Exam 31: Checks and Funds Transfers

A bank's customer whose signature has been forged may be barred from holding the bank liable if the customer's negligence substantially contributed to the making of the forgery.

The Electronic Fund Transfers Act (EFTA) does not cover transactions originated by commercial paper.

If oral, a stop payment order is binding on the bank for __________ days unless confirmed in writing within that time.

Which of the following statements is correct concerning a stale check?

Checks that involve amounts of more than $1,000 generally trigger the bank reporting requirements under the USA Patriot Act.

If a bank improperly refuses to make payment of checks for which its customer has sufficient funds on deposit, it is liable to the drawer for damages sustained by the drawer in consequence of such dishonor.

A bank will not be liable for payment of a check on which the drawer's signature has been forged if:

Which of the following statements describes a check?

Miriam issued two checks. The first check was made payable to her neighbor for a used car that the neighbor sold to Miriam. The second check was a rent payment to Miriam's landlord for the current month's rent. The car was purchased on the basis of the neighbor's written assurance that the car had only 38,000 miles of use. After Miriam took possession of the car, Miriam's mechanic checked the vehicle and substantiated that the odometer had been turned back. The car had actually been used for 79,000 miles. Miriam stopped payment on the check and offered to return the car. Meanwhile, the neighbor had purchased a computer and had negotiated Miriam's check to the vendor in payment. Discouraged by the problems with the car, Miriam decided to take a vacation. She issued a written stop payment to her bank on the rent check because she intended to use this money for the vacation. Although the drawee bank had ample time to act, it made an error and paid the rent check instead of stopping payment. Two lawsuits resulted. In the first, the vendor of the computer sued Miriam on the check. In the second, Miriam sued her bank for paying over her timely stop payment order. Decide both cases.

Where a depositor receives a bank statement and the checks the bank has paid, the failure to notify the bank within a reasonable time of forgeries of the depositor's signature may preclude recovery for other forged checks thereafter paid by the bank.

Consumers have the responsibility to examine periodic statements provided by their financial institutions; accordingly, if a loss would not have occurred but for the failure of a consumer to report within __________ of the transmittal of the statement any unauthorized transfer, the loss is borne by the consumer.

If a bank pays a check whose face has been altered to increase the amount above that which the drawer intended to pay, the bank:

When a bank certifies a check, the amount involved in the certification will be retained in the depositor's account until payment of the certified check.