What to do if someone gives you counterfeit money

Recently, the website Krebs on Security wrote an article about a person who was hawking "super high-quality bogus bills" on cybercrime forums on the Web and other places online. Apparently the hacker, who goes by the name MrMouse, called the fake bills Disney Dollars.

About the same time, the New York Post ran a story about a lawsuit that accused operators of two Taco Bells of forcing workers to pass on fake $20 bills to customers.

The problem seems to be a growing one. In 2013, the U.S. Secret Service recovered $156 million in counterfeit currency, arresting 2,668 people and suppressing 262 counterfeit manufacturing plants as a result of its investigations. You may wonder, then, what you can do to avoid getting stuck with funny money and what you should do if someone manages to pawn some off on you.

If you get a fake bill, the government won’t be giving a replacement, and merchants and banks will probably confiscate it. And since passing counterfeit bills is illegal, you might have to answer to authorities.

But the loss could be covered by your homeowner's or rental insurance policy, up to $500 or $1,000, depending on the policy. And unlike with most losses, the reimbursement amount typically isn't subject to your policy's deductible.

Read more about how to protect yourself from counterfeit cashier's checks and fake products.

What to do

If someone needs to pay you cash for a major transaction, meet the person at a financial institution and have him or her convert the cash into a check or money order, or have a teller deposit the funds into your account. That way, they will be checked to make sure they are authentic. Never have a stranger accompany you to an ATM.

Scrutinize any bills you receive. Although you can buy counterfeit-detection pens and UV lights, it’s usually enough to look for the security features in the currency. The Secret Service offers advice on how to identify a bogus bill.

If you suspect you’ve received counterfeit cash, don’t simply pass it on to someone else. You could be accused of committing a serious crime.

If the money came from a bank or other business, talk with a representative there, preferably before leaving the location. He or she might be willing to replace the bill. If not, or if you received the money from an individual, call police.

You should also call the police if you’re accused by a merchant or anyone else of passing a fake bill. If you don’t call the police and a merchant confiscates a bill you’ve used to make a payment, you might miss out on the opportunity to recover the money. One reason for doing this is that the merchant could be wrong about the bill or may be trying to scam you out of a genuine bill.

Another reason is that if you take the bill with you and possibly spend it somewhere else and then someone files a complaint, you might later be asked what you did with that bill. If you passed it on, you may have commited a crime. It will probably be less taxing dealing with authorities at the time a suspect bill is detected rather than having them contact you later as part of a criminal investigation. Also, a police report probably will come in handy if you’re filing an insurance claim for any losses.

—Anthony Giorgianni