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Altered Check Definition

What Is an Altered Verify?

An altered examine is a examine or one other negotiable instrument that has been materially and maliciously altered to impact a fraud. Normally, both the identify of the payee, the quantity of the examine, or the date is modified. 

Key Takeaways

  • An altered examine is a type of examine fraud that features an altered examine within the type of malicious adjustments. 
  • Such adjustments that represent an altered examine embody adjustments within the quantity and payee identify. 
  • Typically, the fraud should be reported by the client inside a 12 months to make sure restoration of the loss. 
  • Banks can refuse to honor a examine if it believes it has been altered. 
  • To assist forestall examine altering, the Workplace of the Comptroller of the Foreign money (OCC) suggests not leaving massive areas within the quantity and quantity traces. 

How an Altered Verify Works 

An altered examine is one in all 4 widespread varieties of examine fraud, the opposite three being forgeries (imitated signature), counterfeit checks (pretend), and distant checks (as an alternative of a signature, there’s a bogus assertion that the account holder has licensed a examine). Altered checks are particularly addressed within the Uniform Commercial Code (UCC) Part 3-407. The time period “alteration” is outlined as both:

  1. An unauthorized change in an instrument that purports to switch the least bit the duty of a celebration.
  2. The unauthorized addition of phrases or numbers or one other change to an incomplete instrument referring to the duty of a celebration.

Below the UCC, the legal responsibility for an altered examine can reside with the varied events concerned, together with the client drawing the examine, the financial institution on which the examine is drawn, and the financial institution that presents the examine, relying on the evident negligence. Generally the legal responsibility of an altered examine falls with the drawer of the examine and different instances it is the drawee or depository banks. A drawee financial institution can refuse to just accept the loss in sure circumstances, corresponding to buyer negligence or if the fraud was perpetrated by a repeat wrongdoer.

Ordinarily, a buyer wants to look at their bank statement and report the loss inside 30 days. No matter any negligence by the drawee financial institution, a buyer can be barred from restoration if they don’t report the loss inside one 12 months.

Particular Issues 

The Office of Comptroller of the Currency (OCC) of the U.S. Division of Treasury makes ideas to guard towards this sort of fraud. First, clients ought to keep away from leaving massive clean areas within the quantity or quantity traces after they write checks; second, they need to report back to the drawee or payer monetary establishment when their checks are stolen.

 Monetary establishments ought to evaluation checks to make sure that handwriting of letters or numbers are constant all through and that there aren’t any seen indicators of erasure or alteration. If a financial institution believes a examine has been altered it could possibly refuse to honor the examine. 

Instance of an Altered Verify

An altered examine is normally adjustments made to the identify or quantity. For instance, the greenback quantity of a examine will be modified from $100 to $1,000. Greenback quantity adjustments are simpler than adjustments made to names. 

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