Exam 14: Checks and Banking in the Digital Age

Joy steals a check from Kyle, forges his signature, and transfers the check to Loco Loans, Inc., for value. Unaware that the signature is not Kyle's, Loco Loans presents the check to Metro Bank, the drawee, which cashes the check. Kyle discovers the forgery and insists that Metro recredit his account. Can Metro refuse? If not, from whom can the bank recover?

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

Brendan signs a check "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks. The bookstore deposits the check in its account in Eagle Bank. Like most checks, this check is

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

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

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

A bank is not obligated to pay an uncertified check presented less than six months from its date.

Ellen pays State Bank $500 plus a service fee to draw a check on itself payable to Paul's Plumbing. Which of the following parties is responsible for paying the check?

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.

A forged indorsement does not transfer title.

A written stop payment order is valid for only thirty days.

Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in Town Bank to pay her tuition. Rikki is

A check is a special type of draft.

A customer has a right to stop payment on a check that has been certified or accepted by a bank.

If a customer's debit card is lost or stolen, the customer will not be liable for any unauthorized use of the card.

Jacob writes Phillip an uncertified check for $500 on January 1. Seven months later, Phillip presents the check at the bank. The bank pays the check in good faith without consulting Jacob. The bank

Fact Pattern 14-1 (Questions 19 and 20 apply) 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 14-1. Capital Bank pays the check. Capital

Commercial banking practices consider a check that has been outstanding for three months to be a stale check.

Julia opens a checking account with Washington Bank and deposits funds into the account. Julia and Washington Bank

Today, most checks are processed manually.