CRB Banking Products & Customer Service 4 — Questions and Answers
Question 1: A customer disputes a credit card charge for a service never received. Under the Fair Credit Billing Act (FCBA), what is the maximum liability for a billing error if reported timely?
- $0 — all billing errors are fully covered (Correct answer)
- $50
- $500
- $5,000
Correct answer: $0 — all billing errors are fully covered
Under the FCBA, if a consumer reports a billing error within 60 days, the issuer must correct it; consumer liability for billing errors is $0 if properly disputed.
Question 2: Which metric measures how efficiently a bank turns deposits into loans, indicating its lending activity relative to funding?
- Net Interest Margin
- Loan-to-Deposit Ratio (Correct answer)
- Return on Assets
- Capital Adequacy Ratio
Correct answer: Loan-to-Deposit Ratio
The loan-to-deposit ratio shows what percentage of deposits are being deployed as loans, reflecting a bank's liquidity and lending aggressiveness.
Question 3: A banker notices a customer who normally deposits small amounts suddenly making large cash deposits just below $10,000 multiple times in a week. This behavior is called:
- Layering
- Structuring (Smurfing) (Correct answer)
- Integration
- Placement
Correct answer: Structuring (Smurfing)
Structuring, or smurfing, involves breaking up large cash amounts into smaller transactions to avoid CTR reporting requirements, which is a federal crime.
Question 4: What is the key difference between a debit card transaction processed as 'credit' versus 'debit' at a merchant terminal?
- 'Credit' processing funds a short-term loan; 'debit' draws from checking immediately
- 'Credit' processes through a card network with signature; 'debit' uses a PIN and processes via an EFT network (Correct answer)
- 'Credit' earns rewards points; 'debit' does not on any account
- 'Credit' has zero fraud liability; 'debit' has unlimited liability
Correct answer: 'Credit' processes through a card network with signature; 'debit' uses a PIN and processes via an EFT network
Choosing 'credit' routes a debit transaction through Visa/Mastercard networks using a signature, while 'debit' uses PIN-based EFT networks; both draw from the same checking account.
Question 5: A Health Savings Account (HSA) differs from a Flexible Spending Account (FSA) primarily because:
- HSA funds expire at year-end; FSA funds roll over indefinitely
- HSA requires enrollment in a High-Deductible Health Plan and funds roll over year to year (Correct answer)
- HSA is employer-funded only; FSA is employee-funded only
- HSA can only be used for dental expenses; FSA covers all medical costs
Correct answer: HSA requires enrollment in a High-Deductible Health Plan and funds roll over year to year
HSAs require HDHP enrollment, are portable, and unused funds roll over indefinitely, while FSAs typically have a 'use-it-or-lose-it' rule.
Question 6: When a customer applies for a personal loan, which factor in the 'Five Cs of Credit' refers to the economic environment and industry conditions beyond the borrower's control?
- Character
- Capacity
- Conditions (Correct answer)
- Collateral
Correct answer: Conditions
Conditions refer to external economic factors such as interest rate environment, industry trends, and economic cycle that affect the borrower's ability to repay.
Question 7: A customer wants to wire $15,000 internationally. Which compliance step is mandatory before processing?
- File a Suspicious Activity Report (SAR)
- Verify the customer's identity and screen against OFAC sanctions lists (Correct answer)
- Obtain written approval from the Federal Reserve
- Notify the recipient's bank 48 hours in advance
Correct answer: Verify the customer's identity and screen against OFAC sanctions lists
Banks must verify customer identity and screen all wire transfer parties against OFAC's SDN list before processing international wires.
CRB Banking Products & Customer Service 4
A customer disputes a credit card charge for a service never received.
Under the Fair Credit Billing Act (FCBA), what is the maximum liability for a billing error if reported timely?