Deposit Accounts and General Operations Flashcards
The two major problems that can occur with checks are
non payment and wrongdoing
The primary purpose of the Uniform Commercial Code’s (UCC) Articles 3 & 4
encourage commerce (people and businesses) to use and rely on checks
Under the UCC 3 & 4 a negotiable instrument is a check or share draft, and is not an EFT or ACH under Regulation E a transaction account under Regulation D, or a term share account under the Truth in Savings Act. True or False
True
Negotiable Instrument is
a 3 party instrument
Drawer
Drawee
Payee
The reason it is important to understand the nonpayment and fraud issues under State and Federal check law is because checks for large amounts will continue to be presented for payment and offered for deposit to all credit unions. True or False
True
A check is the only form of payment that allows a person (the drawer) to completely control
1) who gets paid (the payee)
2) when the payee will get paid (the date),
3) how much the payee will get paid (the amount). True or False
True
The reason that checks are still used as a form of payment is because a check (and an image of a check) is proof of payment forever for a person (as a drawer), and NOT because numerous consumers do not know how to use electronic access devices for payment, or because Regulation E and ESIGN do not mandate the use of EFTs and ACHs. True or False
True
A check made payable to “John Doe, Jane Doe” without “and” in between the name is payable to either John or Jane. True or False
True
It is illegal to write a post-dated check. True or False
False
If you just sign (endorse) your name on the back of the check, that endorsement is referred to as a “blank endorsement” and anyone who is in possession of that check is in rightful possession of the check. True or False
True
When the credit union encodes a check it warrants (promises by law) to all other financial institutions that take the check after it that the check has been encoded correctly. True or False
True
The UCC’s Articles 3 & 4 require a credit union to return a check that it will not pay by its “midnight deadline,” which means that the check must be returned by midnight of the next banking day after the banking day the check is received. True or False
True
Writing “paid in full” on a check to a creditor for an amount less than owed for a debt in the hope that the creditor won’t notice the language will fail to discharge the drawer’s obligation because such payment is not made in good faith. True or False
True
When a member loses your cashier’s or teller’s check, once she or he makes a claim for a refund for the lost check the credit union must immediately give her or him a replacement check. True or False
False
Can you make the member wait 90 days for a replacement cashiers check
Yes
