In order to reduce the loss of an automatic coin machine for using a 1-Yuan false coin, a new device is designed by applying the eddy current nondestructive testing technology. The device includes four modules: LC oscillating circuit module, signal processing module, microprocessor module and external control circuit module. The device identifies false coins by the frequency changing quantity of the circuit oscillation. For overcoming temperature drift, component aging and environment disturbance, the algorithm adopts the technology of background frequency updating and Median filter. The experiment shows the device has the character of stability, reliability and high accuracy.