Regulation E (Electronic Funds Transfers Act) Exam
Thanks to technology, the banking systems have been advanced to allow transactions across different accounts electronically. The quiz below focuses and tests your knowledge on electronic funds transfers. Find out what you know below. All the best.
- 1.
Why is Regulation E important?
- A.
It provides the consumer with the opportunity to minimize their exposure to unauthorized electronic fund transfers.
- B.
It requires financial institutions to notify consumer consumers of their rights and responsibilities in connection with electronic fund transfers.
- C.
It provides a procedure for dealing with any EFT error on a consumer deposit account.
- D.
All of the above.
Correct Answer
D. All of the above.Explanation
Regulation E is important because it encompasses all of the mentioned reasons. It allows consumers to protect themselves from unauthorized electronic fund transfers, ensures that financial institutions inform consumers about their rights and responsibilities regarding electronic fund transfers, and establishes a process for resolving any errors related to electronic fund transfers on consumer deposit accounts. Therefore, all of the above reasons make Regulation E important.Rate this question:
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- 2.
Regulation E applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's deposit account and includes:
- A.
Point-of-sale transfers
- B.
Automated teller machine transfers
- C.
Direct deposits or withdrawals of funds
- D.
Automated transfers initiated by telephone - non-operator assisted
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
Regulation E applies to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's deposit account. This includes point-of-sale transfers, automated teller machine transfers, direct deposits or withdrawals of funds, and automated transfers initiated by telephone - non-operator assisted. Therefore, the correct answer is "All of the above."Rate this question:
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- 3.
When consumers notice an error on their statement, under Regulation E, what is the maximum number of days the consumer has to report the error to the bank to minimize future liability under Regulation E (excluding extenuating circumstances)?
- A.
30 days from the transmittal date of the statement on which the error appeared
- B.
45 days from the transmittal date of the statement on which the error appeared
- C.
60 days from the transmittal date of the statement on which the error appeared
- D.
None of the above
Correct Answer
C. 60 days from the transmittal date of the statement on which the error appearedExplanation
The correct answer is 60 days from the transmittal date of the statement on which the error appeared. This is because under Regulation E, consumers have a maximum of 60 days to report any errors on their statement to the bank in order to minimize future liability.Rate this question:
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- 4.
What must a financial institution do within 10 business days from receiving a notification of error from the consumer?
- A.
Resolve the error or provisionally credit the consumer.
- B.
Nothing; the financial institution has 45 calendar days to complete investigation.
- C.
Debit provisional credit from the consumer's account. Call the consumer and ask for more time to investigate error.
- D.
None of the above.
Correct Answer
A. Resolve the error or provisionally credit the consumer.Explanation
A financial institution must take action within 10 business days from receiving a notification of error from the consumer. They are required to either resolve the error or provisionally credit the consumer. This ensures that the financial institution addresses the issue promptly and provides the consumer with a temporary solution while the investigation is being conducted.Rate this question:
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- 5.
A consumer may stop payment on a preauthorized electronic fund transfer by notifying the financial institution orally or in writing.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A consumer may stop payment on a preauthorized electronic fund transfer by notifying the financial institution orally or in writing. This means that if a consumer wants to cancel or halt a preauthorized electronic fund transfer, they can do so by either speaking to a representative of the financial institution or by sending a written request. This gives consumers the flexibility to stop payments if they need to, providing them with a level of control over their finances.Rate this question:
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- 6.
The primary objective of Regulation E is to protect individual consumers who engage in electronic fund transfers.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Regulation E is a federal law implemented by the Consumer Financial Protection Bureau (CFPB) that aims to protect consumers when they engage in electronic fund transfers. It provides rights and protections to individuals who use electronic methods such as debit cards, ATMs, and direct deposits. The regulation ensures that consumers have access to clear and accurate information about these transactions, can resolve errors or unauthorized charges, and are protected from certain types of fraud. Therefore, the statement that the primary objective of Regulation E is to protect individual consumers who engage in electronic fund transfers is true.Rate this question:
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- 7.
Which one do you like?
- A.
Option 1
- B.
Option 2
- C.
Option 3
- D.
Option 4
Correct Answer
A. Option 1Explanation
The explanation for the given correct answer (Option 1) is not available as the question does not provide any context or criteria for the selection.Rate this question:
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- 8.
A consumer's request for required documentation or for additional information or clarification concerning an electronic fund transfer requires a financial institution to begin error resolution procedures.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When a consumer requests required documentation or additional information or clarification regarding an electronic fund transfer, it triggers the start of error resolution procedures for a financial institution. This means that the institution is obligated to investigate and resolve any errors or issues related to the electronic fund transfer. Therefore, the statement "A consumer's request for required documentation or for additional information or clarification concerning an electronic fund transfer requires a financial institution to begin error resolution procedures" is true.Rate this question:
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- 9.
Which of the following is not an Electronic Fund Transfer (EFT) transaction?
- A.
Placing a stop payment on a check
- B.
Direct deposit
- C.
Point-of-sale transaction
- D.
ATM transfer
Correct Answer
A. Placing a stop payment on a checkExplanation
Placing a stop payment on a check is not considered an Electronic Fund Transfer (EFT) transaction because it does not involve the electronic transfer of funds between accounts. Instead, it is a manual process where the account holder requests the bank to prevent the payment of a specific check. EFT transactions, on the other hand, involve electronic transfers of funds, such as direct deposits, point-of-sale transactions, and ATM transfers.Rate this question:
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- 10.
If a customer is unhappy with a service, but authorized the EFT, the transaction is still considered an error under Regulation E
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
If a customer is unhappy with a service but authorized the EFT (Electronic Funds Transfer), the transaction is not considered an error under Regulation E. Regulation E provides consumer protections for electronic transactions, including the right to dispute unauthorized transactions or errors. However, if the customer authorized the EFT, even if they are unhappy with the service provided, it would not be considered an error under Regulation E. Therefore, the correct answer is False.Rate this question:
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Current Version
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Mar 19, 2023Quiz Edited by
ProProfs Editorial Team -
Jun 13, 2014Quiz Created by
Jeff Weber
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