Introductory Business Law CLEP Prep Practice Exam

What important consumer protection does the FTC Act provide?

1. A moratorium on credit card spending

2. Prohibiting deceptive advertising

3. Establishing a minimum cost for goods

4. Permitting companies to harm consumer reputations

The correct answer is: Prohibiting deceptive advertising

The FTC Act is a federal statute that protects consumers from deceptive and unfair business practices. Option B, prohibiting deceptive advertising, is the only choice that accurately describes an important consumer protection under the FTC Act. Option A, a moratorium on credit card spending, and option C, establishing a minimum cost for goods, are not specifically addressed by the FTC Act. Option D, permitting companies to harm consumer reputations, is actually the opposite of what the FTC Act aims to do, which is to protect consumers from harmful business practices. Therefore, option B is the correct answer.