Since Volume 22 of the “Weekly Numismatic World Newsletter” will not be sent via email, the following would have been the exclusive content included in the newsletter. A service update follows.
Counterfeiting remains a problem for society and the collector’s market. This was highlighted this week with two stories I posted about scammers and opportunists preying on the public too eager to believe.
In the collector’s market, scammers are taking advantage of the Royal Mint’s myriad of errors on the new £1 coin and mocking up their own errors to sell online. The error coins are clearly contrived because most either remove the center copper-nickel section or replace it in reverse, showing the Queen’s portrait on the wrong side. A few have been polishing the side with the Queen’s portrait to resemble the 2016 version that was issued by the Royal Mint to businesses for testing.
Canadian authorities have found that altered $5 notes are being used to forge $100 notes. Currently, the $5 note is made of polymer and scammers have found that by cutting out the features in the clear window and taping over the cutouts and still be used. Scammers print their own $100 notes, which are still printed on cotton bond currency paper, and use the clear window to make the notes look legitimate. The problem is that if people looked at the notes, its alterations and counterfeits are easily detectable.
It is interesting that people are so willing to try to figure out how to counterfeit currency, especially when it can be detected if someone put in the time to look. It says a lot about a society when the number one blog post on my site is “How easy is it to pass counterfeit currency” where I discussed the use of the iodine pen and the number one clicked link is the one to the site where I borrowed the image of the of the iodine pen.
The scary part is that people are not paying attention to the simple measures.
Because of an issue with the provider, the Weekly Numismatic World Newsletter has been suspended.
Unfortunately, the automated system run by MailChimp appeared to have choked on the word “counterfeit.” I am not sure if this is the exact reason for the problem, but their support is so bad that I have not been able to contact a human to explain the issue to me. When I tried to find another provider (SendInBlue based in France), I was accused of being a spammer. Based on what I can find out, MailChimp may have added me to a non-public database blackballing me from finding another service.
If that is the case, then I will likely create a self-hosted newsletter service. Although it is something I am technically capable of doing I was hoping to relieve myself of the management responsibility. Until I can determine my next move, I am suspending the newsletter. Sorry!
Police in Vancouver, British Columbia has discovered that criminals are altering the new polymer notes to create counterfeits that are being passed in the region. The Royal Canadian Mounted Police (RCMP) and the Bank of Canada are warning merchants that criminals are splicing $5 bills to remove the holographic strips and add them to color-copied $100 notes to make them seem less suspicious.
In order to make sure that the clear window in the polymer notes does not raise suspicion, clear packing tape has been used on the altered $5 notes to cover the alteration.
Discovered in Metro Vancouver, police found that a careful examination of the notes shows that the $5 notes can be altered in a way that does not raise suspicion while creating $100 notes that has been passed with little notice, until recently.
A representative from the Bank of Canada says that criminals are preying on the fact that people are not verifying the notes. The Bank of Canada issued a release urging merchants to check the notes for more than one of the security features.
Travelers to Canada and United States dealers that accept Canadian currency as a convenience to their customers from north of the border should learn about the embedded security features before accepting these notes. Visit the Bank of Canada Banknote website for more information as to how to recognize legitimate currency.
Clarification Update: The three lower denomination Canadian notes ($5, $10, and $20) are made using the polymer substrate. The higher denomination note ($50 and $100) are still made with rag bond paper. These notes are scheduled to be converted to polymer in the next few years.
Anti-counterfeiting features on the front of the Canadian polymer $20 note
Anti-counterfeiting features on the back of the Canadian polymer $20 note
All currency images courtesy of the Bank of Canada.
According to media reports confirmed by the Royal Mint, the three significant errors found are when the thistle on the reverse did not strike properly is produced as a smooth blob, the copper-nickel center of the bimetallic planchet appears to have melted across the coin, and the inner disc and outer ring did not fuse properly. Coins with legitimate errors have been sold on eBay (U.K. and U.S.) for significant premiums.
Unfortunately, scammers have picked up on these problems and have been selling altered coins on eBay as errors. Common alterations are based on removing the silver-colored center and create error-like coins by making different alterations. Amongst the tries to create something that looks like an error includes the Queen’s portrait appearing on the wrong side of the coin and facing the wrong direction which is impossible because of the how these coins are struck, the center of the obverse lacking the Queen’s portrait, and gouges removed from the center.
Both the errors and fakes are being sold for an average of £300 (approx. $386.13) on eBay.
If you want to purchase a British £1 error coin carefully examine the image and the image of a legitimate coin from the Royal Mint’s website. Make sure the person you are buying from has a return policy or buy from a dealer. Of course, it is easier to be careful buying from the U.K. on that side of the Atlantic, but for those U.S.-based error enthusiasts, you have to do your due diligence. Otherwise, you may get stuck with a fake!
Known legitimate errors
A weak strike can prevent the two metals from fusing properly allowing them to separate
First new £1 coin error found with missing detail on the thistle
Too hard of a strike is likely to have caused the copper-nickel center to melt across the coin.
1943 Lincoln cent struck on a copper planchet (Courtesy of CoinTrackers)
People seem to come out of the woodwork when there is the story about an error coin being worth a lot of money. Most have folders or albums left behind by long passed loved ones that they have stored in a draw for sentimental reasons. They do not have the passion of the relative for collecting, but they still have the folders.
Since the news reports about the discovery of two 1943 Lincoln wheat cents struck on copper planchets hit the news, I have received a few inquiries as to whether they have a coin that could be worth tens- or hundreds-of-thousands-of-dollars. All are disappointed when they find out that grandpa’s old album may not be worth more than $50.00 if that much.
“But the coin is so old!”
U.S. cents have been made of copper, steel, and copper plated zinc. What’s next?
Those of us who have been around this hobby for a while know that many factors go into pricing coins including supply and demand, condition, and other market forces. The considerations are so varied, that I wrote a two-part series on “How Coins are Priced” (links: Part I and Part II) that is still relevant.
The 1943 copper Lincoln cent is known as an off-metal error. It probably happened when the U.S. Mint started to strike the 1943 Steel cents and a few copper planchets were probably still stuck in the machine. According to Coin World, there have been 12 reported 1943 copper cents.
Now that the coin has been reported in the mainstream media, be careful about buying counterfeits coins. Sources report that would-be fraudsters are either taking the abundant supply of steel cents at a cost of 50-cents to $2 each and plating them with copper. This type of counterfeit is easy to detect using a magnet. Copper is not magnetic and will not react to a magnet.
Another trick they try is to alter the “8” on a 1948 Lincoln cent to make it look like a three. If you carefully study the style used on the “3” and the “8” you will see that they are very different shapes on the coins. Also, if you look at the date under magnification, you could see the tooling marks. This is where carrying a 10x loupe is beneficial.
Identifying a 1943 altered date
Otherwise, make sure the coin is encapsulated by a reputable grading service and that you check the serial numbers against the grading service’s database.
While it is nice to have the attention, please do not be disappointed when I tell you that the rusting 1943 steel cent is probably worth about 25-cents or that reprocessed set may be worth one- or two-dollars.
An adage of numismatics is “Buy the book before the coin.” It was first used by numismatist and dealer Aaron Feldman in an advertisement that appeared in the March 1966 issue of The Numismatist. Aside from being used to sell books, this sound advice tells collectors to enhance their knowledge of the hobby.
Education is important because helps build the skills and tools they need to navigate the world. Education helps us read, write, calculate and communicate. Without education, we would not be able to perform our jobs competently, accurately and safely. Education also gives us a view of the world which we live and provides a context to how we arrived at society today.
Numismatic education is important because it teaches us how to understand the and navigate the world of money and the economics that made it necessary. Without numismatic education coins, currency, bonds, tokens, and medals are just objects to be ogled without context. We would not know why these items are important or how to collect them. Numismatic education not only teaches us about how to identify these items and collect them but provides the background into history that explains how these items represent today’s society.
The areas I find interesting are the history and policies that have led to how things are today. History gives us the lessons learned as to how it was once done and the evolution of the policies that govern the way any institution is run. This is no different for the money manufacturing apparatus of the United States.
I have been on a book buying binge. If I find a book that will add to my curiosity, then it will become part of my growing library. Over the last few months, I have probably spent more on books than coins. With the exception of the few review copies (that I really should review), most of the books I buy are older and have information that I have not found anywhere else.
There are books from my new stack of older books I would like to highlight.
History of the Bureau of Engraving and Printing
Bureau of Engraving and Printing, 100 Years
Compared to the U.S. Mint, the Bureau of Engraving and Printing does not get the same love by collectors. Created as the National Currency Bureau in 1862, it became the official security printing agency of the United States government. History of the Bureau of Engraving and Printing covers the first 100 years of the agency’s history. Printed by the Bureau of Engraving and Printing and sold for $7.00 in 1962, this book outlines the growth of the agency from cutting fractional currency printed by commercial printers to pioneering currency production including new press operations and how to create plates.
It is a beautifully produced book that stands out for its quality in both production and writing. The history of the BEP is well written with images of the process with images of some of the printing element interspersed throughout the text. Also included are intaglio printed images from the Bureau of Engraving and Printing archives. Between the pages with the intaglio prints is a tissue-like paper to help protect and preserve the images.
Although there are many good online histories of the Bureau of Engraving and Printing none of them are complete and does not include the other security printing history of the agency including bonds and stamps.
Three on Counterfeiting Currency
The most read post on the Coin Collectors Blog is “How easy is it to pass counterfeit currency.” I am fascinated that since I published that post there it has logged over 5,000 unique hits. I am sure that the post is being picked up by search engines and shown to people who are looking for illicit information. They are probably disappointed that the post is not an instruction manual, but I am fascinated that so many people would be interested.
It made me curious about the history of counterfeiting in the United States. Since I am on a book buying binge, it was time to find some interesting titles:
Illegal Tender, Counterfeiting and the Secret Service in Nineteenth-Century America by David R. Johnson. To save money, this is a former library book in very good condition. I have skimmed this book and it looks like it will provide a good background as to the evolution of the U.S. Secret Service. The U.S. Secret Service is a unique agency. It was formed to investigate and deter counterfeiting of U.S. currency starting in 1865. They were so well respected that they were asked to protect President Theodore Roosevelt following the assassination of President William McKinley in 1901. Although many countries have divisions of their law enforcement services that investigate counterfeiting, the United States is the only country that has an agency whose mission to protect the currency from counterfeiting.
Banknote Reporters and Counterfeit Detectors from 1949
Counterfeit, Mis-Struck and Unofficial, U.S. Coins by Don Taxay. While my copy has condition issues, including water damage, it is still a book written by Taxay that has to be worth reading. Since this is my most recent purchase it has been added to the “up next” queue.
Bank Note Reporters and Counterfeit Detectors, 1826-1866, by William H. Dillistin. Published by the American Numismatic Society in 1949, this book is a survey of experts in counterfeit detection that describes what to look for. It is also a catalog of publications in counterfeit detection and the authors. An interesting exercise may be to work on trying to find the papers and pamphlets listed in this book. I also liked the images in the back of the book that shows what to look for to detect counterfeits.
Illustrated History of Coins and Tokens Relating to Canada
Illustrated History of Coins and Tokens Relating to Canada by P.N. Breton
When I reviewed 2017 Canadian Circulating Coins, Tokens & Paper Money I noted that the third section of the book is dedicated to Breton Tokens. Breton Tokens refer to the coins and tokens that were documented by Pierre Napoleon Breton in 1894. Although I am not a collector of Breton Tokens it would be great to have a copy of the book. Think of it as owning a copy of “Penny Whimsy” by Dr. William Sheldon or the first edition of United States Pattern Coins by J. Hewitt Judd.
I have to admit to “picking” this book during a sale of books from my local coin club. The club is selling off items in its library that there seems to be little interest. Periodically, a few books are brought to a meeting and sold by silent auction. When Illustrated History of Coins and Tokens Relating to Canada, I did not pay attention. I was drawn that it was an older book about Canadian coins and that it is written in both French and English. What made this book stand out is that each page had two columns with the French text on the left and the English on the right. The format was fascinating I bid and won the book. Only after I started to go through my pile this past week to prioritize my reading list did I realize what I had purchased.
Although this is not a priority read, to have a contemporary reference about Breton Tokens written by P.N. Breton should make a fascinating read.
It is the job of the FTC to provide support to enforce the Hobby Protection Act. When updates are made to the law, such as the Collectible Coin Protection Act, the FTC is required to figure out how they will implement the law. Executive agencies, like the FTC, is required to write regulations that conform with the law and legal precedent, announce them to the public, allow for public comment, and then publish the file rule.
On October 14, 2016, the final rules that the FTC will use to enforce the Hobby Protection Act was published in the Federal Register (81 FR 70935). Since this is the final rule, the section begins with explanations and commentary about the information received from the public comments.
What appears to be troubling is that the FTC rejected comments from noted numismatists that there should be a rule to cover the manufacturing of fantasy coins. Fantasy coins are those that were not manufactured by the U.S. Mint. An example cited was the manufacturing of a 1964-D Peace Dollar “FANTASY” since the coins were never officially manufactured. Although the coins were struck, they were considered trial strikes and subsequently destroyed.
Daniel Carr is a mechanical engineer who also studied computer graphics and later turned it into an art career. He had entered U.S. Mint sponsored competitions for coin designs that have been used on commemorative coins. Carr is the designer of the New York and Rhode Island state quarters and his design was used as the basis of the Maine state quarter.
2000-P New York quarter with Daniel Carr’s autograph on ICG label
2000-D New York quarter with Daniel Carr’s autograph on ICG label
Carr had bought surplus coining machines from the Denver Mint, repaired them, and had been using them to strike fantasy coins. One of his fantasy coins was the 1964-D Peace Dollar. Over 300,000 coins were struck in 1965 at the Denver Mint anticipating its circulation only to be destroyed after congress disapproved of the way the Mint was allegedly handing the program. Some believe that some coins have survived, much like the 1933 Saint-Gaudens Double Eagle. But like that famed double eagle, it would spark a legal battle if a coin would surface.
Capitalizing on the story, Carr struck his own versions with varieties, errors, and finishes. He sold them as fantasy coins but were not marked in any way. Advertising and writings from Carr explicitly call them fantasy coins, but what about future sellers?
FTC claims it is not necessary to amend the rules “because it can address specific items as the need arises” The FTC further states they have “addressed whether coins resembling government-issued coins with date variations are subject to the Rules.” Using past precedent, the FTC concludes “such coins should be marked as a ‘COPY’ because otherwise they could be mistaken for an original numismatic item.”
Many numismatic industry experts who have seen how Chinese counterfeits have damaged the hobby, wanted the FTC the rule codified so that it would force someone like Daniel Carr to mark his fantasy pieces appropriately. Carr continues to manufacture fantasy pieces based on designs of actual coins changing the date. Recently, Carr has produced Clark Gruber fantasy products with modern dates without the word “COPY” imprinted on the coin.
While Clark Gruber gold pieces were never legal tender, there were allegedly pattern pieces of Presidential dollars that included the required inscriptions and included a denomination. There was no indication on the coins that they were not legal tender even though Carr marketed them as medallions.
The purpose of the CCPA was to prevent counterfeit coins from misleading the public. Carr has allegedly jumped over that line joining the Chinese counterfeiters in an effort that will mislead the public with the apparent blessing of the FTC.
Sources I contacted were not encouraged by the FTC action. It was noted that when Carr’s 1964-D Peace fantasy dollars were reported, the FTC did not take action.
The new rules go into effect on November 16, 2016.
NOTE: Normally, I will include links and other details to the items I write about so you can read more. However, because it is my opinion that what Carr has done violates every spirit that the Hobby Protection Act stands for, I will not provide links to dignify his efforts. I wholeheartedly believe that if similar coins were brought into the United States from abroad, especially from China, the FTC would act to protect our rights under the Hobby Protection Act. However, since Carr previously provided art to the U.S. Mint, it is likely the government may be trying to spare its own embarrassment.
One of the strangest set of stories about the problem of counterfeiting was the several stories that came out at the end of August about people trying to make purchases with movie prop money. This has caused regional U.S. Secret Service across the south to issue warnings.
Prop movie money is designed to look close enough to real U.S. currency so that a moviegoer would not be able to tell the difference on screen. When these notes are examined closely, they are clearly marked with “THIS NOTE IS NOT LEGAL TENDER” and “FOR MOTION PICTURE USE ONLY.” Prop money is smaller than real U.S. currency and does not have the anti-counterfeiting features of a real Federal Reserve Note. But that has not stopped people from trying to pass these notes as real currency.
Prop Movie Money
Prop Movie Money
Prop Movie Money
Here is a sample of the reports about people trying to use prop money as real currency:
In Athens, Georgia, a 30 year-old man beat a customer with a baseball bat at a fast food restaurant when he alleged the customer bought marijuana using two prop $100 notes.
U.S. Secret Service issued a warning in the Tampa Bay area when someone tried to buy a smartphone using prop money and noted that there has been an increase in the use of this currency.
Areas of East Texas have reported several cases in which prop money has been used. Texas Bank and Trust reported that they have seen a few of these notes were deposited into accounts at their bank.
Sources have not confirmed the source of this recent uptick in prop money usage but noted that the currency can be purchased online. Although eBay rules do not allow for this type of currency to be sold on its site, a recent search yielded several listings offering prop money. There is no restriction on Etsy where searches lead to over 300 listings of all types of prop or replica money.
The problem with counterfeiting has been getting worse. Even though congress passed the Collectible Coin Protection Act, the added force of law has not dissuaded foreign counterfeiters from trying to scam the collecting public. In fact, it was reported that North Korea has cranked up its presses and is trying to flood the Chinese market with counterfeit currency.
With stories like this and how Europe is having a difficult time with the counterfeiting of £1 and €2 coins during a time of economic uncertainty had me considering what I could do to help the community.
Rather than just talk about the problems I decided that I would write about how help collectors understand what to do to protect themselves. This lead to the six-part series this past week about how you can check your coins to ensure that they are genuine. For some, the series may have been a rehash of old information. But sometimes seeing again may be a good refresher.
What do you think? Did you like the series? What did you (or did you not) like?
Do (or did) you like the series on Detecting Counterfeits?
Yes, I do! (78%, 7 Votes)
Sorry, this is not doing anything for me. (11%, 1 Votes)
It's OK but I really have no opinion. (11%, 1 Votes)
Total Voters: 9
Would you like to see more information about other topics? Would you like me to go back to just blogging in single posts? Leave me a comment here with your suggestions.
If you are uncomfortable trying to detect whether a coin is counterfeit or not, you might first consider buying from a reputable dealer who has return and/or buy back policies. If you buy raw coins and have questions, ask that the coin be examined by a third-party grading service such as Numismatic Guarantee Corporation, Professional Coin Grading Service, ANACSand Independent Coin Graders. These third-party grading services have a buy-back guarantee so that if the coin is ever found to be counterfeit after it was certified they will buy the coin from you at the price you paid. You may be asked to pay the grading fees. Some dealers may charge a service fee for submitting coins to the grading services on your behalf.
If you own coins that you may have questions about, either bring it to a dealer for an opinion or submit the coin to the third-party grading service yourself. NGC and PCGS have membership services that allow you to directly submit coins for authentication and grading. Members of the American Numismatic Association can register to directly submit coins to NGC. ANACS and ICG allows for collectors to directly submit coins for authentication and grading.
Sample of a PMG Holder
Sample of a PCGS Currency Holder
For collectible currency, buy from a reputable dealer who has return and/or buy back policies. If you buy ungraded currency and have questions, ask that the note be examined by a third-party grading service such as Paper Money Guarantee or PCGS Currency. These third-party grading services have a buy-back guarantee so that if the note is ever found to be counterfeit after it was certified, they will buy it from you at the price you paid. You may be asked to pay the grading fees. Some dealers may charge a service fee for submitting coins to the grading services on your behalf.
If you are buying through an online auction and you have any question about the coin, you are better off not trying to purchase it than trying to deal with returns. While there are quite a few reputable dealers who sell on these sites, it may take more than a month for the process from purchase to refund to occur. During that time, you will not have access to this money.
Remember, caveat emptor, “let the buyer beware.” Without a warranty or some type of assurance, such as a graded and encapsulated coin, the buyer takes all of the risk.
For sellers, caveat venditor, “let the seller beware.” Unless you expressly disclaim any responsibility, you will be held liable if the item is not true to its specification. You may also lose a future customer if that person feels cheated.
The Hobby Protection Act
Over the last number of years, we have seen when a hobby becomes popular and items increase in value, there are opportunists who will try to do whatever it takes to make money from the gullible and uneducated. This chapter was written to inform and educate you as to what to expect from those looking at your wallet and not to you as a valued customer so that you are not a victim.
When I discuss these issues I am eventually asked, “Aren’t we protected by the Hobby Protection Act?” In short, the answer is yes and no. The Hobby Protection Act of 1973 and was amended in 1988 represents an attempt at stopping counterfeits in all collectibles based on the way the world worked in 1973 and slightly updated in 1988. A lot has changed since then including the technologies available to counterfeiters.
The Hobby Protection Act requires that coins not made by the U.S. Mint include the word “COPY” somewhere on the surface. The law allowed law enforcement and buyers to go after the suppliers. The problem was that the suppliers were mainly in China and out of the reach of the U.S. criminal justice system. That changed in December 2014 when congress passed and the president signed the Collectible Coin Protection Act (Public Law No. 113-288). Under the new law, consumers and law enforcement can take civil action against the distributors and resellers of counterfeit coins.
The Federal Trade Commission has published draft rules to update the wa they enforce the (16 CFR Part 304) made by the passage of the Collectible Coin Protection Act.
FTC is required to publish the new rule in the Federal Register (81 FR 23219) and ask for public input on the new rules. These rules are the result of corrections made after a previous draft asked for comments on the costs, benefits, and overall impact of the rules.
As opposed to the effort to detect counterfeit coins, new security features added to the currency paper makes it easier to detect counterfeits. First, examine the currency and compare the note you are questioning to one of the same denomination and series (date with possible letter added). Look at the quality of the paper and the sharpness of the printing. Look for how the note differs from the genuine note.
If the printing looks flat, darker, the colors do not look the same, and does not show the fine details that the original, you should check further. Look at the Federal Reserve and Treasury seals. On a genuine note, the saw-tooth points are clear, distinct, and share. Counterfeit notes may be uneven, rounded, or even broken. The boarder should be clear and sharp, even on a worn bill. The portrait should appear distinct from the background. If it looks like it is blending into the background, the note is likely counterfeit.
One of the tricks the counterfeiters use is to change the denomination in the corners hoping that they can pass the note to someone not paying attention. The most common alteration is changing a $1 note to look like a $10 bill by changing the numbers in the corners to be tens. You would be surprised how many times this works!
Counterfeit Currency Warning issued by the Baltimore Field office of the U.S. Secret Service in 2014.
Genuine currency paper has a distinct feel that is different from writing paper. Currency paper is primarily made from cotton with tiny red and blue silk fibers embedded in the paper. Counterfeiters will try to simulate this feature by printing red and blue lines on their paper. You can see the difference between embedded threads and printed lines using a magnifying glass.
One thing counterfeiters do is to try to print or copy genuine notes on paper that they bleached to remove the printing from a lower denomination. Bleaching will dull the security features but not eliminate them. Counterfeiters count on you not understanding the security features to pass the note.
First, look for the watermark. Every new note except to the $1 bill has a watermark of the portrait on the front of the bill. Hold the note up to the light and look for the watermark. You should be able to recognize the portrait as being the same portrait as printed on the note. If you are looking at a $20 bill, you should see the portrait of Andrew Jackson. If the watermark portrait is unclear, missing, or does not look like Jackson, you have a counterfeit note. If the watermark is the number “5” the paper is from a $5 bill and was reprinted by a counterfeiter.
Also look for the security thread that may be running up and down to the left or right of the portrait. The security thread should say “USA” and the denomination repeating on the thread. If you are looking at a $100 note and the denomination on the thread says “FIVE” then you are looking at a bleached counterfeit.
Counterfeit Detection Pens Do Not Always Work
Every time I visit a store and watch as the cashier use one of these currency pens to try to detect if I passed a counterfeit note, I laugh because it is not a dependable test.
How to tell a counterfeit note using a counterfeit detection pen.
The counterfeit detection pens use an iodine-based ink that writes in yellow or are colorless. If the ink darkens, the bill is allegedly a counterfeit note. The principle is that the iodine ink will react with the natural starches in regular paper. Since currency paper is made from cotton, it does not have these starches and will not react with the iodine-based ink.
If you are trying to pass a bleached note, the ink will not react since it is real currency paper. If you are trying to pass an altered note, the ink will not react since it is real currency paper.
You can also make a genuine note look like a counterfeit by spraying starch that you would use to iron shirts on the note. Spray the starch on the note and use a warm iron get it to stick to the note. When you try to use the note and the cashier uses a counterfeit detection pen, the ink will change colors and you will be accused of trying to pass a counterfeit note.
The only way to reliably detect counterfeit currency is using the embedded security features.
If you receive a counterfeit note, do not return it to the person who gave it to you. Gather as much information as you can such as the description of the person, the description of anyone with that person, license plate and make of the car they might be driving, and call the police or contact your local U.S. Secret Service field office. Try not to handle the note. Rather, put it in something to protect it, like an envelope and give it to the police when they arrive to investigate.
Remember, in the United States it is illegal to posses counterfeit notes that are not marked as counterfeit or defaced in a way that make is clear the note is note genuine.
Finally, in the last installment we discuss resources you can use if you do not trust your own judgement.