Retail stores rely on counterfeit detection pens because they are cheap and easy to use. They assume these pens will detect counterfeit currency. Detection is not so easy, and experts recommend that familiarity with currency is more effective.
The United States Secret Service deals with the counterfeiting of U.S. currency. It depends heavily on the public to remove fake money from circulation.
Real currency is printed on cotton- and linen-fibre paper. It will have tiny blue and red fibres embedded within the paper.
Counterfeit Detection Pens
Counterfeit detection pens contain iodine that will react with wood- or starch-based paper (like common copier paper). The iodine will not react to cotton-fibre paper. A streak is made on the bill with the pen, and if it is genuine, the mark will be yellow or clear. If counterfeit, the streak will be black or dark.
Do Pens Work?
The iodine pens are effective starch paper detectors; however, good counterfeiters know this and simply print their fake bills on starch-free paper.
Printing such as portraits, serial numbers, borders and treasury seals should be clear and sharp. Also, look for the red and blue embedded fibres. Holding a genuine bill up to the light will reveal watermarks and security strips (on bills issued after 1990).