Police say since February there have been about 40 reports of counterfeit money being used at fast food restaurants, milk bars and supermarkets in a number of suburbs including Lalor and Heidelberg.
In some cases the fake notes are smaller than they should be and are not cut straight.
Police say the best way to identify a counterfeit note is by looking at the clear window, attempting to tear it or by doing a "scrunch test".
"If the counterfeit notes are made of paper, then when you scrunch the note it won't return to being flat but will remain scrunched," Detective Senior Constable Matthew McKenzie said.
Police are calling on anybody who believes they been given a fake note to hand it to police.
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