtor; an involuntary petition is filed by one or more creditors of a debtor. Bankruptcy proceedings begin upon the filing of either a voluntary or involuntary petition to the court.

Question 14

The Bureau of Consumer Protection may allege that an individual or company has violated Section 5 of the Federal Trade Commission Act,which prohibits unfair or deceptive acts or practices.The alleged individual or company is called a(n)______.

Accepted Answer

The Bureau of Consumer Protection may allege that an individual or company has violated Section 5 of the Federal Trade Commission (FTC) Act, which prohibits unfair or deceptive acts or practices. The alleged individual or company is called a respondent. The FTC prosecutes businesses for committing unfair or deceptive trade practices.

Question 15

According to the Fair Debt Collection Practices Act,a collector must only telephone a debtor before 8:00
A.M. or after 9:00 P.M. so as to not disturb the debtor while he or she is at work.

Accepted Answer

According to the Fair Debt Collection Practices Act, a collector cannot telephone a debtor before 8:00 A.M. or after 9:00 P.M. The collector cannot physically threaten the debtor.

Question 16

The Magnuson-Moss Warranty Act establishes rules for resolving billing disputes with a credit card issuer.

Accepted Answer

The Fair Credit Billing Act establishes rules for resolving billing disputes with a credit card issuer. It is administered by the Federal Trade Commission.

Question 17

The trustee in bankruptcy is elected by a debtor to represent the debtor's estate in taking possession of and liquidating the debtor's property.

Accepted Answer

The trustee in bankruptcy is elected by the creditors to represent a debtor's estate in taking possession of and liquidating the debtor's property. The trustee in bankruptcy is an important person in the bankruptcy proceeding.

Question 18

According to the Fair Debt Collection Practices Act,a debt collector is not required to disclose his or her identity as a debt collector to debtors when attempting to collect a legitimate,delinquent debt.

Accepted Answer

According to the Fair Debt Collection Practices Act, a collector cannot fail to disclose his or her identity as a collector. The collector also cannot place collect calls to the debtor.

Question 19

The Fair Debt Collection Practices Act applies only to consumer debt collections.

Accepted Answer

The Fair Debt Collection Practices Act applies only to consumer debt collections. Due to complaints that some debt-collection agencies used techniques of harassment, deception, and personal abuse to collect debts, Congress in 1978 passed the Fair Debt Collection Practices Act.

Question 20

In the context of the Magnuson-Moss Warranty Act,under full warranties,a warrantor does not have to replace a defective product,if a buyer of the product does not pay shipping costs.

Accepted Answer

In the context of the Magnuson-Moss Warranty Act, under full warranties, a warrantor must repair or replace a defective product within a reasonable time and at no charge, including no shipping costs. This act applies to all product warranties on consumer products costing more than $15.

Quiz 18: Regulations Protecting Consumer Purchases, privacy, and Financial Activities