Phony tokens and a rising number of fake Metropasses cost the TTC close to $2 million last year, as counterfeiters figured out how to bypass high-tech security features.

Fraud was halted initially when tokens were changed to a bimetal design in 2006 and when the TTC added holograms to the Metropass three years later. But the number of fakes has since shot up, and counterfeit passes appear to be on the rise, according to numbers released through a freedom of information request and interviews.

“Once we make a significant change . . . the number of counterfeit incidents tends to drop for a while, until the producers get better at counterfeiting them,” said Fergie Reynolds, deputy chief of the traffic enforcement unit.

His frontline officers sometimes catch people unwilling to swipe passes through turnstiles, since the magnetic stripes on the knockoffs don’t work. Reynolds said his officers arrested 68 people last year over fake fares.

Counterfeiting has evolved over the years, since people began using gift cards and scanners for “cut-and-paste” jobs, said TTC investigative services Staff Sgt. Mark Russell, who has been tracking counterfeits since the late 1990s.

One or two local operations are now using real card printers and foreign-made holograms, he said, adding the size of these operations could be anything from a bedroom to an industrial space. “It’s more a single large-scale operation than it is all these mom-and-pop operations,” Russell said.

Last year there were 615 fake Metropass reports — a figure that represents incidents, not passes. There were 492 the year before.

“A loose estimate is that roughly 10 per cent of what’s out there comes across my desk,” Russell said, pegging Metropass fraud costs at around $750,000 to $800,000 last year.

The TTC began using holograms in the summer of 2009 as a way to halt fraud. It worked, at first.

Russell said it took about two years before realistic fakes started showing up, going on sale a few days after real ones would go on sale for $128.50. The fake passes were often found at stations near university and college campuses.

With the promise of Presto replacing all but cash fares by 2016, counterfeiting may be an issue only until then, since the company claims the electronic payment chip technology can’t be duplicated and is as secure as a bank card.

For now, fake Metropasses are harder to catch than tokens, since they can remain behind plastic in a wallet for an entire month. Spotting a fake Metropass often falls to TTC operators, who over time have seen enough passes that they can spot a slight discoloration, off texture, blurry text or misshapen hologram, Russell said.

Counterfeit tokens are sorted electronically once they’re paid into the system. At first glance, they look the same as regular ones made of two types of metal, but they can be discoloured and have misshapen logos and lettering.

Annual losses from fake tokens have hovered above $1 million since 2009. More than 300,000 fake tokens were found last year, Russell said, noting that’s about 0.3 per cent of all tokens collected.

Russell said he believes they’re being made in China, based in part on past experience. Two men were arrested in 2010 after a delivery of more than 3,000 counterfeit tokens from China was intercepted.

“It’s such a common go-to place for this type of thing . . . there’s similarities in distribution and mentality, whether it’s counterfeit Gucci bags and designer whatever,” Russell said, adding he believes holograms used on fake passes could also be made there.

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Sometimes police alert Russell to fakes. One afternoon last week, for example, he was informed that someone had been picked up at a Walmart carrying five fake passes.

“People are paying 50 bucks, and then act shocked when they get arrested,” Russell said.