NCCO Exam #2 Questions with Correct Answers
Reg E: Account Types Covered? - ANSWER-Savings accounts
Checking accounts
Payroll cards established for personal, family or household purposes
Reg E: Account Types NOT Covered? - ANSWER-Business purpose accounts
Accounts held under a trust agreement
Escrow accounts
What is an EFT? - ANSWER-any movement of funds by means of an electronic terminal, telephone, computer or magnetic tape for the purpose of ordering or authorizing a FI to debit/credit a consumer's account
EFT Examples - ANSWER-Automated teller machines, direct deposit, debit cards, and electronic checks, online bill payments, telephone transfers
When are EFT disclosures required? - ANSWER-Must be provided at the time the EFT service is established OR before the first EFT is made
If required, when must a periodic statement be sent? - ANSWER-Must be provided monthly for every month where there is an EFT. Otherwise, quarterly.
What is an unauthorized EFT under Reg E? - ANSWER-ANY EFT from an account initiated by a person other than the consumer WITH NO authority and from which consumer gets NO benefit.
Examples of an unauthorized EFT: - ANSWER-Forced to conduct a transfer
Phishing
Card skimming
Stolen access device
Two examples where transactions are not considered unauthorized: - ANSWER-1) When member acts alone/with another with fraudulent intent (ex. member gives brother ATM/PIN. Brother makes purchases and member makes claim)
2) Authorized user transacts on account BUT exceeds authority (ex. I give you card to purchase lunch and you take card and purchase week's worth of groceries)
What are the 3 different levels of liability for unauthorized transfers (access devices)? - ANSWER-$50, $500 or unlimited: Level 1-->$50- applies if the member notifies the CU of the loss or theft of an access device within 2 business days of learning of the loss. Can only be held responsible for $50
Level 2-->$500-applies if the member does not notify CU within 2 business days, but notifies within 60 days after periodic statement is sent. (Calculation is $50 (or amount of unauthorized EFTs that occurred within 2 BD if less than $50) plus any transactions occurring between 2 days and notice date up to $500)
Level 3-->Unlimited: applies if the member notifies CU more then 60 days after statement is sent. (Calculation is anything occurring after 60 day period) plus any amounts owed under the first 2 levels.
What are the 2 levels of liability when NO access device is used? - ANSWER-1) Within 60 days after periodic statement is sent, no liability
2) Greater than 60 days after periodic statement, full liability for any transactions occurring after 60 days and before notice to the CU
Timelines for CU to complete its investigation: - ANSWER-No provisional credit: 10 business days (20 for new accounts)
PC: 45 days (90 days for new accounts, foreign transfers, POS debit card transactions)
Can credit unions require members to pay a loan via an EFT as part of the approval process? - ANSWER-NO. Cannot require, but can incentivize in the form of lower rates or fees
What is a remittance transfer? - ANSWER-Electronic transfer of funds requested by a sender (for personal, family or household purposes) to a recipient (must be located in a foreign country) by a remittance transfer provider
What is a remittance transfer provider? - ANSWER-person providing remittance transfers in the "normal course of business".
When is a remittance transfer provider NOT providing RTs in the normal course of business? - ANSWER-If the RT provides 500 or fewer transfers in the prior calendar year and 500 or less in the current calendar year
Prepaid Accounts: What is the function test? Examples? - ANSWER-Function Test: -issued on a prepaid basis or capable of being loaded with funds after to conduct transfers at multiple merchants/P2P transfers;
-primary function of the account is to conduct transfers with multiple, unaffiliated merchants, at ATMs or for (P2P) transfers; and
-Is not a checking account, share draft account or negotiable order of withdrawal account.
Reg E: Account Types Covered? - ANSWER-Savings accounts
Checking accounts
Payroll cards established for personal, family or household purposes
Reg E: Account Types NOT Covered? - ANSWER-Business purpose accounts
Accounts held under a trust agreement
Escrow accounts
What is an EFT? - ANSWER-any movement of funds by means of an electronic terminal, telephone, computer or magnetic tape for the purpose of ordering or authorizing a FI to debit/credit a consumer's account
EFT Examples - ANSWER-Automated teller machines, direct deposit, debit cards, and electronic checks, online bill payments, telephone transfers
When are EFT disclosures required? - ANSWER-Must be provided at the time the EFT service is established OR before the first EFT is made
If required, when must a periodic statement be sent? - ANSWER-Must be provided monthly for every month where there is an EFT. Otherwise, quarterly.
What is an unauthorized EFT under Reg E? - ANSWER-ANY EFT from an account initiated by a person other than the consumer WITH NO authority and from which consumer gets NO benefit.
Examples of an unauthorized EFT: - ANSWER-Forced to conduct a transfer
Phishing
Card skimming
Stolen access device
Two examples where transactions are not considered unauthorized: - ANSWER-1) When member acts alone/with another with fraudulent intent (ex. member gives brother ATM/PIN. Brother makes purchases and member makes claim)
2) Authorized user transacts on account BUT exceeds authority (ex. I give you card to purchase lunch and you take card and purchase week's worth of groceries)
What are the 3 different levels of liability for unauthorized transfers (access devices)? - ANSWER-$50, $500 or unlimited: Level 1-->$50- applies if the member notifies the CU of the loss or theft of an access device within 2 business days of learning of the loss. Can only be held responsible for $50
Level 2-->$500-applies if the member does not notify CU within 2 business days, but notifies within 60 days after periodic statement is sent. (Calculation is $50 (or amount of unauthorized EFTs that occurred within 2 BD if less than $50) plus any transactions occurring between 2 days and notice date up to $500)
Level 3-->Unlimited: applies if the member notifies CU more then 60 days after statement is sent. (Calculation is anything occurring after 60 day period) plus any amounts owed under the first 2 levels.
What are the 2 levels of liability when NO access device is used? - ANSWER-1) Within 60 days after periodic statement is sent, no liability
2) Greater than 60 days after periodic statement, full liability for any transactions occurring after 60 days and before notice to the CU
Timelines for CU to complete its investigation: - ANSWER-No provisional credit: 10 business days (20 for new accounts)
PC: 45 days (90 days for new accounts, foreign transfers, POS debit card transactions)
Can credit unions require members to pay a loan via an EFT as part of the approval process? - ANSWER-NO. Cannot require, but can incentivize in the form of lower rates or fees
What is a remittance transfer? - ANSWER-Electronic transfer of funds requested by a sender (for personal, family or household purposes) to a recipient (must be located in a foreign country) by a remittance transfer provider
What is a remittance transfer provider? - ANSWER-person providing remittance transfers in the "normal course of business".
When is a remittance transfer provider NOT providing RTs in the normal course of business? - ANSWER-If the RT provides 500 or fewer transfers in the prior calendar year and 500 or less in the current calendar year
Prepaid Accounts: What is the function test? Examples? - ANSWER-Function Test: -issued on a prepaid basis or capable of being loaded with funds after to conduct transfers at multiple merchants/P2P transfers;
-primary function of the account is to conduct transfers with multiple, unaffiliated merchants, at ATMs or for (P2P) transfers; and
-Is not a checking account, share draft account or negotiable order of withdrawal account.
