If a payee's name on a check is spelled incorrectly by the maker, what is the correct procedure?

If a payee's name on a check is spelled incorrectly by the maker, what is the correct procedure?

• A. Reissue a new check
• B. Have the customer endorse using original spelling, then re-endorse underneath with correct spelling
• C. Return the check to the maker
• D. Have the customer cross out the name and write the correct one

Answer: (B)

When a check has a misspelled payee name, the way to handle it is to use the payee’s endorsement to confirm who is entitled to the funds. The correct action is for the payee to endorse the check in the name as it appears on the instrument, and then for the bank to add another endorsement underneath reflecting the corrected spelling. This keeps the instrument negotiable and ties the payment to the rightful person, while allowing the bank to process the item without needing the maker to issue a new check. This approach avoids altering the name by the customer in a way that could raise questions of tampering and avoids the delays of returning the check to the maker or issuing a new check. It provides a clear, auditable chain of endorsements that shows the payee’s consent and the bank’s correction.

When a check has a misspelled payee name, the way to handle it is to use the payee’s endorsement to confirm who is entitled to the funds. The correct action is for the payee to endorse the check in the name as it appears on the instrument, and then for the bank to add another endorsement underneath reflecting the corrected spelling. This keeps the instrument negotiable and ties the payment to the rightful person, while allowing the bank to process the item without needing the maker to issue a new check.

This approach avoids altering the name by the customer in a way that could raise questions of tampering and avoids the delays of returning the check to the maker or issuing a new check. It provides a clear, auditable chain of endorsements that shows the payee’s consent and the bank’s correction.