1.Miracle Pill. Katie advertised that she had developed a pill for women that would result in weight loss, wrinkle loss, and improved vitality; and for men would result in all those things, plus hair growth. Her television advertisement showed miracle results allegedly obtained by consumers. Katie cautioned, however, that ingestion of the pill for six months was required before results would be evident. The pill was wildly popular. The Federal Trade Commission, however, investigated and determined that Katie had failed to have a reasonable basis for the claims she made in advertisements. Katie claimed that she was merely involved in the use of generalities and clear exaggerations. The Federal Trade Commission disagreed and issued a formal administrative complaint against her. After a hearing, the Federal Trade Commission issued an order requiring that Katie stop advertising and selling the pills. After losing all appeals, Katie continued selling the pills until she was fined by the Federal Trade Commission. She has since left the country and cannot be located. Which of the following are generalities and clear exaggerations allowed by the Federal Trade Commission?

Multiple Choice

• Bait-and-switch advertising
• Puffing
• Hook-and-ladder advertising
• Huffing
• None of these, because the Federal Trade Commission does not allow generalities and clear exaggerations in advertisements.

2.The Burial Emporium. Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Fred also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Fred also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. After some pesky consumer complaints, the Federal Trade Commission and other federal agencies investigate Fred. He hires a good lawyer with his profits in an attempt to stay out of trouble. Which of the following is true regarding Fred's practice of making telephone solicitations late at night after people are tired?

Multiple Choice

• Under federal law this practice is legal because any consumer who does not want to talk to him can simply hang up.
• According to a Federal Trade Commission rule, if a telemarketer calls a residence after 9 p.m., the telemarketer is engaging in abusive behavior; therefore, Fred is in violation.
• According to a Federal Trade Commission rule, if a telemarketer calls a residence before 11 p.m., the telemarketer is not engaging in abusive behavior; therefore, Fred is not in violation.
• According to a Federal Trade Commission rule that is specific to funeral home directors, direct phone solicitation may not be made; therefore, Fred is in violation.
• According to a Federal Trade Commission rule that is specific to funeral home directors, direct phone solicitation may not be made after 7 p.m.; therefore, Fred is in violation.

3.Which of the following is not a requirement of the Federal Trade Commission's (FTC's) 1984 Used Motor Vehicle Registration Rule?

Multiple Choice

• A dealer must attach a buyer's guide label to any used car he or she is attempting to sell.
• The buyer's guide label must state that the car is being sold as is.
• The buyer's guide label must warn the customer that the seller is not guaranteeing anything at all about the performance of the car.
• The buyer's guide label must include a suggestion for the buyer to obtain an inspection of the used car before any decision to purchase.
• The buyer's guide label must include notice of a 30-day or 3,000-mile (whichever comes first) warranty on the car.

4.The Burial Emporium. Fred operates a funeral home called Fred's Burial Emporium. Fred likes to keep things simple. He has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Fred also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which a recent death has occurred because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Fred also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. After some pesky consumer complaints, the Federal Trade Commission and other federal agencies investigate Fred. He hires a good lawyer with his profits in an attempt to stay out of trouble. Which of the following is true regarding Fred's door-to-door solicitation and his practice of informing customers that there is no backing out of contracts entered into for funeral services?

Multiple Choice

• Fred's actions are legal so long as he truly gives specific notice that he will not agree to any cancellations.
• Fred must give customers at least 24 hours within which to cancel such a contract, but that is only because funeral services are involved.
• Fred's actions are legal even if he does not give specific notice that he will not agree to any cancellations.
• Because door-to-door sales are involved, Fred must give consumers 24 hours within which to cancel.
• Because door-to-door sales are involved, Fred must give consumers three days within which to cancel.