Question 1

Wendel has a Mastercard from Countrybank. He uses it to purchase a cat from a local pet store, Paws and Pets. Which statement below is correct?

Accepted Answer

Credit card transactions involve communication and payment processing through an interbank network, where Mastercard acts as a facilitator between the merchant's bank and the cardholder's bank, not requiring direct contact between the merchant and the cardholder's bank for payment.

Question 2

Credit cards a largely governed by

Accepted Answer

The answer of Credit cards a largely governed by
...

Question 3

Valerie works for SWAK Industries. Each week instead of a receiving a hard copy of a check, her pay is deposited directly into her savings account at Moon Bank. This process is called

Accepted Answer

Direct deposit of a paycheck into a savings account is an example of an Automated Clearing House (ACH) transaction. ACH is a network used for electronically moving money between bank accounts across the United States.

Question 4

SOS Construction is currently building many new homes for students and therefore needs to purchase a large amount of building supplies from Alfred Lumber. Therefore, SOS Construction sends a payment order instruction to its bank to send funds to Alfred Lumber's bank to cover the costs of the supplies. SOS Construction is using what type of service?

Accepted Answer

SOS Construction is using a commercial wire service to transfer funds directly from its bank to Alfred Lumber's bank, which is typically used for large and urgent transactions.

Question 5

Commercial wires are governed by

Accepted Answer

Article 4A of the UCC (Uniform Commercial Code) governs the transfer of funds through electronic means, which includes commercial wire transfers.

Question 6

Christie gets a message from her son who was working in Peru when his wallet and money was stolen. He needs money immediately and asks her if she can help him get money quickly. Which statement below is correct?

Accepted Answer

Consumer wire services offered by banks or specialized financial services companies allow for quick international money transfers, making it a viable option for Christie to send money to her son in Peru.

Question 7

Consumer wire services are governed by

Accepted Answer

The answer of Consumer wire services are governed by
...

Question 8

Venmo, a digital wallet app on a person's phone which allows people to share payment with friends is an example of

Accepted Answer

Venmo is a mobile payment app that allows users to send money to each other directly from their mobile devices, making it an example of a mobile payment app rather than a debit card, a consumer wire transfer, or a credit card app.

Question 9

A type of software based currency that is created using encryption techniques that is an unregulated currency system is

Accepted Answer

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank, making it an unregulated currency system.

Question 10

Callaghan is a college student who often shares rides and expenses with her fellow classmates. However, she is getting tired, and broke, with friends who tell her that they will pay her back for Uber fares, dinners out and other expenses that she covers upfront for her friends and do not. Which type of fund transfer system would be the best system for her and her friends to use to allow an easy immediate transfer of money without having to wait on someone to give her cash?

Accepted Answer

Mobile payment apps are designed for easy, immediate transfers of money between individuals, making them the most practical solution for Callaghan and her friends to settle small debts quickly without needing cash.

Question 11

In United States v. Faiella, the court ruled that Bitcoin

Accepted Answer

The court ruled that Bitcoin was money because it can be easily used in ordinary financial transactions, recognizing its function as a medium of exchange that can be used to purchase goods and services, similar to traditional currencies.

Question 12

Twin Bank, located in Missouri, must follow the laws of ________________ when determining who faces liability when a check is forged, stolen or altered.

Accepted Answer

Missouri, like other states, has adopted the Uniform Commercial Code (UCC) which includes provisions that govern various aspects of commercial transactions, including the liability issues related to forged, stolen, or altered checks.

Question 13

Armando cashes a check that he stole from Ricardo at Sufficiency Bank and spends the money at Dollar Tree. According to the general rules of the UCC who in this transaction would assume liability?

Accepted Answer

The answer of Armando cashes a check that he stole...

Question 14

Tara receives a check from Shelby and fraudulently changes the amount on the check from $100.00 to $120.00 and deposits the check into her bank, Kania Bank. According to the general rules of the UCC which entity would be liable for fraudulent check?

Accepted Answer

The answer of Tara receives a check from Shelby and...

Question 15

Kennison fraudulently indorses a check, written out to Adam Canon, that she stole from Adam, and gives the check to Cathi to pay for her driving services. Shortly thereafter when Cathi attempts to cash the check at Callaghan Banking, the bank refuses to honor it stating that there had been a stop payment order as the check had been stolen. According to the general rules of the Uniform Commercial Code, which entity assumes liability?

Accepted Answer

Kennison assumes liability because she fraudulently endorsed and passed on a stolen check, making her responsible for the act of theft and fraud under the Uniform Commercial Code.

Question 16

John used his debit card to purchase gas. John's debit card fell out of his pocket and a scammer immediately picked it up. As soon as the scammer got his information, he started purchasing clothing from an online store totaling over $6000.00 in just a few hours, emptying John's checking account. The next day, John attempted to use his debit card and it was denied. He inquired into it and found out about the scam and immediately notified his bank. Which statement below is correct?

Accepted Answer

The answer of John used his debit card to purchase...

Question 17

Which example below would it be considered "timely notice" for someone to notify their bank of a stolen or lost debit card?

Accepted Answer

Reporting a lost or stolen debit card the day after the incident, as in the case of Bob, is considered timely notice.

Question 18

According to the Federal Reserve Bank's Regulations, home much time does a person have to report a lost or stolen debit card to be considered "timely notice?"

Accepted Answer

Under the Federal Reserve Bank's Regulation E, a person has two business days to report a lost or stolen debit card to limit their liability to $50. Reporting after this period but within 60 days after the statement showing the unauthorized transactions can increase their liability to $500.

Question 19

Which statement below is true about the introduction of the "chip system" introduced on credit cards?

Accepted Answer

The chip-based system, also known as EMV (Europay, MasterCard, and Visa), indeed shifts the liability for fraudulent transactions to the merchant if they do not use this more secure chip-reading technology. This was a significant change from previous practices, encouraging merchants to adopt the technology to avoid the risk of bearing the cost of fraud.

Question 20

Missouri Bank, located in St. Louis, Missouri honors a forged check by Wrett Wickline who resides in Montana but was visiting family in St. Louis when he forged the check. According to this fact pattern, which law would the courts use to determine who will assume liability for the forged check?

Accepted Answer

The courts would use the UCC Missouri adopted law because the incident occurred in Missouri and the bank involved is located in Missouri. The Uniform Commercial Code (UCC) is adopted individually by each state to govern commercial transactions, including issues related to forged checks.

Quiz 22: Checks, Deposits, and Financial Institutions