Jim Operates a Used Clothing Business Out of His Parents

question 25

Multiple Choice

Jim operates a used clothing business out of his parents' basement. Lately, in an effort to improve his lot in life, Jim has been advertising on local telephone polls in his neighborhood. His flyers state simply: "Buy one used shirt get a used pair of pants for FREE!!!" Jim is a cutthroat businessman, despite appearances to the contrary, so he decides to double his price on shirts to break even on the "free" pants. Jim's sale is wildly successful and soon Jim's Bargain Basement of Dapper Duds is the hip place to pick up sassy shirt and pant combos. Did Jim do anything legally wrong by raising shirt prices?

• A) Yes. The FTC says you can't advertise something as free and then raise prices.
• B) No. Ethically, you shouldn't advertise something as free and then raise prices, but it is legal to do so.
• C) Yes, but any claim would have to arise under state, not federal, law
• D) No, because posting flyers is not technically an advertisement under the FTC Act.

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Definitions:

Custody of Assets

Responsibility for safeguarding and managing physical or digital assets, ensuring their security and proper use.

Automated Sales Systems

Technology-driven systems designed to streamline the sales process, often involving automated customer interactions, order processing, and data analysis.

Bond Employees

A bond for employees, often called fidelity bond, is an insurance policy that protects the employer against financial loss due to the fraudulent activities of an employee or group of employees.

Internal Control System

A set of policies and procedures put in place by a company to safeguard assets, ensure financial data accuracy, and promote operational efficiency.