What Is an Altered Check? Meaning, Overview, 10 Facts

A altered check is a check or other negotiable instrument that has been significantly and deliberately tampered with in order to perpetrate fraud. Typically, either the payee’s name, the amount, or the date of the check is altered. Click on each section below to read more information related to it.

What Is an Altered Check?

A fraudulently altered check is a negotiable instrument on which important information has been modified. The information on a check that may be updated includes the check date, the amount to be paid, and the payee’s name.

When a bank thinks that a check has been tampered with, it is permitted to refuse to honor the check. Depending on who was negligent, every person engaged in the processing of an altered check may be held responsible.

Depending on the circumstances, the individual writing the check, the bank on which the check is drawn, or the bank presenting the check might all be held accountable. To prevent tampering, the issuer of a check should ensure that the number and amount lines have no substantial blank spaces.

How an Altered Check Works

The other three major kinds of check fraud are forgeries (imitated signature), counterfeit checks (fake), and remote checks (instead of a signature, there is a bogus statement that the account holder has authorized a check).

In Section 3-407 of the Uniform Commercial Code (UCC), alterations to checks are expressly handled. The definition of “alteration” is either:

Unauthorized modification to an instrument that claims to affect the obligation of a party in any way. Unauthorized insertion of words or numbers or other alterations to an unfinished document pertaining to a party’s obligation.

Depending on the obvious fault, the UCC assigns culpability for a changed check to several parties, including the customer writing the check, the bank on which the check is drawn, and the bank presenting the check.

Sometimes the drawer is responsible for a changed check, and other times the drawee or depository institutions are liable. A drawee bank may refuse to take the loss if, for example, the client was negligent or if the fraud was committed by a repeat offender.

Typically, a consumer must review their bank statement and report a loss within thirty days. Regardless of any wrongdoing on the part of the drawee bank, if a client does not disclose a loss within one year, they will be precluded from reimbursement.

Special Considerations

The Office of the Comptroller of the Currency (OCC) of the United States Department of the Treasury provides recommendations to prevent this form of fraud.

First, clients should avoid leaving big blank spaces in the number or amount lines when writing checks, and second, they should report stolen checks to the drawee or payer financial institution.

Checks should be reviewed by financial institutions to verify that the handwriting of letters and figures is consistent and that there are no evident traces of erasure or change. If a bank suspects that a check has been changed, it may refuse to honor the instrument.

Example of an Altered Check

Typically, a tampered check involves alterations to the name or amount. For instance, a check’s amount may be altered from $100 to $1,000. Changing monetary amounts is simpler than changing names.

How to Spot an Altered Check | SQN Banking Systems

Criminals modify checks by altering the amount or the name of the payee. Then, they cash the check over the counter, deposit it into a new account, and remove the monies before anybody discovers the fraud, or they find other means to get the cash. To detect manipulated checks, remember the following suggestions.

What Is an Altered Check?

1. Look for Inconsistent Handwriting

When taking checks for deposit over the counter, your tellers should search for irregularities in handwriting. If they notice discrepancies between the amount, the payee’s name, or other handwritten data on the check, they may choose to do more research before accepting it.

2. Check for Visible Signs of Alteration and Erasure

When receiving checks for deposit, your tellers must additionally search for evident evidence of modification. If they can see that the amount has been altered or that there are erasure marks under the payee’s name, they must adhere to the process you’ve established.

Depending on the circumstances, you may need to place a hold on the check, contact the check’s issuer, or reach out to the bank from where the check was drawn.

3. Tell Customers Not to Leave Spaces

If your clients leave blank areas on their checks, their checks are more open to manipulation. Ideally, they should complete both the check amount box and the line where the amount is written. Consider sending out examples of how to correctly fill out a check everytime a client orders a new box of checks.

4. Advise Customers to Keep Checks Safe

Before checks can be changed, they must be stolen; thus, your customers must safeguard their checks. They should not leave unattended cheques in desk drawers or open vehicles.

In an ideal situation, people should avoid placing checks for bills in their mailboxes, since criminals are infamous for stealing and changing checks from this place.

5. Be Aware of Internal Risks for Corporate Clients

More often, corporate or company customers are affected by check manipulation than individuals. Ensure that company customers are aware of the potential of internal fraud and consider encouraging them to take the following safeguards:

Limit check access to certain workers.

Maintain a clear chain of custody for checks from the moment they are written until the time they are signed and sent.

Maintain current vendor listings to guarantee that no one writes checks to fraudulent suppliers.

Delete void checks.

Utilize built-in means to check security, such as watermarks or security threads.

Utilize electronic ways of payment wherever feasible.

6. Offer Positive Pay to Your Customers

Positive pay is ideal for business clients since it enables them to provide a list of the checks they write each month or statement period.

Then, specialized software analyzes incoming checks to the quantities and payees set by your clients. Positive pay software notifies you of anomalies so that you may personally analyze the check and, if necessary, contact the consumer.

What Is an Altered Check?

7. Consider Using Security Seals

You may also choose to provide the ability to print security seals on checks to business account holders. With SENTRY: Seal, your customers may print a seal or barcode including all the information (amount, payee name, date, etc.) from the check onto their checks.

When your banking institution accepts the check, SENTRY: Seal verifies the encoded information in the seal or barcode with the information printed on the check and tells you of any inconsistencies.

8. Urge Account Holders to Report Stolen Checks

Inform both company and individual account holders of the significance of reporting stolen checks. Then you may order a stop payment on all checks in that series, regardless of whether they lost a few check blanks or an entire box of checks.

Similarly, if one of your customers writes a check to someone who loses it, they should always report it as missing so that no one can locate it, change it, and cash it.

To encourage clients to file these reports, you may offer to suspend a specific number of checks annually at no cost. Thus, your clients will not skip filing a report in order to avoid the stop check price.

9. Use Automated Check Image Analysis Tools

Even if your tellers are very well-trained and have a good eye for fraud, they may miss some changed checks. To reduce your losses, you might consider investing in instruments for analyzing check fraud.

Products like as SENTRY: Inspect and SENTRY: Content examine the stock components and content of on-us checks automatically, detecting minute flaws that are invisible to the naked eye. Then, these solutions display suspect checks in a workflow application so that your staff may manually make a determination.

Knowledge and training are essential for preventing fraud, but you also need the appropriate tools. At SQN Banking Systems, we assist our customers in automating fraud detection in order to save time, decrease labor, and reduce fraud.

Contact us now to learn more about our products and services and how we can help you defend your reputation and bottom line.

What Is an Altered Check?

Altered Check vs. Counterfeit Check

A counterfeit check is a phony check that has been designed to resemble a legitimate one. This strategy differs from altering a check, in which the information on an actual check is changed to benefit the individual participating in the adjustment activity.

Who Is Liable for an Altered Check?

In addition to specifying what constitutes an altered check, the Uniform Commercial Code assigns culpability and describes each party’s rights and obligations.

Ultimately, the culpable party is the individual who changed the check for fraudulent reasons, who will be punished according to the laws of the jurisdiction where the conduct occurred. However, the UCC also considers the following individuals and entities:

the individual who issued the cheque (the “drawer”)

the bank drawn on the check

The bank where the deposit is made.

the settlement service

In general, the law states that any person or entity that transmits a check implicitly guarantees that it has not been changed after the drawer signed it.

Consequently, blame is allocated based on a mix of general culpability and an assessment of which person or institution was in the greatest position to detect the change but failed to do so. At such point, the accountable party pursues the individual who changed the check in the first place.

Does The UCC Apply Specifically to Personal Checks?

A personal check is a promissory note, or a commitment to pay the sum specified on the check. However, according to the UCC, this is merely one kind of what are known as “negotiable instruments.” In addition to personal checks, the following may also be included:

Certified check

check at a teller or counter

Cashier’s check

currency orders

bank deposit certificate

These are not all promissory notes. Cashier’s checks, teller checks, and money orders are classified as “drafts” or orders; the person or institution allowed to pay is under an order to do so (in this example, the person who bought the check).

Can You Cash an Altered Check?

This occurs on occasion, most often with personal checks. However, with today’s technologically advanced watermarks and other authentication and fraud detection methods, it would be very difficult for a prospective fraudster to cash a tampered check.

As previously said, responsibility may lay with anybody along the endorsement chain, from the drawee (the institution financing the check) through the payee (the institution who pays the bearer).

What Is an Altered Check?

In a recent instance, the payee held the remitter (the person signing the check) responsible when they failed to receive payment. This wasn’t brought to the donor’s notice until he received his monthly bill. The cheque had been stolen and the payee’s name had been substituted with the name of the perpetrator.

If and when the thief is apprehended, criminal charges will be filed against him. However, the sender may be held accountable and required to issue a fresh check to the payee in addition to any applicable fines and costs.

In this instance, the sender would have to convince the court that the check had been changed in a manner that any competent bank teller or other financial expert would have been able to notice.

Is it a Felony to Alter a Check?

The response is affirmative if the sum involved exceeds $1,000. Otherwise, the offense is treated as a misdemeanor. Penalties vary from jurisdiction to jurisdiction based on variables such as recidivism and the precise amount involved. In addition to reparation, convictions for larger sums carry severe punishments.

Check modification is one of a number of related financial crimes that fall under the umbrella of check fraud. Although check alteration is widespread, there are various types:

counterfeiting

forgery

“kiting”

“paperhanging”

payroll fraud

Paperhanging refers to the act of writing cheques on closed or nonexistent accounts. On occasion, people are able to get away with this, however the majority of account verification techniques nowadays can at least validate the account’s existence, if not its amount.

The more complex practice of “Kiting” or “Flashing” includes the cyclical movement of monies between many accounts. Here’s a straightforward step-by-step example:

John has $50 in his First National account.

He drafts himself a $100 cheque from this account.

John then deposits this cheque into a separate State Bank account he manages.

John withdraws the $100 from State Bank immediately.

Before the check clears, he goes to First National and redeposits $100.

The $100 is subsequently deposited into his State Bank account

John has essentially just earned himself $50.

The motives for this kind of white-collar crime vary, but often include firms attempting to survive economic downturns. Kiting scams, unlike check forgery, cross the border into federal criminality and are punished as such.

Conclusion

A fraudulently altered check is a negotiable instrument on which important information has been modified. The information on a check that can be updated includes the check date, the amount to be paid, and the payee’s name.

When a bank thinks that a check has been tampered with, it is permitted to refuse to honor the check. Depending on who was negligent, every party engaged in the processing of an altered check may be held responsible.

What Is an Altered Check?

Depending on the circumstances, the individual writing the check, the bank on which the check is drawn, or the bank presenting the check might all be held accountable. To prevent tampering, the issuer of a check should ensure that the number and amount lines have no substantial blank spaces.

FAQ

An altered check contains information that has been changed from its original.
the depositary bank
In the case of a forged check, however, the UCC places the responsibility on the paying bank for identifying the forgery. Therefore, the depositary bank typically bears the loss related to an altered check, whereas the paying bank bears the loss related to a forged check.
Contact your bank or credit union as quickly as you can. If your bank or credit union cashed the check, you may be able to have the difference restored to your account. You are still responsible for the original amount of the check
The term “forged check” is often used to describe a check on which the drawer’s signature is forged or unauthorized. Such a check is meaningless as far as the drawer whose signature is forged is concerned. The drawee bank that pays a forged check is generally responsible for the resulting loss.
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