diff --git a/apps/api/src/__tests__/seed-uat-credentials.test.ts b/apps/api/src/__tests__/seed-uat-credentials.test.ts
index 7f954ae..75eaffc 100644
--- a/apps/api/src/__tests__/seed-uat-credentials.test.ts
+++ b/apps/api/src/__tests__/seed-uat-credentials.test.ts
@@ -173,7 +173,10 @@ async function seedUatCredentials(
     );
 
     if (existingAccount) {
-      // skip — already has credential account
+      // Re-hash and update the password (mirrors seed.ts behavior)
+      const { hashPassword } = await import("better-auth/crypto");
+      const passwordHash = await hashPassword(password);
+      existingAccount.password = passwordHash;
     } else {
       // Use Better-Auth's hashPassword so test helper matches production seed.ts
       const { hashPassword } = await import("better-auth/crypto");
@@ -351,6 +354,49 @@ describe("seedUatCredentials — credential provisioning logic", () => {
     expect(insertedAccounts).toHaveLength(0);
   });
 
+  // ── AC-8: existing account password IS updated (not frozen at first-seed) ──
+
+  it("AC-8: re-seeding with a changed password env var updates the stored hash", async () => {
+    const ORIGINAL_PASSWORD = "original-password";
+    const ROTATED_PASSWORD = "rotated-password-456";
+
+    process.env.SEED_UAT_CUSTOMER_PASSWORD = ROTATED_PASSWORD;
+
+    const preExistingUsers: UserRow[] = [
+      { id: "pre-existing-user", email: "uat-customer@groombook.dev", name: "UAT Customer", emailVerified: true },
+    ];
+    // Account was created with the original password on first seed
+    const originalHash = await hashPassword(ORIGINAL_PASSWORD);
+    const preExistingAccounts: AccountRow[] = [
+      {
+        id: "pre-existing-acct",
+        accountId: "pre-existing-user",
+        providerId: "credential",
+        userId: "pre-existing-user",
+        password: originalHash,
+      },
+    ];
+
+    // Re-seed with the rotated password env var
+    await seedUatCredentials([UAT_ACCOUNTS[2]!], {
+      users: preExistingUsers,
+      accounts: preExistingAccounts,
+      staff: [],
+    });
+
+    // No new user or account created
+    expect(insertedUsers).toHaveLength(0);
+    expect(insertedAccounts).toHaveLength(0);
+
+    // The pre-existing account's password WAS updated (not frozen at first-seed).
+    // hashPassword uses a random salt so we verify by format + that it is a new,
+    // different valid hash from the original.
+    const updatedAcct = preExistingAccounts[0]!;
+    expect(updatedAcct.password).toBeDefined();
+    expect(updatedAcct.password).toMatch(/^[a-f0-9]{32}:[a-f0-9]{128}$/);
+    expect(updatedAcct.password).not.toBe(originalHash); // it actually changed
+  });
+
   // ── AC-6: missing env var skips with warning ────────────────────────────────
 
   it("AC-6: missing SEED_UAT_*_PASSWORD env var skips that account (no error)", async () => {
diff --git a/apps/api/src/db/seed.ts b/apps/api/src/db/seed.ts
index fc65098..e5601d1 100644
--- a/apps/api/src/db/seed.ts
+++ b/apps/api/src/db/seed.ts
@@ -594,7 +594,15 @@ async function seedKnownUsers() {
       .limit(1);
 
     if (existingAccount) {
-      console.log(`✓ Credential account for '${acct.email}' already exists — skipping`);
+      // Re-hash and update the password so that re-seeding rotates credentials
+      // when the env var changes (e.g. after a password rotation).  Previously
+      // this branch skipped entirely, freezing the hash at first-seed.
+      const { hashPassword } = await import("better-auth/crypto");
+      const passwordHash = await hashPassword(password);
+      await db.update(schema.account)
+        .set({ password: passwordHash })
+        .where(eq(schema.account.id, existingAccount.id));
+      console.log(`✓ Credential account for '${acct.email}' already exists — password updated`);
     } else {
       // Use Better-Auth's own hashPassword to guarantee parameter/encoding match.
       // better-auth/crypto uses: N=16384, r=16, p=1, dkLen=64, salt as 16-byte random