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

E-Bank, an online financial institution, gives financial information about Paula and other customers to a federal agency without the cus?tomers' permission. E-Bank may be liable under

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

Dan writes a check to Emma on his account at First State Bank. The bank dishonors the check even though Dan has sufficient funds in his ac?count. The bank is

Dhani signs a check "pay to the order of Etan" drawn on Dhani's account in First State Bank and dates the check "May 1." Etan presents the check to the bank for payment on December 15. This is

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 signa?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 27-3A 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. When Mike receives his National statement, he demands that the bank investigate the matter and recredit his ac?count. The bank

Fact Pattern 27-1A Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order. -Refer to Fact Pattern 27-1A. Capital Bank pays the check. Capital

A bank is subject to a civil suit if its customer writes a bad check.

Ed can write checks on his account at First City Bank. Gina steals the checks, forges Ed's signature, and cashes the checks at First City. The bank is excused from any liability if, after receipt of the first forged check, Ed fails to report the forgeries within

Fact Pattern 27-1A Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order. -Refer to Fact Pattern 27-1A. Capital Bank

On Monday morning, Bob deposits into his account at County Bank a $500 check from Dina, who also has an account at County Bank. On that same day, this check is considered

A customer does not need to examine a bank statement and report his or her forged signa?ture to recover from the bank for the forgery.

Currently, it is not clear which, if any, laws apply to the security of e-money payment information.

Once a check "bounces," a holder cannot resubmit it for payment.

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

A bank has no right to charge a customer's account for the amount of a stale check.

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

A bank that pays a customer's check with a forged drawer's signature can generally pass the loss onto the customer.

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. When Digital's bank received the check, it was required to pass it on

Pete knowingly divulges to Media Exposure magazine information about Randy's e-money payments to City Bank. The payments were in trans?mission to City Bank when Pete, without the consent of Randy or City Bank, discovered and revealed them. This may be a violation of