Altered Check

Altered Check
A check or another negotiable instrument that has been materially and maliciously altered to effect a fraud. Usually either the name of the payee or the amount of the check is changed.

Altered checks are specifically addressed in the Uniform Commercial Code (UCC) Section 3-407. The term "alteration" is defined as either:
(1) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or
(2) the unauthorized addition of words or numbers or another change to an incomplete instrument relating to the obligation of a party.

Under the UCC, the liability for an altered check can reside with the various parties involved - including the customer drawing the check, the bank on which the check is drawn and the bank that presents the check - depending on the evident negligence. Ordinarily, a customer needs to examine his or her bank statement and report the loss within 30 days. Regardless of any negligence by the drawee bank, a customer will be barred from recovery if he or she does not report the loss within one year.


Investment dictionary. . 2012.

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