Fake money is a real problem.

According to the U.S. Secret Service, roughly $767 billion U.S. notes were circulated around the world last year. Of that, more than $64 million of the bills were duds (and worthless).

That's less than 1%, but that matters little to you if you happen to withdraw a phony $20 from your local ATM.

“Sometimes the controls break down,” says Doug Johnson, vice president of risk management for the American Bankers Association. “It’s unusual, but it can happen.”

How to Protect Yourself
Though the Secret Service tracks every note, and the Federal Reserve Bank usually discards the fakes, it is possible to get a counterfeit note from your local ATM.

Here are a few ways to tell if that Jackson is the real deal:

1. Feel the “paper.” Real U.S. bills are made from linen, and though some counterfeiters do print on fabric, the ink on a real bill is embedded into the note.

2. Pay attention to the borders. A blurry border on your bill is a sign that something is wrong.

3. Look at the seals and portraits. The Federal Reserve and Treasury seals on all of your bills should be sharp, even and distinct, not blunt or broken. The presidential portraits on your money should look as though they’re ready to jump off the bill.

4. Go by the numbers. The serial numbers on every bill are evenly spaced. Moreover, they shouldn’t be floating on your bill. If the cash in your pocket looks anything less than uniform, it may be a sign that you’ve been duped.

5. Look into the light. These days $5 denominations and higher have a watermark on the right and a security strip on the left. Hold your bill up to the light. If you see a watermark that looks like Lincoln, Hamilton or Franklin, accompanied by a light-colored strip on the right, you should be in good shape.

6. Say “no” to older bills. Bills printed after 1996 have special features you can check to see if they’re real, but you won’t get that kind of assurance with old money. Visit a bank if you want to exchange old bills for newer ones. If they’re genuine, you’ll get a fair trade. If not, you should contact the Secret Service (see below) and tell them you’ve been victimized.

If You’ve Been Given a Counterfeit Bill
Finding out that you’ve been given a counterfeit bill can shake you up a bit (counterfeiting is a crime). Here are two things that you can do to get bogus bills off the street:

1. Contact your bank immediately. Generally, banks such as Citibank (Stock Quote: C), Bank of America (Stock Quote: BAC) or Chase (Stock Quote: JPM) will reimburse you if you’ve received a counterfeit bill from their ATMs. However, it’s a good idea to keep your receipts for proof that the transaction took place.

2. Notify the Secret Service. The Secret Service was founded to deal with counterfeiting, says Secret Service spokesman Ed Donovan. If you’ve found out (or suspect) you’re carrying a counterfeit, contact your local branch of the Secret Service. Although they do not exchange counterfeit bills for the real thing, you’ll have the benefit of knowing that you were able to prevent someone else from becoming a victim.

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