Exam 27: Checks, the Banking System, and E-Money

Fact Pattern 27-3A 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 27-3A. Mike is responsible for

Generally, a cash deposit is not available for withdrawal until the next business day.

Simon signs a check "pay to the order of Tilly" drawn on Simon's account in United Bank. Vela forges Tilly's indorsement, First Federal Bank cashes the check, and Vela disappears. United pays First Federal and debits Simon's account. Most likely, the ultimate loss will fall on

Financial institutions that exchange digital images of checks do not have to exchange the original paper checks.

Earl issues a check drawn on First National Bank to Good Office Supply to pay for six filing cabinets. Later, Earl discovers defects in the goods and orders First National to stop payment on the check. Earl does not renew the order, and the bank clears the check eight months later. The bank

Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is

A customer has sixty days from the date of receipt of a statement of an electronic transfer to notify the financial institution of any er?rors.

Fact Pattern 27-2A Ruth opens an account with State Bank under an agreement in which the bank reserves the right to charge the account for any item returned due to its unau?thorized alteration. -Refer to Fact Pattern 27-2A. Tom deposits an altered check in Ruth's ac?count. When Unity Bank, the check's drawee bank, re?turns the item due to its alteration, State Bank files a suit against Ruth to recover the amount. The court is most likely to rule that

Jen signs a check "pay to the order of Key" drawn on Jen's account in Little Bank to buy Key's car. Jen asks Little Bank to indicate on the face of the check that it will accept it when Key presents it for payment. If the bank agrees, this will be

Fact Pattern 27-2A Ruth opens an account with State Bank under an agreement in which the bank reserves the right to charge the account for any item returned due to its unau?thorized alteration. -Refer to Fact Pattern 27-2A. The agreement between Ruth and State Bank

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

Stored-value cards are a form of digital cash.

Fact Pattern 27-1B Tom draws a check, on his account in State Bank in New York, payable to Digital Computers, Inc., in San Francisco. Digital deposits the check in its ac?count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve bank sends the check to State Bank. -Refer to Fact Pattern 27-1B. Tom's bank is

The incompetence of a customer revokes a bank's authority to pay an item.

Certified checks are instruments that have been accepted for payment by the institutions on which they are drawn.

The first bank to receive a check for payment is the depositary bank.

A bank that has certified a check is under no obligation to accept it.

Tiny authorizes United Bank to make transfers from his account to make payments on his debt to Vic's Auto Dealership, which sold Tiny the car that serves as collateral for the debt. After three payments, Vic's repos?sesses the car and refuses to return it. Tiny phones the bank to stop the payments and follows up with a confirm?ing letter. The bank fails to stop the next two payments, and Vic's refuses to refund anything. Can Tiny get his money from the bank? Explain.

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

Gaining unauthorized access to an electronic fund transfer system is a felony.