How to Detect Counterfeit Money: Spotting Fake Bills

When retailers accept fake bills, they bear the entire burden of the loss. Although counterfeiters’ techniques are improving, the bad bills can still be detected. Here’s how to spot counterfeit money and protect your business from related losses.  

Counterfeit money is an ongoing threat retailers can’t afford to be complacent about. During the first three months of 2021, U.S. Customs and Border Protection officers seized $1.6 million in counterfeit currency in Chicago, Illinois. Another $110,000 in fake currency was seized in California.

Unfortunately for businesses, not all counterfeit bills are found and seized before getting into distribution. And when a business accepts fake money in payment for merchandise or services, they lose the face value of the money they received plus any goods or services they provided to the customer who paid with the counterfeit $20, $50, or $100 bill.

Fake money shows up in different states in different denominations at different times. Oftentimes, business owners don’t take notice of the bills because the purchases are minimal and the counterfeit money denominations are so small.  

In one case, the Connecticut Better Business Bureau (BBB) was alerted to a $100 counterfeit bill that had been passed to an unidentified retailer in Southeastern Connecticut. According to the Connecticut BBB, the phony bill began as a legitimate $5 banknote.

“The counterfeiters apparently used a technique that involves bleaching legitimate money and altering the bills to look like $100 notes,” the BBB stated in an announcement. “Many businesses use special pens to detect counterfeit currency; however, the pens cannot give a definitive confirmation about suspected altered currency, and they are not sanctioned by the U.S. Treasury.”

Large bills like $100 and $50 bills aren’t the only ones that are counterfeited, either. In December, 2019, U.S. officials seized close to $1 million in counterfeited one dollar bills.

RELATED: Learn to Spot Fake Cashier’s Checks

Understanding Counterfeit Currency

Counterfeit currency, also dubbed fake money, poses a significant threat to both the economy and individuals. It’s estimated that over $70 million in counterfeit bills are in circulation worldwide.

Counterfeiters are using increasingly advanced techniques to create fake bills that are hard to distinguish from genuine currency. This makes it crucial for business owners and individuals alike to understand the security features of genuine bills and how to spot counterfeit money. By being vigilant and knowledgeable, you can help prevent the spread of fake currency and protect your business from potential losses.

How to Spot Counterfeit Money

Business owners should train their employees to examine all bills they receive, $10 and higher (or higher depending on your company policy). If they believe they are being given counterfeit money, they can call the police.

Small business owners need to be aware of the many ways to detect counterfeit money. The Secret Service offers a downloadable PDF called Know Your Money that points out key features to look at to determine if a bill is real or fake. We’ll walk through some of the key techniques here.

Know the security features of genuine bills

Spotting fake money begins with knowing what the real bill should look like. Genuine currency incorporates several security features designed to thwart counterfeiters. These features include:

• Security Threads: Genuine bills have embedded security threads that glow under ultraviolet (UV) light. These threads are woven into the paper and are challenging to replicate.
• Raised Printing: Authentic bills feature raised printing that you can feel by running your fingers over the bill. Counterfeit bills often lack this tactile feature.
• Watermarks: When held up to light, genuine bills reveal watermarks that are difficult to reproduce. These watermarks are integrated into the paper itself.
• Color-Shifting Ink: Genuine bills use color-shifting ink that changes color when tilted. Counterfeit bills may either lack this feature or display it incorrectly.

These security features make it significantly harder for counterfeiters to produce convincing fake bills, helping you spot counterfeit money more effectively.

Inspecting the Bill

To determine if a bill is authentic, follow these steps to inspect its security features:

• Hold the bill up to light: Check for the security thread and watermark. These should be visible when the bill is held up to a light source. You should also see a hologram of an image that matches the person on the face of the bill. If someone has bleached and altered a $5 bill to look like a $100 bill, for instance, the hologram will display an image of Abraham Lincoln, who appears on the $5 bills, instead of Benjamin Franklin.
• Feel for raised printing: Run your fingers over the bill to detect raised printing, which is a hallmark of genuine currency.
• Tilt the bill: Observe the color-shifting ink by tilting the bill back and forth. The ink should change color as you tilt it.
• Check the serial number: Ensure the serial number is not repeated or unevenly spaced. Inconsistencies can be a sign of a counterfeit bill.
• Examine the edges: Authentic bills have crisp, well-defined edges. Blurry or uneven edges can indicate a fake bill.
• Check for microprinting: Microprinting makes bills harder to reproduce. The $5 bill has “USA FIVE” written on the thread; the $10 bill has “USA TEN” written on the thread; the $20 bill has “USA TWENTY” written on the thread; the $50 bill has “USA 50” written on the thread; and the $100 bill has the words “USA 100” written on the security thread. Microprinting can be found around the portrait as well as on the security threads.

By following these steps, you can more confidently identify counterfeit money and protect your business from potential losses.

Advanced Detection Methods

Beyond manual inspection, several advanced detection methods can help spot counterfeit money:

• Ultraviolet (UV) Light: Use UV light to detect the security thread and other embedded security features that glow under UV light. The $5 bill glows blue; the $10 bill glows orange; the $20 bill glows green; the $50 bill glows yellow; and the $100 bill glows red — if they are authentic.
• Counterfeit Detection Pens: These pens use special ink that reacts with the paper to identify counterfeit bills. However, they are not foolproof and should be used in conjunction with other methods.
• Magnetic Detectors: Genuine currency contains magnetic ink, which can be detected using magnetic detectors.
• Advanced Imaging Technology: This technology analyzes the paper and ink used in the bill to detect counterfeits.

While these advanced methods can be effective, they are not infallible. The best defense against counterfeit currency is education and vigilance. Always report any suspected counterfeit currency to law enforcement agencies to help combat the spread of fake money.

By understanding and utilizing these techniques, you can better protect your business from the risks associated with counterfeit currency.

Know what to do if you suspect fake bills

If you believe you have received counterfeit money, the U.S. Treasury advises you to do the following:

• Do not put yourself in danger.
• Observe the passer’s description — and their companions’ descriptions — and write down their vehicle license plate numbers if you can.
• Contact your local police department or call your local Secret Service office.
• Do not handle the counterfeit note. Place it inside a protective cover, a plastic bag, or envelope to protect it until you place it in the hands of an identified Secret Service Special Agent. You can also mail it to your nearest Secret Service office.

Remember, if you are passed a counterfeit bill, you own it. So when accepting cash, it pays to be knowledgeable about the crime of counterfeiting.

RELATED: Protect Yourself and Your Business From Identity Theft

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.