A sixfold surge in seizures of bogus HK$100 banknotes was recorded last year, according to police figures, prompting the force to warn the public to watch out for fakes in the run-up to Lunar New Year.
Counterfeiters usually targeted shops, stalls at wet markets, convenience stores and supermarkets in their efforts to slip the notes into circulation, officers said, since shop owners and employees were often too busy to double-check money.
Some Hong Kong residents had even seen their notes replaced by counterfeits while shopping on the mainland.
"Victims present a HK$100 note to make a purchase. Vendors say it is a fake note and hand back the bill," a police source said. "But in fact, vendors have switched the genuine note with a fake one."
The latest police figures show the number of counterfeit Hong Kong banknotes in circulation rose by almost 20 per cent to reach 2,620 last year, up from 2,198 in 2015. There were 2,196 fakes in 2014.
Last year police arrested 22 people in connection with seizures of fakes.
Almost 60 per cent of the seized bills were HK$100 counterfeits, according to police.
Figures show the number of bogus HK$100 bills surged from 238 in 2015 to 1,542 last year.
More from the South China Morning Post: Cross-border travellers warned on fake banknotes Single Chinese paying more to rent fake partners for Lunar New Year How a temple is using technology to connect with worshippers
Officers also seized 241 HK$50 counterfeits last year, an 82 per cent rise on the 132 in 2015.
The force said it had noticed an increasing number of HK$100 and HK$50 counterfeit notes since June last year.
"The fakes were mostly made on ink-jet printers," a police spokesman said. He said the quality of the fakes was poor and they did not have the embossed feel and security features such as watermarks seen on genuine notes.
The fakes could easily be distinguished by checking security features or by touching the bills, he said.
Seizures of larger-denomination counterfeits were down however, with the number of HK$1,000 and HK$500 fakes found down by 71 per cent and 51 per cent respectively, to 238 and 422.
The source said counterfeiters appeared to have made more notes in smaller denominations because people usually paid less attention to these than they would large denominations.
Meanwhile, the number of fake 20-yuan banknotes seized in Hong Kong soared by 67 per cent to 286 last year from 171 in 2015. Seizures of bogus 50-yuan bills also rose, hitting 259 last year, a 10 per cent increase.
But the total number of bogus mainland bills dropped nine per cent to 2,997, down from 2,395 in 2015. Seven people were arrested last year in Hong Kong in connection with fake mainland banknotes. Police said most of these notes were found when being deposited into a bank, while some victims had had genuine money replaced with fakes when taking a taxi or spending at restaurants and entertainment venues on the mainland.
"Some swindlers even opened people's lockers at massage parlours and switched genuine notes with counterfeits," the police spokesman said.
Officers appealed to the public to contact the police or seek assistance from a bank if they suspected they had been given fakes.
Follow CNBC International on Twitter and Facebook.