By Allen G. Berman, U.S. Coins & Currency June 25, 2012

Excerpted from U.S. Coins & Currency, 2nd Ed. by Allen G. Berman, available from http://www.ShopNumisMaster.com.



First, it must be realized that almost since its beginning, United States paper money has been printed not on paper, but on cloth. It is part cotton and part linen with some silk. The silk is in the form of minute red and blue threads which dive in and out of the surface of the note. A color copier may be able to reproduce the colors of these tiny threads, but it cannot reproduce the texture of them entering and leaving the surface of the note. Use a magnifying glass.

Another key to detecting counterfeits is crispness of the ink in the design. Images and lines should be sharp and distinct. Minimal effort looking for these clues can catch most circulating counterfeits. Most counterfeit bills passed in circulation are accepted not because the counterfeits are deceptive, but because little or no effort is put into looking to see if they are real at all. This is entertainingly illustrated by the occasional news story about the cashier who accepts a spoof note in payment.

In recent years, Federal Reserve Notes have incorporated many new counterfeit detection devices. Since 1993, major new innovations have been gradually incorporated into these notes to prevent counterfeiting. At first micro printing was incorporated into the design and around the frame of the portrait. Also, a transparent strip bearing the value and “USA” was imbedded inside the paper. It can only be seen when the note is held up to the light and cannot be photocopied.

Beginning in 1996 with the $100 note, the portraits were enlarged to show more detail. The reverse was modified to incorporate more white space, making it possible to successfully use a watermark incorporated into the paper. This is an image neither printed on nor imbedded inside the paper, but one created by the pressure of a pattern pressed against the paper during its drying stage. Like the transparent printed strip, it can only be seen when the note is held up to the light. Among the most ingenious high-tech safeguards on the new notes is the use of color shifting ink, which alters its color depending on the angle of the light hitting it. The green Treasury seal has been retained, but the old letter seal indicating the Federal Reserve Bank of distribution is now replaced by the seal of the Federal Reserve system. These innovations were also incorporated into the 1996 series $50 and $20 notes, with the $10 and $5 notes following during the 1999 series. The $1 note is intended to remain basically the same.

Additional steps were taken to prevent counterfeiting in 2004. Both the $20 and $50 notes received multi-color background designs. The change also took place for the $10 and $100 notes in 2005.

Real notes have been used occasionally to create counterfeits. A counterfeiter will take the value numbers from the corners of a note and glue them to a note of a lower face value. Such notes will often feel too thick or irregular at the corners. More importantly, such a criminal is presuming the recipients will pay virtually no attention to the notes they are accepting. Such counterfeits can be detected by even the quickest comparison with a real note.

Certain practices are designed to take an authentic note and make it appear to be in a better grade of preservation than it is. These include ironing a note to make it look less worn, and expertly gluing tears. Hold your note up to a light. Light will pass through the glue differently than through normal currency. When choosing a rare currency dealer it is good to make sure that they have the skills to know a note is real, and the ethics to accept it back if it is not. Of course the same principles apply as mentioned above in choosing a coin dealer. There are specialized organizations that enforce codes of ethics. Two of the largest are the International Banknote Society (IBNS) and the Professional Currency Dealers Association (PCDA). Their insignia in advertising indicate that the dealer is a member.

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