Question 1

A forged signature on a check has no legal effect as the signature of a drawer.

Accepted Answer

A forged signature does not represent the true intention and consent of the drawer, and therefore has no legal effect as their signature.

Question 2

Few laws directly apply to the security of e-money payment information and e-money issuers' financial records.

Accepted Answer

Currently, few specific laws exist that directly relate to the security of e-money payment information and the financial records of e-money issuers. However, there are broader laws, such as data protection regulations and financial services regulations, that may apply to e-money security.

Question 3

Banks must pay interest based on the full balance of a customer's interest-bearing account on the day the bank posts the interest.

Accepted Answer

Banks typically calculate interest based on the average daily balance or the balance at the end of each day over a period, not just on the day the interest is posted.

Question 4

Check 21 requires banks to change their current check-collection practices.

Accepted Answer

The answer of Check 21 requires banks to change their...

Question 5

If a person does not consent, a federal agency normally must obtain a warrant to access his or her financial records.

Accepted Answer

This statement is true. The Fourth Amendment of the U.S. Constitution protects individuals from unreasonable searches and seizures, and generally requires a warrant supported by probable cause for the government to access personal financial records without consent. However, there are some exceptions to this rule in certain circumstances, such as when there is a credible threat of terrorism.

Question 6

If a bank wrongfully dishonors a cashier's check, a holder can recover only the amount of the check.

Accepted Answer

A holder may recover additional damages such as consequential damages resulting from the wrongful dishonor of a cashier's check, not just the face value of the check.

Question 7

A stop-payment order is an order by a customer to his or her bank not to pay a certain check.

Accepted Answer

A stop-payment order is indeed an order by a customer to his or her bank not to pay a certain check.

Question 8

If a customer's debit card is lost or stolen and used without his or her permission, the customer shall be required to pay no more than $50 in any event.

Accepted Answer

The answer of If a customer's debit card is lost...

Question 9

A bank may contractually shift to the customer the risk of forged checks created electronically or by the use of nonmanual signatures.

Accepted Answer

It is possible for a bank to include terms in their contracts that shift the risk of forged checks created electronically or through non-manual signatures to the customer. However, this does not necessarily mean that all banks have such terms in their contracts, and customers should always review the terms of their banking agreements carefully.

Question 10

The bank is liable to the payee or the holder of check in a civil suit if a check is dishonored for insufficient funds.

Accepted Answer

The bank is not liable to the payee or holder if a check is dishonored due to insufficient funds, as the bank's obligation is to the account holder, not the payee.

Question 11

A check is a special type of draft that is drawn on a bank, ordering the bank to pay a fixed amount of money on demand.

Accepted Answer

This is the definition of a check.

Question 12

Financial institutions that exchange digital images of checks must also send the original paper checks.

Accepted Answer

According to the Check 21 Act, financial institutions are not required to send the physical original checks if they exchange digital images of checks. The digital image serves as a legal substitute for the original check.

Question 13

In every situation involving a forged drawer's signature or an alteration, a bank must observe reasonable commercial standards of care in paying on a customer's check.

Accepted Answer

This statement is true. Banks have a duty to exercise reasonable care when processing checks in order to prevent fraud and protect their customers' accounts. This obligation extends to cases where a signature has been forged or a check has been altered in some way. If a bank fails to follow standard protocols for verifying the authenticity of a check, it may be held liable for any resulting losses.

Question 14

Checks are usually three party instruments.

Accepted Answer

Checks involve three parties: the drawer (the person writing the check), the payee (the person receiving the payment), and the bank where the drawer has an account.

Question 15

A bank may not charge a postdated check against a customer's account unless the customer notifies the bank, in a timely manner, to pay the check before the stated date.

Accepted Answer

A bank may charge a postdated check against a customer's account unless the customer provides timely notice to the bank not to pay the check before the stated date.

Question 16

Even if the bank pays a check in spite of a stop-payment order, the bank will not be obligated to recredit the customer's account.

Accepted Answer

If a bank pays a check despite a valid stop-payment order, it is generally obligated to recredit the customer's account, as the payment was unauthorized.

Question 17

When receiving a stale check for payment, a bank has no option but to pay the check.

Accepted Answer

When a check becomes stale, typically after six months of being issued, the bank may choose not to honor it. The bank may return it as unpaid, referring to it as a "stale check." The account holder must request a new check to replace the stale one.

Question 18

If a bank pays a check in spite of a stop-payment order, the bank is liable only for amount of the actual loss suffered by the drawer because of the wrongful payment.

Accepted Answer

This is generally true, although the specific circumstances of the situation may affect liability. The Uniform Commercial Code (UCC) provides that if a bank pays a check despite a stop-payment order, the bank is liable only for the amount of the actual loss suffered by the drawer due to the wrongful payment. However, if the stop-payment order was not properly completed or there was a mistake in the order, the bank may be less liable. Additionally, if the bank was negligent in failing to honor the stop-payment order, it may be liable for additional damages.

Question 19

A customer who fails to report a forged signature within thirty days from the date that the bank statement showing the item was made available for inspection loses the legal right to have the bank recredit his or her account.

Accepted Answer

The time frame for reporting a forged signature can vary based on the bank's policy and local laws, but it is not universally set at thirty days.

Question 20

When a customer makes a deposit, the customer becomes a creditor, and the bank a debtor, for the amount deposited.

Accepted Answer

This is because the bank now owes the customer the amount of their deposit and must repay it on demand or according to the terms of the deposit account.

Quiz 28: Banking in the Digital Age