Technology Impact on Counterfit Currency

I noted three interesting perspectives about the impact of technology on US currency fraud, all in a single AP article:

The government says $118.1 million in counterfeit U.S. currency was detected in 2006, an increase of 3.8 percent from 2005.

While that is a fraction of the currency in circulation, the Secret Service is concerned with the threat, especially the challenge posed by new digital technology. Digital copies account for about half of all counterfeit notes passed in the U.S., compared with less than 1 percent of all counterfeit bills detected in 1995.

“The quality of the counterfeit currency has gone down, but the ease by which people can make this currency and the access to the computer equipment has had an impact on the rising numbers,” Secret Service spokesman Eric Zahren said.

Color laser printers and the like means the money printing business needs more complexity in their product in order to differentiate themselves properly. New controls (barrier to entry) are needed:

To stay ahead of the counterfeiters, the Bureau of Engraving and Printing plans to redesign U.S. currency every seven years to 10 years. That is a far cry from the practice for most of the 20th century – from 1929 to the 1990s – when the currency stayed the same without any major changes.

“We had three generations of engravers who spent their entire careers at the bureau and never saw their designs hit the streets,” Felix said. “Now since 1996, we have all of these changes.”

Wonder what the reason was for keeping the currency so constant. The article gives a little perspective:

By order of Congress, the $1 bill, which accounts for 45 percent of the notes printed each year, will not be redesigned. Lawmakers were concerned about the cost to business if low-end vending machines that only take coins and $1 bills had to be upgraded.

If I read that correctly, it might be argued that the US did not upgrade any of its currency in the past because the people taking the currency did not want to handle the cost of better verification. Now the issue is the cost of upgrading technology readers instead. But that argument only makes sense if people taking the counterfit currency are not the same as the ones who end up holding the bag. Strange logic.

One would think that the low-end vending machine owners/operators would actively participate or even encourage better controls to avoid accepting bogus bills.

With all that in mind, consider this case, where strippers in Tennessee identified fake money:

A man who authorities say used his computer to make fake $100 bills to buy lap dances at a strip club has pleaded guilty to counterfeiting charges, federal prosecutors said.

Strippers at Deja Vu in Nashville were suspicious of the bills and called police after Damon Armagost spent $600 of the fake money April 16, authorities said.

It is not clear whether the strippers immediately could tell that the money was fake (after six bills) or if they just profiled the person spending that kind of money and then became suspicious. I guess the big question is whether Congress would have intervened and argued on his behalf had the man paid with fake dollar bills instead.

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