Exam 30: Checks and Funds Transfers

The Electronic Fund Transfers Act (EFTA) covers all transactions, including those that originated by commercial paper.

Which of the following statements describes a check?

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:

In a complex funds transfer, an intermediary bank may receive and transmit the payment order.

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:

A forged endorsement must be reported within one year of the time that the bank statement is received.

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.

The drawer of a check is always a bank.

A written stop payment order or confirmation is effective for:

In theory, a valid check can be written on a cocktail napkin.

A bank is not required to pay a check presented more than three months after its date.

Morris issued a check to Al in payment of a debt.There were sufficient funds in Morris' account to cover the check when it was presented for payment.However, due to an error, the bank dishonored the check.Which of the following parties is/are potentially liable to the holder?

To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution.