The fraudster palmed off a pile of fake £20 notes on an unwitting seller in exchange for an iPhone.
Officers said the victim was conned out of £500 and the iPhone after trying to sell the device on a classified ads website.
Counterfeit notes are being used in scams run by sophisticated criminals using technology to produce fake currency, police say.
The incident took place at around 7.25pm on Thursday in Glasgow city centre.
Police are warning the public to be on the look out for counterfeiters.
The suspect is described as being between 20 and 30-year-old and around 6ft tall, with short dark hair and stubble.
He was wearing a dark bomber jacket and a dark jacket.
A Police Scotland spokesman said: "We received a report of counterfeit money being passed in Glasgow.
"We would urge anyone to check the serial number on their notes and make sure they are not all the same.
"If you are in doubt about the quality of a bank note, or if it doesn't feel right, don't accept it."
In November, the Evening Times told how a 24-year-old man was conned out of £300 and an iPad after selling the device online.
Genuine Scottish bank notes have a watermark, which is hardly visible until it is held up to light.
Anyone with information is asked to call police on 101.