In this report
What if you get fake currency

Don't get stuck with fake bucks

When selling stuff, be on alert for counterfeit currency and checks

Last reviewed: April 2011

Weeks after selling an old watch on Craigslist, you discover that the cashier's check the buyer sent you is fake and that the bank has withdrawn the money from your account. Now the watch is gone and so is the money. Or maybe someone hands you a stack of benjamins for your used car and you later find out that some of the bills are counterfeit.

Stories like those are not uncommon. Today's high-quality ink-jet printers, scanners, and copiers allow scammers to produce fabulous fakes that can easily pass for the real thing. They also produce fake money by "bleaching" real $1 and $5 bills, removing the images and denominations, and reprinting them as $100s.

Convincing counterfeits

In fiscal 2009, the U.S. Secret Service removed more than $182 million in counterfeit currency from circulation. If you get a fake bill, you'll probably be out of luck. The government won't replace it, and merchants and banks will probably confiscate it. And since passing counterfeit bills is illegal, you might have to answer to authorities.

You're probably already cautious about accepting a personal check from someone you don't know. But seemingly safe instruments like bank-issued money orders and cashier's checks could also be bogus. If you cash or deposit a fake check, your bank will demand its money back, possibly weeks later. And it will probably slap you with a returned-check fee of $15 or more.

Financial institutions don't have a central system to verify each other's checks and money orders before they cash them. Banks and credit unions aren't required to verify the routing numbers or compare the documents with banking regulators' lists of reported fakes. And some won't cooperate or will charge you a fee if you're not a customer and you ask them to verify or cash a check or money order. In contrast, the U.S. Postal Service has a free system for verifying the tens of millions of postal money orders it issues each year, which is available for banks and the public to use.

Take precautions

So how do you protect yourself, especially when dealing with someone you don't know? That depends on the type of payment, amount, and source. Before you hand over merchandise to a buyer, here are some precautions to take:


Be cautious if someone wants to pay cash for a major transaction. If cash is the only option, meet your buyer at a financial institution and have him or her convert the cash into a check or money order, or deposit it into your account. Have a teller handle this transaction so the bills will be checked for counterfeits. Never have a stranger accompany you to an ATM.

Scrutinize any bills you receive, advises Richard Goldberg, chief of the economic crimes unit in the U.S. attorney's office in Philadelphia. 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 what to look for at

Personal checks

If you decide to accept one, see if you can get verification that it's good before turning over the goods. Some financial institutions, such as Bank of America, will verify that the account on which a personal check is written is valid.

The safest approach is to cash the check at the institution on which it's drawn, but you might have to pay a fee if you don't have an account there. If you deposit a check, you can generally consider the payment good after two weeks, although one credit union reports having forged checks returned up to a year later.

Bank checks and money orders

If someone wants to pay you with a bank check or money order, a safe option is to accompany the person to the bank and watch him or her buy it. If the payment comes through the mail, especially from someone you don't know, try to verify it yourself. Type "routing number" into an online search engine, along with the actual number on the document. You'll probably find the financial institution the number is assigned to. Be wary if the number doesn't match the name of the issuing institution on the face of the document. If the routing number is correct, search for reports that it's being used on counterfeit checks.

If a significant amount of money is involved, contact the issuing institution to verify the document's authenticity. Some institutions will provide that service, even for noncustomers. Once you deposit it, wait at least five days and contact the institution again to verify payment (your own bank probably won't know if it's been paid). When trying to reach the issuing institution, don't rely on the contact information on the check because it might be fake as well. Use the Internet or directory assistance to obtain contact information.

Postal money orders

Check them using the USPS money-order verification system (866-459-7822). It will compare the serial number and amount against a list of legitimate money orders that are between 48 hours and 90 days old. For a description of the security features to look for on a postal money order, go to

Cash them at a post office rather than at a bank or credit union, advises Michael Romano, a spokesman for the U.S. Postal Inspection Service. He says post office personnel are trained to spot counterfeits. In fiscal 2010, only 107 counterfeit postal money orders got through post offices.

Wire transfers

Once money is wired into your bank account, it's probably safe, though some transfers can be reversed. But using a wire transfer typically requires you to give someone your bank-routing and account number, which could be used to fabricate counterfeit checks. Another option is to obtain the wired payment in cash or on a stored-value card, such as a prepaid Visa. If you plan to use a wire transfer, check the terms, conditions, and fees.

Escrow and payment services

Payment-processing services such as PayPal can protect both parties in a transaction. PayPal's seller-protection program is designed to ensure that people who sell something online won't be bothered by postpayment hassles. Read the terms to see if your transaction qualifies.

Escrow services, such as, can also protect both parties. The service holds the money until it clears for the seller and the buyer is satisfied with the merchandise. But fees can be high. To transfer $5,000, for example, charges $163 to $315 depending on the level of protection you want. And be aware that fraudulent escrow services have surfaced in recent years.

Smart selling

When you're selling things, think locally. Major classified advertising sites, such as Craigslist, are accessible from anywhere and are popular with scammers, some of whom work from overseas. "I would be very careful about selling anything to anybody who is 2,500 miles away," says Barry Thompson, a former banker who is now a bank-security consultant.

Verify your buyer's contact information. Don't just use e-mail; always ask for a phone number and call it. Then do a Web search of the person's name, phone number, and address to see if any reports of suspicious activity turn up. Be wary if the buyer's address is a mail drop.

Just say no if someone gives you a check or money order for more than you're owed and asks you to wire or otherwise transfer the difference to another party.

This article appeared in Consumer Reports Money Adviser.

Posted: July 2011 — Consumer Reports Money Adviser issue: April 2011