Exam 27: Checks and Banking in the Digital Age

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Delphi Bank.Caleb's forged signa?ture is

A cashier's check is an instrument in which a bank draws a check on itself.

A customer has two days to discover and notify the bank of any error on the monthly statement involving an electronic transfer of funds.

Hoppy steals two checks from Eagle Retail Stores,Inc.: a blank check and a check payable to the order of General Supplies Company (GSC),drawn on Eagle's account with First National Bank.Hoppy forges Eagle's sig?na?ture on the blank check and makes it payable to himself.Hoppy forges GSC's indorsement on the back of the check payable to GSC,and adds "Pay to the order of Hoppy." At Friendly Credit,Inc.,Hoppy indorses the back of both checks with his own name and gives them to Friendly for cash.Friendly does not know about the theft or the forged signatures and presents the checks to First National,which pays them.Eagle,which was not negli?gent,discovers the forgeries and asks First National to recredit its ac?count.Who suffers the loss on each check?

Fact Pattern 27-1A (Questions A17 and A18 apply) Mike loses his National Bank access card.He realizes his loss the next day but waits a week to call National.Meanwhile,Opal finds and uses Mike's card to withdraw $3,000 from Mike's account. -Refer to Fact Pattern 27-1A.When Mike receives his National statement,he demands that the bank investigate the matter and recredit his ac?count.The bank

Smith & Jones Associates is a business customer of Superior Bank.Under fed?eral law,Smith & Jones cannot demand

No financial institution can disclose nonpublic personal information about a consumer to an unaffiliated third party under any circumstances.

Shakira issues a check drawn on Thrifty Bank to United Office Supply to pay for six computer desks.Later,Shakira discovers defects in the goods and orders Thrifty to stop payment on the check.Shakira does not renew the order,and the bank clears the check eight months later.The bank

Johnny writes a check to Katie as payment for a 3D DVD player but soon discov?ers the player is broken.He goes to the drawee bank and orally author?izes Sissy,a bank officer,to stop payment on the check.This order is valid for

Thelma signs a check "pay to the order of Uri" drawn on Thelma's ac?count in Verity Bank.Thelma has $400 in her account but the amount of the check is $500,which the bank pays.This is

Each bank in a collection chain must pass a check on before midnight of the next business day following its receipt.

Bank customers cannot demand that their original canceled checks be returned with their monthly statement.

Any local check deposited must be avail?able for withdrawal by check or as cash within one business day from the date of deposit.

A customer can escape liability for failing to notify the bank of forged or altered checks when the customer can prove that the bank was negligent.

A drawer is liable to the holder of a check if the check is not honored.

City Bank mistakenly transfers $1,000 from the account of Donna,its cus?tomer,to the account of Earl in First Federal Bank.The transfer is done electronically.When City Bank learns of the mistake,it credits Donna's account and asks First Federal to "return" $1,000.First Federal refuses.City Bank files a suit against First Federal,claiming that it is in violation of the Electronic Fund Transfer Act.How might the court rule?

Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service.This is

The maximum time that a bank can hold funds from deposited checks be?fore making them available to the depositor will not change.

A certified checks is an instrument that has been accepted for payment by the bank on which it is drawn.

Fact Pattern 27-1A (Questions A17 and A18 apply) Mike loses his National Bank access card.He realizes his loss the next day but waits a week to call National.Meanwhile,Opal finds and uses Mike's card to withdraw $3,000 from Mike's account. -Refer to Fact Pattern 27-1A.Mike is responsible for