Altered Check

What Is an Altered Check?

An altered check is a check or another negotiable instrument that has been tangibly and maliciously altered to effect a fraud. Generally, either the name of the payee, the amount of the check, or the date is changed.

How an Altered Check Works

An altered check is one of four common types of check fraud, the other three being phonies (imitated signature), fake checks (fake), and remote checks (rather than a signature, there is a false statement that the account holder has authorized a check). Altered checks are explicitly tended to in the Uniform Commercial Code (UCC) Section 3-407. The term "modification" is defined as by the same token:

1. An unauthorized change in an instrument that implies to alter in any respect the obligation of a party.
2. The unauthorized expansion of words or numbers or one more change to an inadequate instrument connecting with the obligation of a party.

Under the UCC, the liability for an altered check can live with the different gatherings included, including the customer drawing the check, the bank on which the check is drawn, and the bank that presents the check, contingent upon the clear negligence. Sometimes the liability of an altered check falls with the cabinet of the check and different times it's the drawee or depository banks. A drawee bank can decline to acknowledge the loss in certain conditions, like customer negligence or on the other hand in the event that the fraud was executed by a repeat miscreant.

Conventionally, a customer needs to look at their bank statement and report the loss in 30 days or less. No matter what any negligence by the drawee bank, a customer will be banished from recovery on the off chance that they don't report the loss in one year or less.

Special Considerations

The Office of Comptroller of the Currency (OCC) of the U.S. Department of Treasury makes ideas to safeguard against this type of fraud. To begin with, customers ought to try not to leave large clear spaces in the number or amount lines when they compose checks; second, they ought to report to the drawee or payer financial institution when their checks are taken.

Financial institutions ought to survey checks to guarantee that penmanship of letters or numbers are steady all through and that there are no apparent indications of eradication or change. In the event that a bank accepts a check has been altered it can decline to respect the check.

Illustration of an Altered Check

An altered check is normally changes made to the name or amount. For instance, the dollar amount of a check can be changed from $100 to $1,000. Dollar amount changes are simpler than changes made to names.

Features

• Generally, the fraud must be reported by the customer in something like a year to guarantee recovery of the loss.
• Banks can decline to respect a check in the event that it accepts it has been altered.
• To assist with forestalling check modifying, the Office of the Comptroller of the Currency (OCC) recommends not leaving large spaces in the number and amount lines.
• Such changes that comprise an altered check remember changes for the amount and payee name.
• An altered check is a form of check fraud that remembers an altered check for the form of malicious changes.