Practice Consumer Law

Revision Tasks and Achievement Tests.

C – they are based on the notion that seeing is believing and try to make us laugh.

D – all the abovementioned ideas.

5. The bait and switch sales technique is:

A – an insincere offer to sell a product on terms that are too good to be true.

B – a sales technique to get a consumer in the store. C – a try to sell some specials at very low prices.

D – a kind of advertising something that does not sell well.

6. Mail shopping is convenient because:

A – items may cost less.

B – some items may be available that are not available in local stores.

C – mail–order packages always arrive on time.

D – some free items can be sent in exchange for subscriptions or memberships.

7.The elements of a contract are:

A – an offer by one party.

B – an acceptance by the other party. C – mutual agreement.

D – an exchange of consideration.

8.Minors can make a contract if:

A – they are over 18.

B – any other adult cosigns it. C – it is ratified.

D – they are not forced to carry out their promises and.

9.Some contracts are illegal because:

A – they are unenforceable in court. B – they are against public policy. C – they are unfair.

D – there is very uneven bargaining power between the parties.

10.An implied warranty is:

A – a statement concerning the quality or performance of goods offered for sale that becomes a part of the bargain between the parties.

B – an unwritten promise, created by law, that a product will do what it is supposed to do.

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C – an unwritten promise that the item sold is of at least average quality for that type of item.

D – a seller’s promise that he or she owns the item being offered for sale.

UNIT 19. Disclaimers

1. Complete the sentences, using the appropriate words from the box:

as is; disclaim; with all faults; opportunity; liable; remedy; limit.

1.A disclaimer is an attempt to … the seller’s responsibilities should anything go wrong with a product.

2.Sellers can usually disclaim the implied warranty of merchantability by using such expressions as “…” or “...”.

3.Under the Magnuson–Moss Warranty Act, sellers offering a written warranty may not … any implied warranty during the effective period of the written warranty.

4.Sellers sometimes use disclaimers to limit the consumer’s ….

5.The seller is not … in damages for injury to persons or property.

6.Courts will require that the buyer give the seller a reasonable

…to repair the product.

2.Are the statements true (+) or false (-)? Correct the false statements.

1.A disclaimer is an attempt by the store to avoid responsibility for anything that goes wrong with the product.

2.Unless these or other easily understood words are used, the seller must actually use the word merchantability in disclaiming the implied warranty of merchantability.

3.It is impossible to disclaim the implied warranty of merchantability.

4.To be effective, the disclaimer must be written so as to be easily seen by the consumer.

5.Sellers sometimes use disclaimers to enlarge the consumer’s remedy.

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Revision Tasks and Achievement Tests.

UNIT 20. Credit

1. Complete the sentences, using the appropriate words from the box:

Debtors; default; unsecured; collateral; interest; conditions; creditors; finance charge; secured; variable; usury; in the future.

1.Using credit means buying goods or services now in exchange for a promise to pay… .

2.People who lend money or provide credit are called… .

3.People who borrow money or buy on credit are called … .

4.Additional money owed to the creditor is called the… .

5.The two general types of credit are … and … .

6.A … is some property of value put up by a consumer as protection in the event the debt is not repaid.

7.A borrower who does not make the required payments is said to … on the loan.

8.The cost of credit includes … and other finance charges.

9.Charging any amount above the legal limit is called … .

10.Interest rates can vary widely depending on the lender and the economic … at the time.

11.Some companies now offer … interest rates, when the amount of interest you are charged changes from time to time and is computed based on financial market indicators.

2. Are the statements true (T) or false (F)? Correct the false statements.

1.Credit means lending money now in exchange for a promise to repay it in the future.

2.Creditors usually pay debtors additional money over the amount borrowed for the privilege of using the credit.

3.There are three general types of credit.

4.Secured credit is credit for which the consumer is not required to pledge property in order to obtain it.

5.If a borrower defaults, the lender can take the collateral.

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6.Each state sets limits on the amount of interest that can be charged for various types of credit.

7.Lenders who charge interest rates below the legal minimum may be liable for both civil and criminal penalties.

8.Besides the interest paid on a credit sale, there are sometimes other charges that may be added onto the basic price: credit property insurance; credit life/disability insurance; service charge; penalty charge, and others.

UNIT 21. Credit

Cards and Charge Accounts

1. Complete the sentences, using the appropriate words from the box:

Transaction; toll–free; advances; unauthorized; identification; compete; owe; compute; accounts.

1.Many stores and companies issue credit cards and allow their customers to maintain charge… .

2.Some of these cards can also be used to obtain cash … from banks and bank machines.

3.Credit cards are engraved with the holder’s name and … number.

4.Companies issuing credit cards send out monthly statements indicating how much you … .

5.Some companies impose interest charges from the date of the … .

6.Companies use different methods to … interest.

7.Providers of credit … with each other to get new customers.

8.Many major credit card companies have … telephone numbers.

9.If your credit card is lost or stolen, you are not responsible for any … charges made after you have notified the issuer that the card is missing.

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2. Are the statements true (+) or false (-)? Correct the false statements.

1.Consumers can use credit cards to buy gasoline, take a vacation, go out to dinner, and buy furniture, clothing, and many other things.

2.Companies provide these cards free.

3.Consumers are usually given a credit limit and can make purchases up to that limit.

4.Some credit card and charge accounts allow you to pay bills over time.

5.All companies use the same methods to compute interest.

6.To more easily compare the rates charged by different companies, you can ask what annual percentage rate (APR) is charged.

7.Annual interest rates may vary by as much as 10 percentage points.

8.Credit cards are in such wide use today that certain goods and services may be difficult to obtain without one.

9.For protection, any person with credit cards should keep a list of the following information for each card: the name of the company issuing the card, the account number on the card, and the number to call if the card is lost or stolen.

10.If your credit card is lost or stolen, you are responsible for any unauthorized charges made after you have notified the issuer that the card is missing.

UNIT 22. EFT Cards and Debit Cards

1. Complete the sentences, using the appropriate words from the box:

Withdrawals; follow; billing; automatic teller machine; debit; forbids; electronic funds transfer.

1.In recent years, many banks have offered their customers … cards.

2.They allow you to withdraw money from your account by using an … .

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3.If your EFT card is lost or stolen and you do not notify your bank within two business days after discovering its loss, you may be liable for up to $500 in unauthorized … .

4.… cards look like credit cards but work like EFT cards.

5.To avoid … problems, check all sales slips carefully, save receipts and canceled checks, and go over each bill or monthly statement carefully.

6.Until your complaint is settled, the law … the creditor from reporting the matter to a credit bureau.

7.It is important to … the requirements when complaining about a bill.

2.Are the statements true (+) or false (-)? Correct the false statements.

1.Electronic funds transfer cards look like credit cards but are not credit cards.

2.If your EFT card is lost or stolen and you notify your bank within two business days after discovering its loss, you may be liable for up to $500 in unauthorized withdrawals.

3.It takes time and energy to sort billing errors out.

4.You may withhold payment of the disputed amount pending the investigation.

5.Phone calls protect your rights under the Fair Credit Billing Act.

6.You must explain why you believe there is a billing error and state the amount of the error.

7.Once negative information is reported to a credit bureau, it may be easy to have it removed.

UNIT 23. Costly Credit Arrangements

1. Complete the sentences, using the appropriate words from the box:

Usurious; disclosure form; blank spaces; acceleration clause; violators; abuses; balloon payments; suspicious; variable–rate; loan sharking.

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Revision Tasks and Achievement Tests.

1.Consumers may fall prey to … .

2.… loans are illegal under state laws.

3.In … the last payment is much larger than the monthly payments.

4.The … permits the creditor to accelerate the loan, making all future payments due immediately in the event a consumer misses a single payment.

5.To prevent credit …, Congress passed the Truth in Lending Act.

6.The law requires creditors to give you special information about … loans if you are being offered this plan.

7.The law also requires that consumers be given a copy of the … containing the credit information.

8.… can be subject to both civil and criminal penalties.

9.If you are … about a lender, check to see if the lender is licensed and whether complaints have been filed.

10.Don’t sign contracts with … .

2. Are the statements true (+) or false (-)? Correct the false statements.

1.Loan sharks lend money at low, often usurious rates of interest.

2.There are a variety of legal but costly credit arrangements that consumers may want to avoid.

3.Balloon payments make it easy for you to make the final payment.

4.Lenders sometimes claim you can wipe out all your bills by making easy monthly payment to them, which they will distribute to your creditors.

5.Consolidation loan may require payments over a shorter period of time and at a higher rate of interest.

6.The law requires creditors to give you certain basic information about the cost of buying on credit.

7.Before making a credit purchase, read and understand the entire contract.

8.Keep receipts for some payments.

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UNIT 24. What Lenders Want to Know Before Extending Credit

1. Complete the sentences, using the appropriate words from the box:

Discrimination; deny; investigate; human rights commission; reinvestigating; file; turned down; key; repaid.

1.Any store, bank, or credit card company that extends credit to consumers wants to know that the money will be … .

2.The Equal Credit Opportunity Act, protects consumers against credit … based on sex, marital status, race, color, religion, national origin, old age, or source of income.

3.Complaints should be directed to the state or local consumer affairs office or … .

4.The creditor may … you personally.

5.Information about you in a credit bureau’s files can be a … factor in determining whether you get loans, credit cards, or other forms of credit in the future.

6.If a credit report indicates that you are a poor risk, the creditor will probably … credit.

7.The Equal Credit Opportunity Act says that creditors must tell consumers why they were … .

8.Every consumer has the rights to learn the nature of information in his or her credit … .

9.If the credit bureau does not cooperate in correcting your credit file, you may complain to … the information.

2.Are the statements true (+) or false (-)? Correct the false statements.

1.A person who moves or changes jobs frequently might be considered reliable.

2.Bank regulatory agencies, such as the Federal Reserve Board and the Comptroller of the Currency, handle complaints against banks and bank credit cards.

3.Many states have laws that forbid credit discrimination.

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Revision Tasks and Achievement Tests.

4.Financial and personal information about consumers is often stored in computers but it can not be passed among the various bureaus.

5.If a credit report indicates that you are a poor risk, the creditor will probably give you credit.

6.Another federal law protects you from inaccurate credit bureau reporting.

7.The creditor can give you the name and address of the credit bureau that supplied the report.

8.Credit bureau are required to show consumers copies of the actual file.

9.If you discover false, misleading, incomplete, irrelevant, or out–of–date information in your file, you can require the credit bureau to recheck its information and correct the errors.

UNIT 25. Default And Collection Practices

1. Complete the sentences, using the appropriate words from the box:

Pay off; bankruptcy; default; consequences; reassess; wiped out; overextended.

1.Consumers who use credit sometimes have difficulty making all their payments because consumers are … .

2.A consumer who is unable or unwilling to pay a debt goes into … .

3.If you have problems paying your bills, you should … your financial lifestyle to determine where the problem arose.

4.… is a procedure through which a person places assets under the control of a federal court in order to be relieved of debt.

5.A wage earner can make an arrangement, supervised by a federal court, to … some or all of what is owed to creditors over an extended period of time.

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6.A declaration of bankruptcy has serious long–term … for the debtor.

7.Some debts are not … through bankruptcy.

2.Are the statements true (+) or false (-)? Correct the false statements.

1.Problems with making payments can arise because of unexpected unemployment, family illness, or a variety of other reasons.

2.If you have problems paying your bills, you should not notify each creditor of the problem.

3.A consumer who is unable or unwilling to pay a debt goes into bankruptcy.

4.In recent years, a few bankruptcies have been filed in the United States.

5.A more severe form of bankruptcy is called a Chapter 7 bankruptcy when the federal court takes control of most of the debtor’s assets, sells them, and pays off as much debt as possible.

6.Records of personal bankruptcy remain in credit reports for 15 years.

7.All debts (taxes, alimony, child support, and student loans) are wiped out through bankruptcy.

UNIT 26. Creditor Collection Practices

1. Complete the sentences, using the appropriate words from the box:

Incurred; legitimate; attachment; last resort; defendant; harassment; postponement; small claims court; garnishment; voluntarily; unwilling; imprisoned; plaintiff; repossess; unsavoury.

1.Creditors have many ways of collecting money from consumers who are … to pay their debts.

2.In the past, some bill collectors engaged in … practices.

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