The bills in question are the old $100 bill design and are manufactured using $5 bills.
The bills escape discovery because counterfeit markers, which businesses use to detect phony bills, show the money as being legitimate, since they are altered forms of legal tender.
The Snyder police have investigated three uses of the bills this month -- at Stripes, Western Auto and United Supermarkets.
Police Chief Terry Luecke said the counterfeiters are washing the ink from the $5 bills and reprinting them.
"They look good. At first glance, it looks like an older $100 bill," said Luecke. "It is becoming more common and everyone needs to pay attention to what they are receiving."
There are two ways to determine if the bills are phony.
The first is to hold the bill up to a black light or another light source, where a watermark of Abraham Lincoln's face is visible. There also is a security stripe that denotes the value of the bill.
The second is to check the serial numbers. If they are the same on more than one bill, the bills are not legitimate, since the counterfeiters are using the same $100 bill, and serial number, for printing.
Luecke said that the cases are being investigated, but he is not sure if the phony money is being produced in Snyder. He also said that some customers may be unaware that they are passing false cash.
"It's hard to say. These bills may be in circulation and we can't really pin it on one person," he said. "Some of them have been going through the banks. We have no idea where they are made, but it's a common problem right now."
Luecke said that any merchant who suspects they have received a fake bill should contact police immediately, especially if the customer is still on the premises.
Anyone who comes into possession of a counterfeit bill must turn it over to law enforcement, which will then file a report and turn the case over to the Secret Service office in Lubbock.
Luecke said the Snyder police will be in contact with the Secret Service today and that the investigation will continue. Conviction for counterfeiting carries a punishment of up to 15 years in federal prison.