Ithaca New York has been doing this for a while. They're trivially counterfeitable, as you might expect, and the IRS considers much of the activity tax-evasion (and rightly so) though to my knowledge nobody has yet been busted for them. Technically people are supposed to claim them and pay taxes (and many do) but there's a lot of nonpayment going on too and it's very hard to trace.
Those at least look a lot more professional. The Ithaca Hours I saw (I was there maybe 5 years ago) looked like someone made them using colored paper and a copy machine. They had serial numbers, but as far as I know there was no way for a merchant or individual to verify those at the time of transaction, so they were useless except maybe after the fact (at which point it would still be hard to tell which was an original and which a fake).
