A check clearing our customer's account was identified by our bank staff as Altered. They confirmed it with the customer. He had issued the check and put it in the mail, but it was intercepted at some point and was 'washed'. On the check that cleared, the payee and the two amounts had been altered. Amazingly, this Altered check was caught by bank staff on the day it cleared. We can return it on Monday before the Midnight deadline.

Since we are within the midnight deadline timeframe, can we just return the check through normal return processes, or do we have to do something additional since the check was Altered? I don't have a good understanding of how to make a breach of warranty claim.

Thank you in advance for any help given!

You don't need to make a breach of warranty claim if you are returning the check before the midnight deadline. You just return the check.

The warranty claim comes in if the alteration is discovered after the check has already been paid.

Lately, there have been many cases in which a check appears to the paying bank and its issuer to have been altered, but when the paying bank makes a warranty claim against the depositary bank, the depositary bank refuses the claim, and counters with a claim that the check was not altered, but counterfeit. In such cases, the paying bank is often left "holding the bag."

In your case, because you returned the check before the midnight deadline, the depositary bank will be responsible, since your return was timely regardless of whether the check was altered or counterfeit.