To spot counterfeit money, use three quick checks on the bill in your hand: feel the paper for its distinctive cotton-linen texture and raised ink, tilt it to see color-shifting numerals and (on the $100) a 3-D security ribbon, and hold it to the light to find the watermark and the embedded security thread. If any of those fail, don’t spend the bill. Knowingly passing a fake is a federal felony carrying up to 20 years in prison, and no one is going to reimburse you for its face value.
The Three-Step Check
Genuine U.S. currency carries layers of physical security built into the paper itself. Most counterfeiters can fake one or two features. Almost none can fake all three at once.
Feel the Paper
Real currency paper is 75 percent cotton and 25 percent linen, giving it a crisp, slightly rough texture that ordinary printer paper can’t match.1Bureau of Engraving and Printing. The Buck Starts Here: How Money Is Made Tiny red and blue fibers are embedded throughout the paper, not printed on the surface.2U.S. Currency Education Program. Currency Facts Run a fingernail across the portrait and you should feel raised ink from the intaglio printing process. A bill that feels flat, slick, or flimsy almost certainly isn’t real.
Tilt the Bill
On $10 bills and above, the numeral in the lower right corner uses color-shifting ink that changes from copper to green when you angle the note.3U.S. Currency Education Program. Dollars in Detail The $100 bill adds a blue 3-D security ribbon woven directly into the paper, showing images of bells and the number 100 that shift as you tilt the note.4U.S. Currency Education Program. $100 Note The same $100 also has a bell inside a copper inkwell that appears and disappears with the viewing angle.5U.S. Department of the Treasury. U.S. Government Unveils New Design for the $100 Note If none of those effects show up, treat the bill as suspicious.
Hold It to the Light
Every denomination of $5 and above has a security thread embedded vertically in the paper. The thread sits in a different position on each denomination and is inscribed with the bill’s value. Under ultraviolet light, each denomination’s thread glows a different color: the $10 orange, the $20 green, and the $50 yellow.6U.S. Currency Education Program. $10 Note7U.S. Currency Education Program. $20 Note8U.S. Currency Education Program. $50 Note The bill should also show a watermark, a faint version of the portrait visible from both sides of the note. A missing or blurry watermark is one of the fastest tells.
Why Counterfeit Pens Miss the Best Fakes
The yellow iodine pens common at cash registers work in a limited way. The ink reacts with the starch in ordinary wood-based paper, leaving a dark mark. Because real currency uses cotton and linen, the mark stays light on a genuine bill. The problem is that the pen only tests paper composition. A counterfeiter who bleaches a real $1 or $5 bill and reprints it as a $100 is still using authentic cotton-linen paper, so the pen reads it as genuine. It also can’t check for watermarks, security threads, or color-shifting ink. Treat the pen as a first screen, not a verdict.
The Bleaching Trick and the Best Single Defense
The most effective counterfeiting technique exploits the one thing counterfeiters can’t manufacture: real currency paper. Bleaching means soaking a low-denomination bill in chemicals to strip the ink while preserving the paper, then reprinting a higher denomination onto it. The paper is real, so it passes the feel test and defeats detector pens. But the original security thread stays in the paper. On a bleached $5 reprinted as a $100, the thread will still say “USA FIVE,” and it will still glow the wrong color under UV.
Checking that the thread’s inscription matches the printed face value is the single best defense against this method. If the numeral on the bill says $50 and the thread says $5, you’re holding a counterfeit.
What to Do If You Get a Counterfeit Bill
Do not try to spend it. Knowingly passing a counterfeit note is a federal felony, even if you’re only trying to unload one you were stuck with.
If You’re an Individual
Contact your local U.S. Secret Service field office, or turn the bill over to your local police department.9U.S. Currency Education Program. Report a Counterfeit Write down where you got it: the date, the time, and anything you can remember about the person who gave it to you. Handle the bill as little as possible and store it in an envelope or plastic bag to protect any fingerprints. Once you hand it over, you won’t get it back and you won’t be reimbursed.
If You Run a Business
Complete the Secret Service’s Suspected Counterfeit Note Submission Form (SSF 1604) for each suspect bill.10United States Secret Service. Suspected Counterfeit Note Submission Form The form asks for the serial number, denomination, and transaction details. If you have a description of the person who passed the note or their vehicle, hold the bill and report directly to your local police or Secret Service office. Otherwise, mail the form and the note to the Bureau of Engraving and Printing’s Counterfeit Currency Processing Facility using the address on the form.
The Penalties for Passing a Fake
Federal counterfeiting laws are unusually severe, and they’re the reason you can’t just spend a bad bill and move on.
Making counterfeit currency carries up to 20 years in federal prison and a fine of up to $250,000.11Office of the Law Revision Counsel. 18 USC 471 – Obligations or Securities of United States12Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine Using, attempting to use, or even possessing counterfeit money while knowing it’s fake and intending to defraud someone carries the same maximum: 20 years and a $250,000 fine.13Office of the Law Revision Counsel. 18 USC 472 – Uttering Counterfeit Obligations or Securities Possessing the tools of the trade, including digital images of currency held for the purpose of reproducing it, is a Class B felony carrying up to 25 years.14Office of the Law Revision Counsel. 18 USC 474 – Plates, Stones, or Analog, Digital, or Electronic Images for Counterfeiting Obligations or Securities Foreign banknotes are covered too: possessing or distributing fake euros, pounds, or other foreign currency inside the U.S. carries up to 20 years.15Office of the Law Revision Counsel. 18 USC 480 – Possessing Counterfeit Foreign Obligations or Securities
If You Already Spent One Without Knowing
Every federal counterfeiting statute requires prosecutors to prove intent to defraud. If you genuinely had no idea a bill was fake when you spent it, you haven’t committed a crime. Most counterfeit bills pass through several innocent hands before anyone catches them. A cashier who unknowingly gives you a fake $20 in change hasn’t broken any law, and neither have you when you spend it at the next store.
Claiming ignorance after the fact isn’t automatic, though. If prosecutors can show you had reason to know, such as buying a stack of bills at a discount or continuing to spend notes from the same source after one was flagged, intent can be inferred from the circumstances. The practical rule: the moment you suspect a bill is fake, stop spending it. From that point on, passing it stops being an innocent mistake.
Getting Your Money Back
You don’t. Whoever is holding a counterfeit bill when it’s identified takes the loss. The Secret Service does not reimburse individuals or businesses for the face value of seized counterfeits, and anyone who submits a bill for examination gives up any property interest in it.10United States Secret Service. Suspected Counterfeit Note Submission Form If the bill turns out to be genuine, the Counterfeit Currency Processing Facility returns it. If it’s fake, it’s gone.
For businesses, counterfeit losses in the ordinary course of operations can generally be deducted as a theft loss, reported on Form 4684.16Internal Revenue Service. Casualty, Disaster, and Theft Losses For individuals, the Tax Cuts and Jobs Act suspended personal theft loss deductions for losses not tied to a federally declared disaster, but that suspension expired at the end of 2025.17Congressional Research Service. Expiring Provisions in the Tax Cuts and Jobs Act Starting in 2026, individuals who itemize can again claim unreimbursed theft losses, which would include counterfeit currency received in a transaction. For a single fake bill it likely isn’t worth the paperwork. For a larger loss it can be.