Questions 1-5 relate to the US Court of Appeals opinion in Ford Motor Company v. Federal Trade Commission:
< style="font-family: arial;">1. What was Ford advertising that resulted in this lawsuit?
Insert here the attached explanation of three "6% financing plans"
6. True or False: Prior
to 1968,
the biggest problem in the disclosure of credit costs was lack of
uniformity
in the way costs were disclosed by various creditors.
-add-on rate
-discount rate
-simple interest
rate
-only the amount of
payments stated (e.g., "only $50 a month")
-"no money down"
-whether these were good deals or not was impossible to determine
7. To resolve the problems associated
with
disclosure of credit costs, Congress passed
a. the Fair Credit Reporting Act
b. the Equal Credit Opportunity Act
c. the Truth-in-Lending Act
d. the Fair Credit Billing Act
-we saw this in an earlier class because it
provides a 3-day right to cancel
-but it's primarily
a disclosure law
8. Congress gave rulemaking power under
the Act to
a. the Federal Trade Commission, which
adopted Regulation Z
b. the Federal Trade Commission, which
adopted Regulation M
c. the Federal Reserve Board, which
adopted
Regulation Z
d. the Federal Reserve Board, which
adopted
Regulation X
-fairly common practice
-Congress passes a
law, then gives regulatory agency authority to "fill in" with rules
-in this case, it's
the FRB and Reg. Z
9. The Regulation requires that the
cost
of credit be disclosed
a. based on the simple interest rate
b. based on the actuarial rate
c. using the term "annual percentage rate"
or "apr"
d. all of the above are true
-TILA is merely a disclosure law
-does not regulate the RATE of interest
-that's determined on state-by-state basis
10. A new car loan and home mortgage
are
examples of
a. open-end transactions
b. revolving accounts
c. closed-end transactions
d. all of the above
-why is a car loan "closed end"?
-cuz
it doesn't anticipate additional transactions under the contract
-unlike a credit card, which does
-note that (a) and
(b) are the same thing
11. Identify five or more disclosures
that
the Regulation requires in all closed-end transactions.
-see list of 10 in sec. 4 of lecture notes
-see "federal box"
in sec. 2
12. In an open-end transaction, the
Regulation
requires
a. a single set of disclosures
b. two sets of disclosures
c. three sets of disclosures
d. four sets of disclosures
-why two sets?
-initial disclosures in original contract (e.g., when you get credit
card)
-monthly statements
13. Identify five or more disclosures
that
the Regulation requires in all open-end transactions.
-see sec. 5 of lecture notes
14. What is a "triggering term" as used
in the Regulation?
-see sec. 6
-a term that, if
used in an ad, "triggers" the requirement to disclose other terms
-prevents
advertisers from only advertising the most attractive terms of an offer
-e.g.,
can't advertise only the monthly payment or "no money down" cuz
consumer doesn't know if it's a good deal or not
Questions 15-16 related to the Applied Graphics ad linked in the lecture notes.
15. Does the ad include any triggering
terms? If so, what are they?
-"no money down"
-monthly payment
16. Is the ad missing any of the
required
disclosures? If so, what are they?
-terms (i.e., how many months)
-annual percentage
rate (APR)
Questions 17-30 relate to the opinion of the Kansas Court of Appeals in Remco Enterprises v. Houston:
17. What was the nature of plaintiff Remco's business? What would you guess was its target market?
31. How did
the Vermont Attorney
General's
Office deal with the problem, exemplified by the Remco case, of
excessive credit costs in rent-to-own transactions?