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Q.) Our account holder informed us that a check that posted to their account was altered (payee and amount). How should this be handled?
A.) The Bank of First Deposit (BOFD) warrants that the check it presents is not altered (UCC 3-417, 4-208). As the Paying Bank, you will need to deal directly with the BOFD and will need to provide a copy of the check, affidavit from the maker, and a Warranty Breach Claim letter stating the reason for breach (altered check), specific details and demand for payment. The BOFD must either reimburse (the Paying Bank) or provide proof that the check has not been altered. Additionally, the Reg CC statute of limitations for altered check claims is one (1) year from presentment date.
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