The computer printer produced just 0.5% of the counterfeit money put into circulation in 1995. By 1998, 43% of the currency was produced on inkjet printers — an increase of 8500%. Said one Secret Service agent in a hearing of the House Banking Committee: "Counterfeiting U.S. currency is as easy as a click of a mouse with computer equipment found in many homes." The Secret Service has coined a new term for this currency: P-Notes (printer notes).
How does it work? Dennis Lynch of the Secret Service offers this explanation: A scanner copies the image of a bill (the $20 bill is most popular). A computer enhances the picture's quality, and the image is then enhanced electronically and printed on a printer. The quality is, of course, affected by the quality of the equipment used. The prices of computers and printers has dropped over the years; good quality machines can be purchased for as little as $1,500.
The currency looks real enough to get accepted routinely at retail establishments. Until two years ago, counterfeit money was more likely to be seized at its source than passed into circulation. Now money counterfeited domestically is three times more likely to be passed than to be seized. In 1995, the Secret Service seized about 70% of all domestic counterfeits. By 2000, that figure had fallen to about 26%.
Production of phony money is on the increase. Agent Patrick J. Sullivan of the San Diego office of the Secret Service claims their office sees between $10,000 and $15,000 in counterfeit currency each week. Roughly half is computer-generated. Another sign of the sudden growth of this type of counterfeiting is the jump in arrests. There were 37 people arrested for P-note counterfeiting in 1995. 4,500 people were arrested in 2001.
The government has continually made changes to currency to make it more difficult to replicate. ID threads have been embedded into the bills. New dyes have been used in production. A total of 16 changes were made in 1996 — such as a watermark portrait of a U.S. leader that is only visible when bills are held up to the light. Another idea has been proposed by The Bureau of Engraving and Printing: colored money. Why not $100 bills with a gold background? We have copper Lincoln pennies, as Richard Powelson points out, so why not copper Lincoln $5 bills? If the Treasury Department approves the plan, our multi-colored money might go into circulation as early as mid-2003.
The Secret Service was created in 1865 to combat counterfeit money. By 1930, an estimated $750,000 in currency was thought to be in circulation. Counterfeiting increased during the Depression. In the 1930s, it was believed that if the government published information about how to identify phony money, that would somehow encourage counterfeiting. When Frank Wilson in 1937 took over the Secret Service, he reversed these policies. The Service educated the public about how counterfeiters worked and how to spot fake money. In the early 1940s, the amount of fake money seized was only $48,000 — meaning more fake money was getting circulated than seized. During the 1950s, law enforcement was seizing more money — the government routinely making $1 million seizures. Less than 10% of counterfeit money went into circulation in the 1950s.
Less than 1% of the money in circulation is thought to be fake. $450 billion worth of genuine currency is in circulation worldwide.
Counterfeit currency seized by the government
June 1875-June 1876: $232,000
June 1941-June 1942: $48,000
1950s: (average annual seizure) $1,000,000
1997: $40,000,000
2001: $47,500,000
Sources: United States Treasury Department, The Use and Counterfeiting of United States Currency Abroad, p. 63; "Tougher Counterfeiting Laws Sought." Retrieved from http://www.wired.com; Powelson, Richard. "Bluebacks or Amber Andys: A New Color of Money." From http://www.redding.com; "A Brief Counterfeiting History in U.S." Retrieved from http://www.csibusinesscenter.com; Kalisha Brown. "Keeping Currency Current." Denver Business Journal, July 7, 2000, p. 17A; "Computer-Generated Counterfeit Currency Production Is On the Rise." Research Alert, August 18, 2000, p. 7; Rita Fennelly. "Phony Bills Cost Merchants tons of Money." San Diego Business Journal, February 14, 2000, p. 2A. "New Ways to Fake Cash." Retrieved from http://www.abcnews.com; "Better Technology Makes Counterfeiting Easy." Retrieved from http://www.techweb.com. Data retrieved October 1, 2002.
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