This article is part of a larger series on Retail Management.
Counterfeit money is currency produced by someone other than the government intended to deceive the recipient into believing it is authentic. The Secret Service seized over $505 million in counterfeit currency in 2020 alone.
The Bureau of Engraving and Printing designs and produces Federal Reserve Notes to include a number of security features. Counterfeiters can sometimes duplicate one or two of these unique characteristics but rarely all of them. By looking for specific security features on a bill—like the watermark, color-shifting ink, and microprinting—it’s possible to spot a fake quickly. There are also a number of tools—like scanners and lamps—designed to detect counterfeit currency.
In this guide, we’ll walk you through how to detect these fake bills and protect your business from the threat of counterfeit money. If you’re intimidated by the threat of counterfeits and want to reduce the risk of losing profits due to fraud, consider using a merchant account to cut down on cash transactions and improve the security of credit card payments.
Almost as easy to find as the portrait itself are the watermarks incorporated into denominations of $5 and up.
When evaluating the most recent $5 bill design, hold the note up to light to see three numeral 5s to the left of the portrait and on the right edge; in the previous design, the watermark depicts Lincoln’s portrait.
On new $10, $20, $50, and $100 notes, the watermark is a replica of the portrait and is located to the right of the printed image. Generally speaking, if there is no watermark or the watermark is visible without being held up to the light, the bill is likely a counterfeit.
When confirming the authenticity of a watermark, make sure it is:
- Only visible when you hold it up to the light
- Located to the left of the portrait and on the right edge on $5 bills
- Located to the right of the portrait on $10, $20, $50, and $100 bills
- An exact replica of the portrait on the bill in the case of $10, $20, $50, and $100 notes
Note: Most of the examples we use are of a $20 bill because it is the most counterfeited denomination of US currency stateside. However, some security features vary by denomination. Likewise, security features have improved over time as currency is redesigned, so old bills may be more difficult to evaluate than others.
2. Color-shifting Ink
Another quick way to distinguish between a fake and authentic bill is to look for color-shifting ink on the denomination in the lower right corner of a $10, $20, $50, or $100 bill. For $100 bills, the bell in the inkwell (located to the left of the denomination) is also printed with color-shifting ink.
When looking at the most recent design of a genuine bill, the denomination and bell will be a copper color; tilt the bill, and the color will change from copper to green. This unique color-shifting ink was also used on some older versions of these bills, though the color shifts from green to black on older designs.
In addition to the color-shifting denomination, the 2013 style $100 bills feature a color-shifting bell in the inkwell. While the inkwell remains a copper color, the bell shifts from copper to green when viewed from a different angle.
3. Security Thread
The security thread is one of the most distinctive security indicators of an authentic bill. If you hold a genuine bill with a denomination of $5 or more up to the light, you will see a security thread running vertically across the bill to the right or left of the portrait.
On $5, $10, and $50 bills, the thread is located to the right of the portrait; on $20 and $100 bills it is located to the left of the portrait. The threads are imprinted with “USA” and the denomination alternating across the bill, although the exact format of this text varies by denomination—as detailed in the table below.
That said, the ultimate test involves viewing the bill under an ultraviolet (UV) light to confirm the security thread glows the correct color. This extra security measure was originally added to provide a quick way for bartenders to check the legitimacy of a bill. Based on these features, counterfeit bills will either lack a security thread entirely or will have a security thread with text, location, and/or color that do not match the denomination.
Security Thread Features for Each Denomination
Location of Security Thread
Text Imprinted on Thread
Color Under UV Light
Right of the portrait
Right of the portrait
USA TEN and a small flag
Left of the portrait
USA TWENTY and a small flag
Right of the portrait
USA 50 and a small flag
Left of the portrait
Note: Federal Reserve notes designed before 1990 do not contain security threads.
4. Security Ribbon
Unlike other notes, the most recent $100 note design has a 3-D security ribbon woven into the paper to the right of Benjamin Franklin’s portrait. By moving the bill, you can see images of bells and 100s shift as you move. Tilting the note back and forth makes the bells and 100s move side to side; tilting the bill side to side causes them to move up and down. This 3-D security ribbon reportedly cannot be duplicated by counterfeiters, making it an easy way to confirm the authenticity of a $100 bill.
In the News:
In August 2021, police in Barrington, New Hampshire, received reports of counterfeit $100 bills being passed in town. The bills had the security ribbon, but also Chinese lettering on the back and “looked greyish and had markings in the upper right-hand corner.” These bills may be training bills used to educate bank tellers in China that made their way to the US.
5. Crisp Printing & Borders
Authentic US currency is printed using extremely detailed, die-cut printing plates capable of creating impressively fine lines. Because of that, counterfeit printers are rarely capable of duplicating the level of detail. To spot a counterfeit bill, take a close look at the printing quality—especially the borders—to see if there are any blurred areas. If you notice significantly blurry borders, printing, or text, it’s an automatic red flag for counterfeit money.
Beyond just crisp, high-quality printing, genuine US currency of $5 denominations and greater is characterized by microprinting. This super-fine text is difficult for counterfeiters to reproduce with their less advanced equipment. For that reason, counterfeited bills may exhibit unreadable microprinting when viewed under magnification.
The location—and text—of microprinting on US currency varies by denomination, so look out for these features when checking the most recent version of each note for authenticity:
Note: Federal Reserve notes designed before 1990 do not feature microprinting.
7. Paper Material & Texture
The paper used by the Federal Reserve for US currency is made up of 25% linen and 75% cotton; it has been supplied to the US Bureau of Engraving and Printing by Crane and Co. since 1879. In addition to their composition, authentic bills feature small red and blue security fibers evenly distributed throughout the material of the bill.
Counterfeiters attempt to reproduce this effect by printing red and blue threads onto fake bills in a similar pattern. But, a close look often reveals that the “fibers” are merely on the surface level—and indicates you have a counterfeit on your hands. All Federal Reserve notes are printed on paper with embedded security fibers.
In addition to the material used for authentic currency, notes have a unique texture due to the raised printing used on notes of every denomination—including $1 and $2 notes. Larger denominations feature enhanced intaglio printing on the portraits. By running your fingers across portions of the bill, you’ll be able to feel this raised texture that’s not present in most counterfeit currency. The best place to check is along the shoulders of the people on the bills; you should be able to feel bumps and ridges.
8. Serial Number & Series Year
A final check when evaluating the authenticity of a bill is to compare the serial number and the series year printed on the front of the note. The serial number, which includes a unique combination of 11 numbers and letters, appears twice on the front of each note—on the right side and in the upper left corner. On an authentic bill, the first letter of the serial number corresponds to the series year printed to the right of the portrait.
Serial number prefixes and corresponding series years are as follows: A (1996), B (1999), C (2001), D (2003), E (2004), F (2003A), G (2004A), H (2006), I (2006), J (2009), K (2006A), L (2009A), M (2013), N (2017), and P (2017A).
Counterfeit Detection Tools
Just as it’s important to prevent chargebacks in a credit card-driven business, business owners and employees should know how to distinguish between authentic and fake currency during cash transactions. To simplify the process—and improve accuracy—there are a variety of products available. Here are some of the best options.
Best All-in-One: AccuBANKER LED430
An all-in-one counterfeit money detector, like the AccuBANKER LED430, includes several features to help employees evaluate the authenticity of suspect bills. This detector includes LED lights, a UV light, an integrated ruler for checking bill dimensions, a magnetic sensor to check the authenticity of the ink, and a magnifier to confirm the presence of microprinting. If you operate a largely cash business and need to quickly verify large bills based on several characteristics, this type of tool may be the best option.
Best Handheld: Dri Mark UV Light Counterfeit Bill Detector
To fully evaluate the authenticity of a bill’s security thread, invest in a UV light for each payment station or employee who handles cash. A small, affordable tool like a handheld UV light can help employees quickly and accurately identify counterfeit money. Consider this option if you own a bar or other business that relies on several employees to process a large amount of cash in a short amount of time.
Best Counterfeit Pen: Dri Mark Dual Test
Counterfeit pens work by identifying fake notepaper using an iodine solution that reacts with the starch in wood-based papers. Iodine does not react with the cotton and linen fibers found in authentic bills. So, if a counterfeit bill was printed on basic paper, the pen will leave a dark stain; if the bill is authentic, it will not.
However, while counterfeit pens can help identify some fake bills, they’re not as accurate on more advanced counterfeits. In fact, some counterfeiters treat fake notes with a chemical solution so that the money will pass a pen test. For that reason, counterfeit pens should be used in combination with other tools or a careful visual review of relevant security features. The Dri Mark Dual Test pen also includes a UV light to check the security stripe.
What to Do if You Detect a Counterfeit Bill
If you suspect you’ve been given a counterfeit bill, follow the steps below to protect yourself and ensure that the US Secret Service can evaluate the fake currency.
1. Avoid putting yourself in danger. If you think a bill is counterfeit, do not make any statements or take any actions that might cause the passer to threaten or harm you.
2. Do not return the bill to the customer. Rather than returning a suspected counterfeit to the passer, keep the bill so that you can pass it along to law enforcement. Unfortunately, you won’t receive any financial remuneration for surrendering a counterfeit bill to law enforcement, but doing so can help combat counterfeiting.
3. Jot down some notes about the passer. Observe and record as much about the passer and their companions as possible. This may include characteristics like height, weight, eye color, hair color, and any other unique features. Where possible, write down the passer’s license plate number and other identifying information.
4. Contact local law enforcement or the local US Secret Service Office. As soon as you suspect that a bill is counterfeit—and you’re not at risk—contact local law enforcement. Once you’ve made contact, only surrender the note to an identified police office or Secret Service Special Agent; you may also be directed to mail it to the nearest Secret Service field office.
5. Write your initials and the date on the border of the bill. Before passing a suspected counterfeit bill to law enforcement, write your initials and the date in the white border area of the note.
6. Handle the bill as little as possible. In some cases, there may be remnants of fingerprints, DNA, or certain processing chemicals that can help the police tie a bill to a certain counterfeiter. Handle a potential counterfeit as little as possible and separate the bill from your other cash by putting it in a protective cover, plastic bag, or marked envelope until you can submit it to the Secret Service.
Losing profits to larceny can hurt profits as much as reduced sales. Learn more about reducing retail theft.
Counterfeit Money FAQs
Does counterfeit money feel real?
Yes, it may feel similar to authentic bills. However, one sign of counterfeit money is that it feels smooth. Run your fingers over the shoulders of the portraits. Real money has bumps and ridges.
What happens if you accidentally acquire counterfeit money?
If you realize it’s fake, immediately contact the police. Follow the steps listed above as they apply to your situation. It should go without saying that you should not try to use it. If, however, you are caught accidentally trying to use counterfeit money, then work with the store owner to contact the police. Try to remember where you got the bill and (of course) pay for your purchase with legitimate bills. If you are charged with using counterfeit currency, contact your attorney.
How big a problem is counterfeit money?
Older reports indicate over $70 million in counterfeit bills are in circulation, but the Secret Service said it confiscated over $505 million in 2020.
What are the most common mistakes counterfeiters make?
The most common mistakes are errors in color or paper, as well as poor printing. The easiest way is to check for color-shifting ink and to feel for the texture of the paper.
How does counterfeit money affect me?
First, the bills are worthless; the government will not honor them even if you turn them in. Second, it’s a felony to pass counterfeit bills. It hurts the economy as well and can contribute to inflation, which means higher prices for the things you want.
Where am I most likely to find counterfeit money?
Bogus bills are more often passed along at retail stores. Banks usually have more safeguards to detect counterfeit money, so it’s less likely you’ll find them from an ATM.
Are dollar bills counterfeited?
Yes, especially since the design has not been updated like the rest of the bills. However, they aren’t as profitable, for obvious reasons.
Learning to identify fake money and teaching your employees is an important part of good store management. Start by introducing your staff to each of the security features incorporated into authentic US currency—of each denomination. Then, consider investing in tools like UV lights or all-in-one counterfeit detectors if you want to provide an extra line of defense for your business.
If your business continues to struggle with counterfeit money, consider reducing your dependency on cash transactions. Get started by learning more about the easiest ways to accept credit card payments. Also, read more about how to start a retail business for other skills to get you started on the right foot.