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GWarren For Business & Nonprofits
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience:  30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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If a customer makes a pament of his account at a retail store

Resolved Question:

If a customer makes a pament of his account at a retail store and the cashier in error endorses it for too little amount can the check be lowered to reflect the amount the cashier gave the customer credit for?
Submitted: 8 years ago.
Category: Business Law
Expert:  GWarren For Business & Nonprofits replied 8 years ago.
Thank you for contacting justanswer.

1. Do I correctly understand that the check for a larger amount was accepted by the cashier and credited for a lesser amount and that you are now seeking to have your account credited as paid for that lesser amount (so that you would receive a refund or other credit for the difference in the amounts)?

2. Was the check cashed/deposited for the actual amount written rather than the amount accepted and credited to your account by the cashier?
Customer: replied 8 years ago.
the check amount was lowered by the store to reflect the payment that the customer got credit for
Expert:  GWarren For Business & Nonprofits replied 8 years ago.
Thank you for your immediate reply.

If the actual amount on the check was not altered by the cashier, as a negotiable instrument a check issued for a specific amount would typically be paid by the bank or other institution based on the amount authorized by the check. In that case the store would receive a greater amount of money than it credited your account.

If the cashier and store accepted the check and by mistake credited it to your account for a lesser amount, the below Alabama law appears to allow the store to recover the full payment from the customer who issued the check for payment or revoke the earlier acceptance of the check and the credit given to the account for that check. However if the store received the greater amount from the bank or other institution backing the check, the store should either increase the credit to your account to reflect the full amount or refund the difference to you.

Under the Code of Alabama - Title 7: Commercial Code - Section 7-3-418 - Payment or acceptance by mistake, subsection (b) specifically provides:

"...the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, (i) recover the payment from the person to whom or for whose benefit payment was made or (ii) in the case of acceptance, may revoke the acceptance."

I hope this is responsive to your question and particular situation. If you would like further clarification by providing additional details regarding the impact of your particular facts, please let me know.
Customer: replied 8 years ago.

did the store break any law by changing the check to the lower amount to reflect the customers credit. the check was processed the next day from the original transation and additional credit to the customer was not possible. the customers check went through their bank for the lower amount. is there still a violation legally?

Expert:  GWarren For Business & Nonprofits replied 8 years ago.
Thank you for the further detail.

The action of the cashier (and the store if it authorized that action) to change the amount of the check would have been improper without your authorization or other permission (typically you would need to change the amount and initial that change on the check). If it is obvious the amount was changed and it was not initialed by you the bank typically should have dishonored the check.

I am providing a reference to the Alabama Code section on alteration of a check in the event the cashier actually altered the amount of the check without your permission or other authorization. An alteration of the amount could avoid the check, however, the store may be able to enforce the check for the changed amount. The issue may be the action of the cashier and whether that action affects the rights of the store to the amount of the check (was the cashier acting as the store's agent and was the store without notice of the alteration?):

"Section 7-3-407 - Alteration.

(a) "Alteration" means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

(b) Except as provided in subsection (c), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

(c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed."

Did the posting of the lesser or lower amount to the account adversely impact you (store account late charges, missed minimum payment amount, etc.)? Were funds available in the check account for the full amount on the original check? Was the alteration of the check amount obvious? What was the motivation of the cashier to alter and reduce the amount on the check?

Answers to the above questions will help determine whether you have actions against the bank, store and or cashier. Once you answer those questions, depending on the answers, you may want to pursue contact with the bank and store related to the issues.
Customer: replied 8 years ago.
i work at the store and processed the check in bookkeeping the next day of the transaction with the cashier. in an effort to not overcharge the customer i lowered the check amount because our system doesnt allow us to pull up the customer account number to make the correct payment for the full amount of the check. i should have contacted the customer but i thought it was clearly written in error for a larger amount. i was wrong when the customer came to the store and brought this to our attention. nobody benefited from the alteration and it was made in good faith to be fair to the customer. the customer did not have any adverse actions because of the lower payment accet getting full credit for the payment. do i have a legal problem of being prosecuted for my action?
Expert:  GWarren For Business & Nonprofits replied 8 years ago.
Thank you for your further clarification.

Although the check was altered without the drawer's (individual who signed the check) permission you indicate that the amount was reduced to benefit the customer. Could the customer initiate a complaint and prosecution? Yes, alleging that the check was altered without permission. Whether a prosecutor would pursue an action on the matter is doubtful given the absence of fraudulent intent (elements of fraudulent intent may be missing such as materiality of the misrepresentation and proximate injury caused by the alteration). Your good faith in a customer service attempt may also be a defense.

As you state the customer came to the store, the customer would likely have realized the difference in amount (despite your good intentions) when the cashed check was reconciled against the customer's check register. Other courses of action as you suggest would have been to contact the customer to bring in another check, cash the check and refund the difference, etc., however, unless the customer is inclined to pursue the issue legally it is doubtful anyone else would prosecute.

I hope this answer addresses your concerns. If by any chance the matter is pursued as a complaint by the customer beyond a complaint to the store, a conversation with the prosecutor would hopefully avoid any further action (and in that event you may want to consult with legal counsel for the store or your own attorney (the local bar association lawyer referral service can assist you to identify and interview lawyers as to their similar experience and fees in such matters). Best wishes.
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