DEFINITION of '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.

BREAKING DOWN 'Altered Check'

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.

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