Unit quiz: Proving it after the fact: coverage arithmetic from statements, the clauses that fail, fraud indicators, complaint routing, and the ninety-day audit

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Question 1

Ninety days of statements show $1,284,600.00 of deposits, $1,190,200.00 of debits and an average daily balance of $22,410.00. A first-position remittance of $5,148.00 a week is proposed, equal to 70.89 percent of monthly net cash. The merchant is profitable and has never bounced a supplier cheque. Why does the first debit still risk an R01, and what measurement shows it?The account turns over every 1.69 days, so the average balance covers 1.69 days of debits; a Friday debit collected against Monday card settlements that settle at T+2 arrives before roughly $42,820.00 of weekend settlements land, which is a timing failure rather than an insolvency, and the fix is to measure the debit day against the settlement calendar rather than the monthly average.The merchant is profitable and the remittance is only 5.21 percent of deposits, so there is no coverage question and an R01 would indicate a bank error rather than a schedule problem.

Question 2

A merchant wants to contest a $9,400.00 overcharge. The contract accelerates the balance when the funder deems itself insecure and requires arbitration before an arbitrator 1,900 miles away, with the merchant advancing half the arbitrator's compensation, estimated at $12,500.00, plus $18,000.00 of counsel and $1,450.00 of travel. What is the clause doing, and how should it be described?The acceleration clause is void because it says at will, and the arbitration clause is unenforceable because it is unconscionable, so the merchant can ignore both and sue locally.The acceleration clause is read down to a good-faith belief that the prospect of payment is impaired, so it is not the unlimited trigger it appears to be, while the forum and cost provisions make the dispute cost $31,950.00 to pursue against a $9,400.00 claim, a ratio of 3.40 to 1, so the clause's real function is to make the claim economically irrational; describe that effect and record it, and leave enforceability to a lawyer in the governing jurisdiction.

Question 3

A file shows revenue rising from $412,000.00 to $1,401,000.00 in one year, a bank account opened 41 days before the application, three statement PDFs with identical creation timestamps and a tax return whose receipts are exactly $116,400.00 above the deposits in the statements. The merchant says the statements are 'just missing a couple of accounts'. What do you do, and what do you not say?Stop the submission, record the specific indicators with their measurements, decline to coach the merchant on what documentation would look better, and leave the account opening and the reporting to the institution; you do not tell the merchant that a suspicious activity report has been or may be filed, and you do not describe the file as fraud in a document that could be produced.Ask the merchant to supply the missing account statements so the deposit figure matches the return, then submit once the numbers reconcile, since an unexplained gap of $116,400.00 is a documentation problem rather than an integrity problem.

Question 4

A merchant complains that a $3,300.00 debit was taken eleven days after the file was paid off. Your twelve-month log shows three complaints across 214 funded files, one about that debit, one about a disclosed fee and one about a call after an opt-out. What is the response and what does the log tell you?The complaint rate is 1.40 per 100 files, which is below any reasonable threshold, so the correct response is to explain the payoff timing to the merchant and log the complaint as resolved without changing the process.Acknowledge in writing within three business days, preserve the debit authorisation, the payoff quote and the termination demand, refund the debit if the payoff date supports it, and treat the three complaints as 1.40 per 100 files with three distinct root causes, one of which is a control failure at payoff rather than a communication failure.

Question 5

At day ninety on a $205,920.00 file funded on 7 November, thirteen weekly debits of $5,148.00 were expected. The bank shows fifteen debit entries totalling $77,220.00 and two credits of $5,148.00, plus $140.00 of bank fees and two $50.00 funder return fees that were debited separately. The servicer's ledger shows the balance reduced by $66,924.00. Reconcile it.The bank movement is $66,924.00 net of the two returns, so the debits reconcile, but the two $50.00 fees were collected and never credited, so the ledger overstates the balance by $100.00; the $140.00 of bank fees belongs to the merchant's own bank and never touches the obligation, and the audit records both facts separately.The ledger is correct because $77,220.00 of debits less $10,296.00 of returns is $66,924.00 and the fees of $240.00 are immaterial, so the file closes with no exceptions.

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