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Why is the practice of counterfeiting money such a hot issue in this country?
Well, believe it or not; the United States dollar bills have a large number of hi-tech security features, making the dollar is one of the most advanced currencies in the world.
The US also have a dedicated government agency, the Secret Service, specializing in combating counterfeiting. However, all this security comes at a price: it’s expensive to print US dollars! So why such an intense focus on combating fake bills?
The roots of the counterfeiting problem go way back. Fake dollars have been in circulation in the US since the days of colonial rule, followed by a huge increase in counterfeiting during the Civil War. Thus, history has made counterfeiting a critical issue in the USA.
Now, let’s see how to detect a fake vs real bill. Here is an easy mnemonic: there are seven US bills ($1, $2, $5, $10, $20, $50, $100) and seven steps to authenticate them. If you forget how many steps, count in your head the number different-denomination US bills.
So, let’s start with the simplest tests and work upwards.
The size and weight of US paper currency are tightly controlled. All seven US bills are 2.61 inches wide by 6.14 inches in length and 0.0042 inches thick, and each weighs 1 gram.
Stack all the bills you have and see if any are the wrong size, even if only slightly.
The “paper” (it’s not really paper) from which the bill is made is a special blend of 75% cotton and 25% linen. This material has a distinctive feel, according to Independent Banker. Your fingers are extremely sensitive to thickness and texture. Give each bill a quick rub between your fingers. If it doesn’t feel right, set it aside for further checking. Nine times out of ten, your fingers will be accurate fake detectors.
You can also place each bill next to a real bill of the same dollar amount and see if something doesn’t match. However, this tends to take too much time and is not very effective.
If you notice significantly blurry borders, printing, or text, this should be an automatic red flag. Authentic bills are extremely detailed, made using die-cut printing plates that are capable of creating impressively fine lines. Laser and inkjet printers are rarely capable of the same level of detail. Take a close look, especially at the borders, to see if there are any blurred parts in the bill.
Here is a tip that can speed up the whole process. There are some notes can you pretty much ignore, and others that should you should check carefully. To make it even faster, there are only two worth checking: the $100 dollar bill and the $20 bill.
The $100 note is the most frequently counterfeited. It tends to be targeted by overseas syndicates and “money factories” in certain countries. Surprisingly, fake 100 dollar bills are not the most common counterfeit notes found here inside the US. According to Fraud Fighter’s How to Detect a Counterfeit $20 Bill, the $20 bill is the popular choice of forgers inside the continental USA. The Jackson is popular with domestic criminals because it’s a common bill dispensed by ATMs and is not usually examined with the degree of scrutiny of larger bills, Secret Service officials say. So you would want to examine $100 and $20 bills more carefully. The other bills are very seldom counterfeited, and agonizing over checking for one or two fake $1, $2, or $5 bills is not worth the time and effort, unless you have reason to believe that you have been given a significant quantity of them.
Assuming that you have found a bill/bills that don’t “feel right” what should you do next? If you have more than one of these suspect bills and they are of the same denomination, check for identical serial numbers. This will at least filter out amateur forgers and kids using color photocopiers. The ease with which people can buy photo-editing software or search how to make bad bills has added teenagers to the demographic of advanced criminals.
Often you will have only one suspect bill in the batch. We then have to use one of the more sophisticated anti-forging features built into US paper currency. There are seven smart security features built into US bills. Understandably, the $100 dollar bill has the most security, as it is the highest value bill and brings in the biggest profit when forged.
To digress for a moment, what profit do you think forgers make on a fake hundred? In Peru, the average selling price for a fake $100 in bulk, i.e. the “wholesale” price, is $20. The glue needed per bill is 50 cents, the paper can be bought in bulk for $10 to $15 per stack. Including labor, the total cost comes to between $3 and $5; that’s a profit of at least $15 per fake $100 bill. At a “manufacturing” cost of five dollars per bill, that’s a 300% markup. Not a bad business, if you can get away with it.
Of the counterfeit currency seized in the United States last year, 61% was manufactured using digital printing, with the remaining counterfeit currency manufactured with traditional, or “offset”, printing. Digital counterfeiting is outpacing traditional printing because today’s high-performance, low-cost printers offer high resolution and improved color matching of copied currency. This trend has changed who produces bad bills. It has shifted from a small number of highly skilled criminal rings to more amateur opportunistic counterfeiters.
The $100 bill was redesigned in 2013. The change was a long time coming, due to a 2010 manufacturing flaw with creasing of the bill, but the end result was the most complex note ever made. The new $100 bill has the most advanced protection features of all of the seven US bills. It is now an outstandingly sophisticated bill amongst all the paper money notes in the world.
As all the other smaller bills have various subsets of the security features of the new $100 note. We will first deal with how to counterfeit-check a $100 bill.
To apply the more sophisticated checks for a fake $100, let’s look at the easiest of these to check, the Portrait Watermark. You can check out the full descriptions of these features on the US Federal Reserve website - www.UScurrency.gov. The watermark image is caused by the US Mint using different thickness of paper, with light areas being the result of thinner paper. A watermark is an excellent security feature, as a counterfeiter is very unlikely to manufacture his own paper. Watermarks can be simulated in some ways, but the effects are almost always very crude.
Where to find the watermark: there is a faint outline of Ben Franklin in the blank space between the upper (small) and lower (large) “100” printed on the right-hand side of the bill. It is visible from both sides of the note, as it is not printed on the note but embedded in the thickness of the paper. To make it easier to find, look for the watermark being partly overlapped by the Treasury seal (see the illustration below.) You need to hold the note up to a bright light and look carefully.
The Security Strip is a thin, faint embedded strip that runs vertically across the note from top to bottom, just to the left of Ben Franklin in the $100 bill. The thread should be visible from both sides of the note.
The thread in a $100 bill glows pink when illuminated by ultraviolet light (UV). It is present in most of the US bills (excluding the small-denomination $2 and $1 bills), old and new, and is the primary security feature used by Money Counters and Bill Checkers to identify fakes.
Next, a real sophisticated security feature, hard to check but even harder to forge. The new $100 contains micro-printing, very tiny lettering in various weird places scattered over the note. Look carefully (magnification will be necessary) to see the micro-printed text in the following places:
It can take a lot of squinting and searching, mostly looking in the wrong places, before finding the micro-printing. You are going to need a really good quality magnifying glass, or even better, a watchmaker’s loupe and plenty of patience.
The fifth hi-tech security feature is color-shifting ink. Parts of the bill are overprinted with a thicker layer of a special ink that has different colors depending on the angle at which it is viewed.
To see this, tilt the note and look at the bell in the "Inkwell" and the large numeral "100" in the lower right corner of the front of the note. They should shift color from copper to green as the note moves. The large “100” is particularly easy to see, and the change is dramatic. It’s amazing to see the pronounced color difference. A fun feature and once again hard to counterfeit.
Photo Courtesy of FitSmallBusiness
Move your finger up and down Ben Franklin’s right shoulder (left side of the bill). It should feel raised and rough to the touch. This is as a result of recessed intaglio printing.
Older-tech raised printing can be felt throughout the rest of the $100 note. For instance, the serial number and the Treasury Seal, but the old raised printing is not as pronounced as the new hi-tech. To detect the older raised printing you can compare with the feel of a genuine bill you know to be okay.
THE 3D SECURITY RIBBON OF THE NEW $100 BILL – IN BLUE NEAR THE CENTER OF THE NOTE.
We have saved the best for last, the 3D security ribbon, because this feature is also the most complicated to check. The 3D security ribbon is the bright blue vertical stripe, about 6mm wide, in the center of the $100 at the right of Ben Franklin’s portrait. This stripe is also called a “thread” because it is not printed over the top of the note, but “threads” through the paper, over the top layer of paper and under this top layer.
Let’s plunge into the deeper mysteries of the 3D security ribbon. It is actually a hologram, and it is totally magic. As stated by Snapily’s 3D Technology Gives US Money a Makeover, it is made up of hundreds of thousands of “micro-lenses” that create a hi-tech effect.
Move the bill while focusing on the broken blue strip in the center. You will see three rows of “100”s when you look at the bill with its left edge towards you. These 100's move in an unusual way.
Make sure you have good strong lighting. When you rotate the note around its vertical center (called “yaw” in aircraft – like the bill was trying to flap its wings), the 100’s move left to right, not up and down – unexpected and very weird. Now, turn the bill around so the wide edge is in front.
Rotate the bill back and forth around its horizontal axis (called “roll” in aircraft) and now the “100”s will move side to side. Wow. The trick is, the “100”s move back and forth along the opposite axis from that axis along which the bill is being rotated.
It gets better. If you examine the “100”s very carefully while yawing and rolling the bill, you should see the “100”s turning into “bells”. These “bells” are of the same type as the color-changing “liberty bell” in the inkpot. (I found the “100”s easier to see.) The bells should move in the same non-intuitive way as the “100”s do when the bill is rolled or yawed.
You can check out the full descriptions of all these features on the US Currency website. The site also shows some very useful pictures of how you twist and turn the bills to make the security features possible to see.
Only a few of these advanced features are checked automatically by electronic money counters and counterfeit detectors. Mostly these machines use UV and magnetic ink detection, not the least because detecting only these two is fast and uses inexpensive sensors.
The most advanced money counters will use color image scanning and feature recognition, but even these advanced machines cannot read holograms and raised printing. Human senses are still best, for now.
EXAMPLE OF AN ADVANCED COUNTERFEIT-DETECTING MONEY COUNTER – THE CR2 FROM CARNATION ENTERPRISES
This discussion has so far focused on the new $100 note because it is on the top of the pile, security-wise. Let’s switch to discussing the other bills – the fifty, twenty, ten, five, two, and one dollar. As they go down in value, the security features become fewer.
None of these bills has the full set of advanced features contained in the new hundred dollar bill. From an anti-counterfeiting point of view, once you know how to check for fake hundreds, you know how check all the rest. As pointed out earlier, the $20 is the object of most of the counterfeiting activity within continental US, so we focus on the $20 more than the other bills.
The $50 bill was last updated in 2004 and has not been changed since. The $20 bill was last redesigned in 2003. We will deal with these two notes together, as they have the same feature set. As discussed earlier, the $20 should be checked carefully. The main difference in the $20/$50 bill security feature set, is the absence of the “magic” 3D Security Ribbon. The precise size and weight, watermark, security strip, micro-printing, color-shifting ink, and raised printing are all present in the $20 and $50 bills, with only slight differences to the $100 note, as follows:
The UV-sensitive Security Stripe in the $50 is located to the right of the portrait, not the left as in the $100 bill. On the $20 bill and $5 it is still on the left. This extra security measure was originally added to provide a quick way for bar owners (one of the businesses most commonly targeted to dispose of fake 20 dollar bills) to check the legitimacy of a bill.
If the $20 bill is held up to an ultraviolet light the security stripe glows green, if it is authentic! Hold the note to light to see the stripe (security thread) to the left of Andrew Jackson’s portrait. It reads USA TWENTY and includes a small flag. The thread is visible from the front and back of the note and glows green under ultraviolet light.
Here are the location and colors of the security stripes on different denomination bills and how to detect:
The $2 and $1 do not have a security strip at all.
If you take a close look at an authentic bill, you will see that there are small red and blue threads woven in and out the fabric of the bill. Printers try to reproduce this effect by printing red and blue lines onto the bill in a similar pattern.
A close look will often reveal that such printing is merely on the surface and not in the paper. It’s best to compare with a real $20 to be sure.
An extra thing you could check on a $20 bill is that the serial number correctly matches the “series year” printed on the bill. The first letter of the serial number for a bill should correspond to the year of the Series Block (see picture for location) as below:
The new series $50 also has color-shifting ink on the “50” in the lower right-hand corner.
The $10 bill was updated in 2006 and also has the same feature set as $50
The $5 bill was updated in 2008. It has the “standard” security feature set of the $50 but without the color-shifting ink.
The $1 bill was updated in 1963 and has only raised printing.
And the less-common $2 was last updated in 1976 and has only the raised printing.
Lastly, there is a relatively new, extremely simple, way to detect dud dollars, and that is using a Counterfeit Pen or, more accurately, a counterfeit-detection pen. This looks like a fat permanent marker but with a key difference. When you mark a bill, let’s say a $20 note, with the pen in a genuine $20 the marking will show up bright yellow. On a fake dollar bill (or on ordinary paper), the marking will slowly turn black. Don’t worry, the mark you make on a good bill is not permanent. It quickly evaporates and leaves no trace. However, on a fake bill the black mark will remain, so mark your bills with a large “X” and the fakes will be easy to separate!
The pen contains a tincture (solution) of iodine as ink that reacts with the starch in wood-based paper to create a black stain. As we discussed in Step 1, the “paper” that US bills are made is a blend of 75% cotton and 25% linen. There is no starch at all in a genuine bill. When the iodine solution is applied to the cotton-and-linen-based paper used in real bills, no discoloration occurs. You can read more on How Stuff Works’ How does a counterfeit detector pen work?.
A good quality counterfeit-detection pen will also have a UV light source, usually built into the lid. When you press a button on the clip of the lid, an UV LED switches on. Shine the UV spot on a good hundred, at the left of Ben Franklin’s portrait, and you will see the UV security stripe light up in pink. Also, a genuine bill will absorb UV light while a dud will reflect UV.
Place a piece of ordinary paper overlapping the bill under test and move the UV light-spot back and forth from the paper to the bill. For a real $100, the UV spot will be much brighter on the paper than on the bill. This check will work for all the other bills too, with the UV stripe glowing in the specific color for each denomination, as listed in the table above under “UV-sensitive Security Stripe”.
A pen does have its limitations though. Most commercial paper is made from wood pulp and is brown until it is bleached and starched. Sophisticated counterfeiters will not use paper that contains starch. Instead they will buy paper that is made from cotton/linen fibers like those used in legitimate US bills. While this is not an available option to the average counterfeiter, governments unfriendly to the United States, and sophisticated large-scale operators do have ways to access starch-free paper.
The pen is inexpensive, small, easy to use, and will provide quick results. It is probably a good investment if you handle large amounts of cash every day. However, don’t rely on it solely. Use one or more of the Seven Steps as well to have more confidence that your bills are good.
The first large-scale, deliberate counterfeiting started as the colonies began their march toward independence. The British experimented with pumping in fake currency in volume to weaken the economy and foil the attempts to achieve independence. This was the first time counterfeiting had been used as a weapon of war.
Until the 1780s, paper money had always been backed by gold. This made counterfeiting less popular. The first experiment with “pure paper” money was driven by the exigencies of war. The Continental paper money issued during the Revolutionary War (1775-1783) was not backed by a physical asset such as gold or silver. It quickly lost value to zero shortly after the war, simply because people stopped accepting it as payment for goods and services.
The origin of the saying “not worth a Continental”, and the phrase “I don’t give a Continental” does not mean what you might think.Continental currency was soon replaced by the adoption of a stronger currency, the original U.S dollar, but in many different forms. There were eventually no less than six different types of dollar bills in circulation. All these paper currencies, however, were convertible to gold “on demand”.
The next experiment in relaxing the gold-backing for paper money was again driven by the exigencies of war, but this time it was the Civil War of 1861–1865. Under President Lincoln, a paper dollar not exchangeable for gold was issued as “legal tender” in 1862 as an emergency war measure. Some people feared, with good reason, that it would create a financial calamity. However, thousands of troops had to be paid and equipped; weapons, everything from bullets to cannons to ironclad warships, had to be built. The fledgling Union did not have the gold to finance this. They went right ahead and printed dollars anyway, initially some $400 million worth of them. If every one of the new dollar notes had been presented for conversion to gold, the Union government would have been broke many times over.
The new Federal Dollars were printed in green ink on the back, and became known as “greenbacks” - a derogatory term at the time. One version of origin of the name is that people said the money had no backing other than the green ink on the back. Also called “funny money”’, the value of these notes gyrated wildly with military wins and losses, inflation soared as high as 75%, and in 1863 just before the Gettysburg Address, a $100 greenback was worth only $35 in gold. To read more on the Civil War and Greenbacks, check out The Gold Standard Now.
The ironic thing about greenbacks is that they are actually totally un-backed.
By some unprecedented miracle, the greenback dollar survived, and the notion of a paper currency with an illusory value began to take root and become acceptable to the public.
In July of 1929, the US Fed decided to replace the physically large notes circulating with smaller notes, closer to the dollar note size now used. Originally intended to save on paper cost, the change unexpectedly created another revolution in US paper money. Just three months after the changeover, the stock market crashed completely, and the Great Depression began. The great crash was not unrelated to the fact that the economy had been running on un-backed dollars since the Civil War.
The six types of dollar currency then circulating were Gold Certificates, Silver Certificates, National Bank notes, United States notes, Federal Reserve notes, and Federal Reserve Bank notes. Each system had its own denominations. There was an unmanageable hodgepodge of over 50 different dollar bills types and values. A counterfeiter dream.
Soon after the Civil War, it was estimated that, of the nation's entire currency in circulation, no less than one third to one half was counterfeit. Four years of intense combat had left 620,000 to 750,000 people dead and much of the country’s infrastructure destroyed, especially the transportation systems, railroads, mills and houses. Counterfeit money posed a major threat to the economy, and financial disaster loomed. There was a very strong reaction by the Federal Government, the effects of which are felt to this day. Nowadays even though the actual number of fake bills in circulation in the USA is very small, according to the US Treasury, the time and effort, not to mention money, spent on combating fake dollars is still disproportionately large.
In 1985, an ad-hoc department impressively named the “Secret Service” was founded, with reducing counterfeiting as its primary mission. While this helped tamp down massive counterfeiting, there were some notable exceptions, for example:
Photo courtesy of How to Peru
The Federal Reserve Bank estimates that less than 0.01% of all U.S. currency in circulation worldwide is counterfeit. That amounts to $85.4 million in forged currency compared to the $8,500 billion real bills circulated throughout this country, according to the U.S. Secret Service. So the chances of finding a counterfeit bill are relatively small – only one fake in 10,000 bills, on average.
The best defense against a future flood of counterfeit currency is an educated and aware public. Tell your friends about the seven steps, and encourage them to download and read this article and other reliable anti-counterfeiting articles. It’s important. Genuine and dependable paper currency is key to the financial security of the United States.
Press, T. A. (2013, October 07). New $100 bill heads to banks Tuesday.
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Ilao, J., Smoker, J., Allen, K., T., Aland, M., D., . . . J. (2018, January 19). How to Detect Counterfeit Money: 8 Ways to Tell If A Bill is Fake. Retrieved March 06, 2018, from https://fitsmallbusiness.com/how-to-detect-counterfeit-money/