Question 1

No financial institution can disclose nonpublic personal information about a consumer to an unaffiliated third party under any circumstances.

Accepted Answer

Financial institutions are permitted to disclose nonpublic personal information to unaffiliated third parties in certain circumstances, such as when the consumer has given consent or when required by law. However, financial institutions are still required to have privacy policies and provide consumers with the ability to opt-out of certain types of information sharing.

Question 2

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

Accepted Answer

The first bank to receive a check for payment is the depositing bank. The intermediary bank comes into play when there are multiple banks involved in processing the check.

Question 3

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

Accepted Answer

According to the Uniform Commercial Code, a drawer (person who writes a check) is responsible for ensuring that the funds are available to cover the check. If the check is not honored, the drawer can be held liable for the amount of the check.

Question 4

If a bank fails to detect an alteration on a customer's check,it is liable to its customer for the loss.

Accepted Answer

Banks have a responsibility to detect and prevent fraud, including alterations on customer checks. If they fail to do so, they can be held liable for any financial losses incurred by the customer as a result.

Question 5

Only a customer or a person authorized to draw on an account can order a bank not to pay a check when it is presented for payment.

Accepted Answer

Only the customer or a person authorized to draw on an account can place a stop payment order on a check.

Question 6

Bank customers cannot demand that their original canceled checks be returned with their monthly statement.

Accepted Answer

According to federal law, banks are not required to return original canceled checks with monthly statements. However, some banks may offer this service for a fee. Most banks provide electronic copies of canceled checks with monthly statements or offer access to them through online banking.

Question 7

A cashier's check is an instrument in which a bank draws a check on itself.

Accepted Answer

A cashier's check is a type of check that is drawn on the bank's own funds rather than the funds of an individual account holder. It is considered a secure form of payment because the bank guarantees the funds, making it a preferred method for large transactions such as buying a car or a house.

Question 8

A check that is presented for payment more than one month from its date is a stale check.

Accepted Answer

The answer of A check that is presented for payment...

Question 9

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

Accepted Answer

This is known as the "midnight deadline" and is a standard practice in the banking industry. Each bank in the collection chain has a limited amount of time to process and forward the check to the next bank in the chain before it becomes stale-dated and cannot be processed.

Question 10

The maximum time that a bank can hold funds from deposited checks be?fore making them available to the depositor will not change.

Accepted Answer

The answer of The maximum time that a bank can...

Question 11

Any local check deposited must be avail?able for withdrawal by check or as cash within one business day from the date of deposit.

Accepted Answer

The answer of Any local check deposited must be avail?able...

Question 12

When a bank pays a check on which the drawer's signature is forged,generally the customer suffers the loss.

Accepted Answer

The answer of When a bank pays a check on...

Question 13

A certified checks is an instrument that has been accepted for payment by the bank on which it is drawn.

Accepted Answer

A certified check is a check that has been verified and guaranteed for payment by the bank on which it is drawn. Therefore, a certified check has been accepted for payment by the bank.

Question 14

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

Accepted Answer

The answer of The death of a customer immediately revokes...

Question 15

Any failure of a bank to honor a check because it would create an over?draft is a wrongful dishonor.

Accepted Answer

The answer of Any failure of a bank to honor...

Question 16

A customer has two days to discover and notify the bank of any error on the monthly statement involving an electronic transfer of funds.

Accepted Answer

The answer of A customer has two days to discover...

Question 17

A customer can escape liability for failing to notify the bank of forged or altered checks when the customer can prove that the bank was negligent.

Accepted Answer

According to the Uniform Commercial Code section 3-406, a customer is not liable for failing to notify the bank of forged or altered checks if the bank's failure to exercise ordinary care substantially contributed to the loss. Therefore, if the customer can prove that the bank was negligent, they can escape liability.

Question 18

A creditor-debtor relationship can exist between a bank and its customer.

Accepted Answer

The answer of A creditor-debtor relationship can exist between a...

Question 19

A bank that pays a customer's check bearing a forged indorsement is not obligated to recredit the customer's account.

Accepted Answer

The answer of A bank that pays a customer's check...

Question 20

A bank that encodes information on an item after the item has been is?sued warrants to any subsequent bank that the encoded information is correct.

Accepted Answer

The answer of A bank that encodes information on an...

Quiz 27: B: Checks and Banking in the Digital Age