David Lipin got a nasty shock after he recently cashed a $1,000 money order at a Los Angeles post office: Most of the cash he received was counterfeit.
Unfortunately for Lipin, he did not realize this when the postal clerk handed him eight $100 bills and 10 twenties. But when he tried to spend one of those eight Benjamins at a local gas station, the cashier immediately identified it as a fake — just like the other seven hundred-dollar bills Lipin was holding.
Lipin was wise enough to call the police himself and explain what had happened, which helped authorities conclude that he was a victim rather than a perp. But he still found himself out $800. Wayne Williams, who is in charge of the Secret Service's L.A. office, likens the movement of counterfeit currency to a game of hot potato. Whoever ends up with the fake bills last is the loser. Williams’ professional opinion of Lipin’s situation? “He's hosed.”
Counterfeiting, while increasingly difficult thanks to multiple security features in most U.S. currency, leaves the victim with limited recourse for recovering lost funds. While the government will not reimburse you for turning in counterfeit money, reporting the crime is usually a good way to avoid being blamed for it. Knowingly passing a bad bill to someone else is a felony, and can result in serious jail time.
If you find yourself holding counterfeit cash, check your homeowners’ or other property insurance coverage. You may have some protection. In New Jersey, for example, standard policies typically cover up to $500 (without applying a deductible) if you inadvertently accept counterfeit cash. You can buy an endorsement to provide even more coverage.
Still, the best way to cope with counterfeiting is to protect yourself from getting stuck with bogus bills in the first place. There are some basic steps that will lower your chances of finding yourself in Lipin’s uncomfortable shoes.
First, it can’t hurt to use less cash in general. I make liberal use of plastic and seldom carry more than a few hundred dollars in cash. My kids, as is typical of their generation, keep even less cash and use credit or debit cards to pay for items as small as a latte at Starbucks. If Lipin had deposited that $1,000 money order in his bank account and then withdrawn the cash he needed from an ATM, he never would have had a problem.
And if Lipin really needed that $1,000 in his pocket, he could have cashed the Postal Service money order at his bank. He would have been better protected that way, because banks are so good at spotting counterfeit money that they almost never hand it out to their customers.
It also helps to be familiar with the common ways to spot phony currency. Though it may be slightly inconvenient, it is worth taking the time to feel each bill you receive, especially if you’re dealing in large denominations. Most of us handle enough money to notice if something is odd about the texture of the paper or the ink. You can also hold a bill up to a light to look for its watermark; the mismatched watermark was how the police confirmed the fraudulence of Lipin’s post office bills. Other security features include red and blue thread embedded in the paper, a security strip, and color shifting ink (in notes of $10 and above).
Finally, don’t let yourself be scammed. Business owners and others who handle large amounts of cash are typical targets.
Suppose you are a small business owner and you are approached by someone who says he wants to process a large sum of money discreetly, perhaps because of an impending divorce or other personal reasons. He offers you a briefcase containing $10,000 in cash if you give him a cashier’s check for $8,000. He tells you to consider the difference a commission, which he is glad to pay because it saves him from having to disclose where he obtained so much cash. He promptly disappears once he has your funds, and you are left, literally, holding the bag, which turns out to be full of counterfeit currency.
Consider yourself warned. If you ever find yourself with a wallet, or a briefcase, full of funny money, you have only yourself to blame. And that’s the way the law will treat you.