Your lobster might be off, or your pineapple rotten to the core — don’t be surprised. There are plenty of counterfeit notes out there.
- Australia has comparatively high counterfeit rates for a smallish, largely domestically exchanged currency
- Around 40pc of counterfeit notes are regarded as good to excellent quality fakes
- While the rate of fakes has slipped in recent years, it is unlikely to be wiped out as forgers’ technology catches up to the mint
The good news is there are fewer than there used to be.
The bad news is counterfeiters are getting better at their craft.
The Reserve Bank — responsible for production of the legitimate currency and charged with maintaining its integrity — said it typically receives around 30,000 counterfeits a year.
Counterfeiting by the numbers
Although this is small relative to the total amount of banknotes in circulation — around 1.6 billion — and the losses are modest compared to other forms of fraud, it is still significant.
The RBA points out receiving a counterfeit can have severe consequences for people with low incomes and businesses with small profit margins.
“The average retail business would need to sell around $2,200 worth of goods or services to recoup the loss sustained through a single $100 counterfeit banknote.”
The RBA’s latest survey of counterfeiting, published in its March Bulletin, found counterfeiting is on the decline, having peaked in 2015.
The RBA’s forensic approach is to measure the number of counterfeits per million genuine banknotes in circulation as parts per million, or ppm.
“Counterfeiting in Australia rose steadily from the early 2000s, when the counterfeiting rate was around 5 to 10 ppm, until 2015, when the counterfeiting rate reached 26 ppm,” it found.
It has since declined to an estimated 15 ppm in 2018, as police operations disrupted several large counterfeiting outfits.
However, the RBA warned the fight is far from over.
“The declining cost and growing sophistication of technology will likely enable counterfeiters to more easily produce counterfeits on a larger scale than was the case previously, and the bank does not necessarily expect the counterfeiting rate to return to the low levels of the early 2000s.”
Dud $100 notes are on the rise
The $50 note unsurprisingly is the most common counterfeit — given it is also the most commonly withdrawn denomination from an ATM and still has a relatively high value.
However, on a ppm basis, fake $100 notes have caught up to the $50s. The dud $100s generally are “good quality forgeries”.
“This may in part reflect advances in technology, which have enabled the production of counterfeits that will usually pass a cursory inspection,” the RBA noted.
“Given that $100 banknotes are likely to be more closely inspected than other denominations when spent, counterfeiters are unlikely to produce and try to pass them unless they believe that the counterfeits have a good chance of fooling an unsuspecting retailer or member of the public.”
Feel the quality
The switch to a polymer notes (or substrate as the RBA calls it) in the early 1990s may have made it trickier for the forgers, but it didn’t put them out of business.
It took them five years to come up with the first forged polymer note. That was back in 1997, but it wasn’t until 2010 that it became an industrial process.
The RBA keeps upgrading their notes and the top-level crooks keep upgrading their technology to keep pace. Anything less than a polymer counterfeit is amateur hour.
Counterfeiting coins is a bitsy high-cost/low-margin game that not even the dumbest crim would bother with.
Small number of highly skilled operators
The quality of counterfeits is on the rise again. Around 40 per cent are considered good to excellent quality.
The RBA suspects this is being driven by a small number of well organised operators.
However, the bank is pretty confident they haven’t totally nailed it.
“It is worth noting that counterfeits that successfully replicate security features such as the microprint, shadow image, see-through register or intaglio [raised ink] print are rare, and members of the public can check these security features if they suspect a counterfeit,” it suggested.
Middle of the pack
Depending on your perspective, Australia sits at the lower end of the big counterfeiting nations, or in the upper reaches of the middle-of-the-pack.
The United Kingdom has a much higher concentration of toxic notes at 140ppm, followed by Brazil — where it appears not every real is real — and Mexico.
New Zealand has a very pure currency, with counterfeiting rates of less than 1 ppm. Of course, there are plenty of Kiwi coins in circulation here, but that’s an entirely different frustration.
The United States is an unknown as the Federal Reserve doesn’t publish any information on counterfeiting rates.
However, the RBA has its suspicions.
“The ‘internationalness’ of currencies also appears to be a contributing factor: on average, more widely used currencies — such as the US dollar, euro and British pound — have higher counterfeiting rates than other, less international, currencies,” the RBA said.
“This may be because counterfeiters in neighbouring countries choose to counterfeit a more widely used foreign currency rather than the domestic one.”
The broader crime rate across countries is another key factor, as well as how much cash is used in the general economy.
Dud dollars follow the population
The RBA found, on a per capita basis, Victoria and New South Wales have the highest counterfeiting rates, while Tasmania and the Northern Territory have low rates.
“This is largely related to where large counterfeiting operations choose to distribute the counterfeits,” the RBA said.
A recent spike in Western Australia can be attributed to a large counterfeiting operation there, although this was shut down by police at the end of 2017.
The average forged note doesn’t survive long in the wild.
Most are detected and destroyed within the first few months of release. They’re pretty well all gone within two years.
In other words, the forgers flood their notes en masse into the economy, rather that use a drip-feed technique.
Most forgeries are detected by commercial banks and cash depots due to their bulk cash processing roles.
Over the past decade, police seizures have averaged 16 per cent of all counterfeit detections in Australia — usually raiding operators before the counterfeits are released.
What to do if you get a dud note
The first thing to know if you get a dud note is that you’ve done your dough.
The RBA, or the commercial bank where it shows up, will not reimburse individuals or businesses for counterfeit banknotes, as doing so would act as an incentive to counterfeit.
The RBA’s advice if you get a suspicious note is simple:
- Put it aside. Handle the suspected counterfeit banknote as little as possible, and store it in an envelope
- Provide details. Try to remember as many details as possible about when, where and how you came into possession of the banknote
- Report the incident to your local police or the Australian Federal Police
Remember, you are within your rights to refuse to accept a banknote you suspect is counterfeit. Knowingly passing a counterfeit banknote is a crime.
Penalties for counterfeiting can be severe, including fines of up to $75,000 and/or up to 14 years imprisonment for responsible individuals.