A Federal Reserve Bank of Chicago study from early 2010 estimated that roughly $61 million in fake United States currency was making its way around the world at the end of 2005. This represented a small percentage of the nearly $760 billion estimated to be in circulation outside of the U.S., but still accounted for a loss of approximately 20 cents for every U.S. citizen.

SEE: The Federal Reserve

The Fed's study estimated that at any given time between $60 million and $80 million in counterfeit bills could be circling the globe. Given the study represented a sample, it's thought the total could potentially be as high as $220 million, though this would represent the higher end of its estimated range. In any case, for individual consumers or retailers, even a tiny fraction of counterfeit currency could result in a significant loss. Below are five recommendations from the U.S. Secret Service on how to best detect counterfeit money.

Portrait
The picture of the president or other notable historical figure should "stand out distinctly" from the background of the note. A counterfeit portrait will look "lifeless and flat," and the lack of distinctness means that the picture will appear to be merged into the background. Overall, the image might also be too dark or mottled, which means it might be too spotted or blotched in terms of color.

Seals
A bill will have both a Federal Reserve and Treasury Seal. In a similar fashion to the portrait, a seal that is not "clear, distinct or sharp" might be a fake. In addition, the seal might have "uneven, blunt or broken saw-tooth points."

Border
Each bill has a border of ink that turns to green right before the edge on each side. The lines should appear "clear and unbroken," as opposed to "blurred and indistinct" on a fake one.

Serial Numbers
The serial numbers on each bill are used to uniquely identify each one. Those that are not distinctly printed or unevenly spaced might be fake. Additionally, the serial numbers will be of the same color as the Treasury seal. Even spacing as well as alignment are some things to keep an eye out for.

Paper
The paper of a genuine bill will have "tiny red and blue fibers embedded throughout." A counterfeiter may try to just print these specs on the bill, so if it looks like the red and blue fibers are just on the surface and not part of the paper, you could be in possession of a fake bill.

Consumers and businesses can also purchase a marker that is meant to detect if a bill is fake and printed on bogus paper. If the pen's ink turns black, the bill could be fake. A yellow ink suggests that bill is genuine.

The Bottom Line
In the face of credit cards and electronic transfers, the supply of currency continues to shrink. Fraud also continues to rise in these newer currencies. The Fed Chicago study estimated that check fraud cost commercial banks $1 billion in 2005, or 20 times the counterfeit bill total. Additionally, the study detailed that the integrity of bills across the world has greatly increased in recent years. Advancements in technology have made it extremely difficult to create fake money and it all started with the introduction of a 1996 series of notes that made a huge leap forward in protecting the integrity of genuine notes.

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