Chapter Review
1.The Federal Trade Commission (FTC) prohibits “unfair and deceptive acts or practices.” A practice is unfair if it meets the following three tests:
•It causes a substantial consumer injury.
•The harm of the injury outweighs any countervailing benefit.
•The consumer could not reasonably avoid the injury.
2.The FTC considers an advertisement to be deceptive if it contains an important misrepresentation or omission that is likely to mislead a reasonable consumer.
3.FTC rules prohibit bait and switch advertisements. A merchant may not advertise a product and then disparage it to consumers in an effort to sell a different item.
4.The FTC prohibits telemarketers from calling telephone numbers listed on its do-not-call registry.
=.Consumers may keep as a gift any unordered merchandise that they receive in the mail.
6.Under the 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.
7.In all loans regulated by the Truth in Lending Act (TILA), the disclosure must be clear and in meaningful sequence. The lender must disclose the finance charge and the annual percentage rate.
8.In the case of a high-rate home equity loan, the lender must notify the consumer at least three business days before the closing that (1) he does not have to go through with the loan (even if he has signed the loan agreement) and (2) he could lose his house if he fails to make payments. If the duration of a high-rate home equity loan is less than five years, it may not contain balloon payments.
9.Under TILA, consumers have the right to rescind a mortgage (other than a first mortgage) for three business days after the signing. If the lender does not comply with the disclosure provisions of TILA, the consumer may rescind for up to three years from the date of the mortgage.
10.Under TILA, a credit card holder is liable only for the first $=0 in unauthorized charges made before the credit card company is notified that the card was stolen. If, however, you wait more than two days to report the loss of a debit card, your bank will only reimburse you for losses in excess of $=00. If you fail to report the lost debit card within 60 days of receipt of your bank statement, the bank is not liable at all.
11.In the event of a dispute between a customer and a merchant, the credit card company cannot bill the customer if:
•She makes a good faith effort to resolve the dispute
•The dispute is for more than $=0, and
•The merchant is in the same state where she lives or is within 100 miles of her house.
12.Under the Fair Credit Billing Act, a credit card company must promptly investigate and respond to any consumer complaints about a credit card bill.
13.Under the Fair Credit Reporting Act:
•A consumer report can be used only for a legitimate business need
•A consumer reporting agency cannot report obsolete information
•An employer cannot request a consumer report on any current or potential employee without the employee’s permission, and
•Anyone who makes an adverse decision against a consumer because of a credit report must reveal the name and address of the reporting agency that supplied the negative information.
14.The Fair and Accurate Credit Transactions Act permits consumers to obtain one free credit report every year from each of the three major reporting agencies.
1=.Under the Fair Debt Collection Practices Act, a debt collector may not harass or abuse debtors.
16.The Equal Credit Opportunity Act prohibits any creditor from discriminating against a borrower on the basis of race, color, religion, national origin, sex, marital status, age, or because the borrower is receiving welfare.
17.The Magnuson-Moss Warranty Act requires any supplier that offers a written warranty on a consumer product costing more than $1= to disclose the terms of the warranty in simple and readily understandable language before the sale.
18.The Consumer Product Safety Commission evaluates consumer products and develops safety standards.