A counterfeit detector pen is a felt tip pen containing an iodine solution that can be used to help identify computer-generated counterfeit bills. According to U.S. Secret Service data, "funny money" generated by criminals using computers and ordinary printers accounted for only one-half of 1 percent of the counterfeit bills confiscated in 1995. By the year 2000, that figure had risen to 45 percent and is still going up. Detector pens, although not fool-proof, are an effective way to identify computer-generated counterfeit bills because the iodine solution in a detector pen reacts with starch, which is commonly found in the wood-based copy paper used by most printers.
Detection pens are easy to use and require no training. A clerk at a cash register simply uses their counterfeit detector pen to put a small mark on the bill. If the bill is counterfeit and the paper is wood-based, the iodine in the pen solution will react with the starch and leave a dark brown or black mark. If the bill is authentic and the paper is fiber-based, there won't be any starch and the pen will not leave a mark. (Although manufacturers of counterfeit detector pens will sometimes add a biodegradable pastel coloring to the iodine solution so that users can easily see which bills they have already screened -- the pastel coloring usually fades within a day or so.)
Typically, a counterfeit detector pen costs about $5.00 and can be used to screen up to 3,000 bills. Counterfeit detector pens can be used for any thread-based paper currency.