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#2172984 - 04/11/18 03:52 PM Altered/Fictitious vs Counterfeit Checks
KPAP Offline
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Joined: Dec 2014
Posts: 59
Midwest
Can someone help clarify for the me the difference in definitions between altered/fictitious checks and counterfeit checks? I feel like we should know this but we're struggling to figure out which bank is actually out the money. Back story-We recently had a customer give out her mobile deposit login information and allowed an unknown person to make mobile deposits. Nine checks total were deposited into our customers account and only three were returned using the altered/fictitious return reason but we believe they were actually counterfeit checks. The bank didn't get them returned within the 24 hour return window which is why we think they said altered/fictitious, but how do we really know? We're wondering how banks determine if a check is truly altered/fictitious vs. counterfeit and who has the liability? We're wondering if we can reject the late return. Any help would be appreciated!

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#2172987 - 04/11/18 03:59 PM Re: Altered/Fictitious vs Counterfeit Checks KPAP
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,689
Illinois
Most banks that I have seen use the terms synonymously. Either way, the drawee bank has until their midnight deadline to return the item assuming that you are both using the Fed for your clearings. If you both participate in the same correspondent relationship, this have its own set of rules which may result in shared liability

If the check were a legitimate item, but returned as altered, the drawee bank would have up to one year (based on your state's Uniform Commercial Code) to send a without entry claim along with an affidavit of alteration from the check maker to pass liability along to you if the check is truly an alteration..
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#2173011 - 04/11/18 04:57 PM Re: Altered/Fictitious vs Counterfeit Checks KPAP
KPAP Offline
Member
Joined: Dec 2014
Posts: 59
Midwest
Thank you, Brian! Your advice is always so appreciated. So if the drawee bank can not produce the affidavit of alteration, then would I be correct in assuming that the drawee bank assumes the liability since they missed the midnight return deadline? The checks are all identical other than the check numbers and amounts so we're really thinking that they are counterfeit and not altered. We are both using the Fed for our clearings.

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#2173022 - 04/11/18 05:29 PM Re: Altered/Fictitious vs Counterfeit Checks KPAP
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,689
Illinois
If they missed their midnight deadline, then the drawee bank is liable. Just remember that their return can be timely, but that doesn't mean that you get the check within 24 hours in the event that the Fed misrouted it.
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#2176339 - 05/02/18 04:45 PM Re: Altered/Fictitious vs Counterfeit Checks KPAP
KPAP Offline
Member
Joined: Dec 2014
Posts: 59
Midwest
I have a quick follow-up question with this situation. The drawee bank did not meet the midnight deadline for the return and instead tried a late return for the item. They never provided an affidavit of alteration (I'm assuming management requested it but still unsure)As I understand it, we had 20 days to refuse the late return. However the 20 days have passed and we did not refuse it, so it looks like we're just passing the liability on to our customer. Is this acceptable? Our customer is now responsible for paying us back the $2,000 for the counterfeit item?

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