Exam 31: Checks and Funds Transfers

Customers are precluded from asserting unauthorized signatures or alterations if they do not report them within __________ from the time the bank statement is received.

A consumer who notifies the issuer of an EFT card within two (2)days after learning of a loss or theft of the card is limited to a maximum liability of:

A written stop payment order is effective for one year.

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.

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.

The standard form of check does not specify when it is payable,and it is therefore automatically payable on demand.

A tender occurs when the holder of a check or other consumer transaction authorization demands payment.

Although a drawer has stopped payment on a check,the drawer still may be held liable on the check.

Most states provide that if a dishonored check is not made good within a stated period of time,it will be presumed that the check was originally issued with the intent to defraud.

When a drawee bank pays on a check that lacks an essential endorsement:

The drawee of a check is always a bank.

A bank that fails to carry out a payment order is usually liable for:

The liability for losses on counterfeit checks depends on: