By Type: Articles

Are Companies Held Liable For Fake Products?

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Author: OuterBox

By the Authentix Brand Protection team

Brand protection often isn’t the first thing on a company’s mind as they launch a new product. When a company sets out to design a product, they want it to be a hit. They strive to make it useful and helpful to people, and they want their customers to trust and love the new product. Many brand owners refer to their products as their “baby” due to the long and challenging process to get it just right, in addition to the thought and testing that goes into the product research and development process.

One of the most powerful practices a company should apply to their products is often overlooked and that is brand protection, which can protect a company from unforeseen liability costs and customer mistrust in emerging or gray markets. Estimates vary, but the total amount of counterfeit goods impacting the job market is astonishing — it’s responsible for the loss of 2.5 million jobs globally.

When Brand Reputation is on the Line

An expression often used in sales states, “You are only as good as your last deal.” Similarly, brand reputation plays a significant role in the sales of most products. More than ever, customers are informed and do their research, reviewing competitors and finding the best deal according to various factors such as quality, cost, and reputation. A positive brand reputation can take years to build and only moments to collapse. (For example, in 2019, Nike pulled its products from the Amazon marketplace in part to try to lessen the damaging effects that counterfeit goods were then having on its brand). A brand’s positive reputation can be ruined due to a counterfeit product damaging someone’s skin, hair, body, or health.Online Brand Protection Strategies

Any product that is a premium brand and popular (e.g., car parts, cosmetics, pharmaceuticals, clothing, or even bed sheets) will be counterfeited at some point and can severely damage the reputation of the brand name. It can take many years and a significant amount of money in marketing and legal fees to rebuild public trust. The risk of this predicament can be materially reduced or even avoided with an investment in a brand protection program right from the start.

Forgoing Brand Protection Is Not an Option

When companies decide to forgo a brand protection program for the release of a premium product, several adverse outcomes can occur. The product may end up in non-targeted marketplaces where consumers find counterfeited or unauthorized and often heavily discounted versions. In many cases, this could also happen with brand owners’ third-party manufacturers producing unauthorized products for their own benefit.

In these cases, brand owners may also be held liable for those counterfeit products because there is little way to prove the provenance or authenticity of the fakes vs. the legitimately produced goods. For example, if a consumer in the marketplace gets hurt by an unauthorized or fake product, the brand owner is often exposed to liability. The legal fees can pile up quickly with no end in sight, all while product sales drop due to the lack of consumer trust.

In addition to counterfeited products, there is the gray market where consumers may find a company’s genuine products sold by unauthorized distributors at deeply discounted pricing, such as being sold out of the “back of the truck” or through other nonstandard channels. These may include expired or out-of-season products where the selling price is much less than the Minimum Advertised Price (MAP).

Supply Chain Physical Visibility & Traceability Simplified

Navigating a solid brand protection program does not have to be overly complex or challenging to implement. For example, putting a digital identifier or UIM on a product is much like putting a license plate on a car. That plate’s unique letter and number combinations should only be found on the exact vehicle with matching registration.

The same goes for placing a security taggant and/or a secure digital code on a product — it is only made for that specific product. The quantity and size of the product’s merchandising and packaging will determine the best security feature(s) needed to later identify the authenticity and unique attributes belonging to the product.Brand Protection Strategies

A covert or visible encrypted QR code with a unique, serialized item level ID can provide track-and-trace insight for a brand owner. This can provide much-needed supply chain visibility and uncover gray market diversion. If there is a question of the authenticity of a product, a consumer or inspector can check for various covert and/or overt security features (depending on the brand protection program the brand has in place).

For example, when a company’s product is entering the country of destination, the border patrol can easily detect the proper security taggants and confirm the validity of the product, allowing it to reach the distribution and retail channel much faster without delays in customs.

Online Brand Protection for Added Peace of Mind

Online brand protection is another factor to consider. If a product is sold in an online marketplace, there are tools today that can make the authentication process even easier. Many providers now have image searching and can digitally compare images for authorized licensed goods offered on non-authorized sites. Also, as part of online brand enforcement efforts, inspectors can view the product image for special overt security features to help identify these suspect products.

Today’s modern online brand protection advancements allow for identifying fake products and providing ancillary services such as cease-and-desist letters and a formal process to request site takedowns from legitimate or dark web marketplaces. Online brand protection services can perform sample buys and help find, chase, catch, and investigate infringing operators in multiple marketplaces, shutting them down and further protecting your trademark.

Consumer Engagement & Authentication Significant to Growth

For traditional core brand protection programs, the growing trend of merging consumer engagement with digital product authentication in a single platform can be insightful for a growth-minded strategy. There are many technology options for both brand owners and authentication providers in developing these hybrid and dual-purpose programs. Such services allow consumer interaction for marketing purposes while forming large data sets to detect trends as the product’s journey is tracked.

As consumers become more vigilant and seek genuine products when shopping for premium brands, including a consumer engagement feature also provides an effective means of protecting products. Moreover, it enables direct engagement with loyal consumers to help increase both customer interaction and continued brand loyalty.

The Value of Complete Brand Protection

The return on investment of implementing a brand protection program from the beginning of a product’s introduction to the market is a valuable and worthwhile investment for several reasons. It can help detect fake or unauthorized products quickly, mitigate potential liability costs that may result, and help support a brand owner’s preferred market pricing by avoiding unauthorized gray market activity. Being able to police all third-party manufacturers can also be a crucial result of a well-implemented brand protection program.

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About Authentix

As the authority in authentication solutions, Authentix brings enhanced visibility and traceability to today’s complex global supply chains. For over 25 years, Authentix has provided clients with physical and software-enabled solutions to detect, mitigate, and prevent counterfeiting and other illicit trading activity for currency, excise taxable goods, and branded consumer products. Through a proven partnership model and sector expertise, clients experience custom solution design, rapid implementation, consumer engagement, and complete program management to ensure product safety, revenue protection, and consumer trust for the best-known global brands on the market. Headquartered in Addison, Texas USA, Authentix, Inc. has offices in the North America, Europe, Middle East, Asia, and Africa serving clients worldwide.  For more information, visit https://www.authentix.com.

Footnotes

1 BASCAP, Estimating the global economic and social impacts of counterfeiting and piracy, Frontier Economics, 2011

2 Elizabeth Segran, Nike tried playing nice with Amazon. Here’s why it didn’t work, Fast Company, 2019

 

Tips to Avoid Online Counterfeit Products During The Holiday Season

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Author: Kathryn Olivier

This year’s holiday period will bring the busiest shopping season of the year including a growing portion of purchases made online, an environment ripe for counterfeiters and scammers to take advantage of buyers by pushing fake products or phishing for personal and financial information. The consumer product counterfeit business has evolved and grown from city sidewalks to the online global marketplace. We’ve listed below a few helpful tips to be mindful of this risk and potentially avoid purchasing counterfeit products online during this high-volume and often confusing purchasing season.

1) Check to Confirm the Shopping Website is Secure.

When purchasing items online, make sure you are only purchasing from trusted sources. By verifying the website is secure, you are less likely to deal with illicit sites either selling fake products or worse, looking to steal your personal and financial information. One method to verify you are more likely to be on a legitimate site is to check the web address bar, where you’ll find the fully expressed website domain address. If a site address begins with “https://” the “s” stands for secure. You should also see a padlock symbol at the top of your browser. While this isn’t 100% foolproof, if you don’t see these indicators, chances are you have stumbled into a non-secure and possibly illicit e-commerce site.

Another tip is to be cautious of sponsored search results on Google that can lead to little-known e-commerce portals. Sponsored content which typically appears higher up in a search result or sponsored content appearing on social media that targets consumers directly are not always trustworthy. It is also recommended to be cautious of sales offered on chat apps, email campaigns and short video apps. The original website of the brand owner should normally be the first port of call, followed by the reputed e-commerce websites. On reputed e-commerce sites, use caution and evaluate the seller you’re buying from. For example, if you see a seller sell reputed brands alongside generic goods the products will most likely be fake.

2) Evaluate if the E-Commerce Site Shows the Warning Signs of Highly Discounted and Unrealistic Offers.

Many brands are often impersonated online by websites offering large price savings or special onetime deals. Be cautious of websites offering retail pricing at substantial discounts from the manufacturer’s suggested retail price. A deal that seems too good to be true probably is. Often these illicit trading sites need to use these pricing and promotional tactics to attract the web traffic and entice shoppers to navigate and purchase fake or unauthorized goods. Google Transparency Report and Scam Advisor are helpful sources to view a site’s legitimacy. We also recommend never purchasing anything online with terms of purchase not allowing returns and stating all sales are final.

Another rule of thumb to verify if the site is more likely selling legitimate product is to check the brand owner’s official, authorized website and compare the standard retail price offered on the same product against the price quoted on the questionable site. Often, discounts of 30% or more for premium branded products should be suspect. Also, check the brand owner’s official site for any mention of similar deals or a list of authorized distributors/dealers. If you’ve ordered and received product under these questionable circumstances, it is important to always inspect the products fully and compare the product’s appearance to the legitimate images on the brand owner’s site. It is also important to check all packaging, missing or expired dates or broken/non-existent safety seals. If you discover inconsistencies and suspect you’ve received a fake product, be wary of using it, especially if the failure of the product could result in your own bodily harm. It might be time to request a refund and/or report the purchase to the authorized brand owner.

3) Refer to Legitimate Verified Buyer’s Reviews as a Potential Credibility Builder.

If the shopping site you’re visiting is credible, there should be substantial and believable third-party reviews from multiple verified buyers. Make sure to browse several consumer reviews to verify the content is believable and visit other review sites such as Google My Business and Yelp to review the seller’s reputation and any negative customer experience feedback that’s already out there. Sometimes, rogue traders try to plant fake reviews with glowing praise. Thus, it may also help to sort reviews by low to high rating, and quickly check if any customer has complained of the product being substandard or even suspecting it to be counterfeit.

Many Brand Owners Work Diligently to Protect Their Brand’s Online Credibility

Authentix provides some of the world’s most recognizable brands with sophisticated online brand protection tools and services to address a broad range of online infringement and counterfeit risks. From global online surveillance and enforcement, online investigations and site takedowns, target verification, and even offline investigations, Authentix helps major brands to proactively reduce the threat of unauthorized or outright fake product hitting the online marketplaces.

If you’re a brand owner and curious how Authentix Online Brand Protection can help protect against intellectual property infringement, schedule a consultation with our brand protection experts today.

Reigning in Influencer Counterfeiting

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Author: Kathryn Olivier

By Bharat Kapoor, Vice President, Authentix Online Brand Protection

Partnerships between major brands and social media influencers are today de rigueur. Worryingly, however, the rise of influencer marketing has been accompanied by an unseemly trend of “influencer counterfeiting”, where a minority of unscrupulous influencers blatantly hawk fake goods on the internet. A recent survey, commissioned by the UK Intellectual Property Office and conducted by the University of Portsmouth, found that “deviant” social media influencers exert a significant influence on young followers, stating a host of alarming statistics.

While a reasonable amount of media coverage has been devoted to the trend of influencer counterfeiting, what is sometimes missed is that levels of respect for intellectual property can vary across social media platforms.  For example, Meta appears to have a fairly robust complaints mechanism, with approximately 80 percent of counterfeit-related complaint resulting in takedowns (per its transparency reports). Meta has also partnered with well-known brands and initiated legal action against counterfeiters (including, in one instance, a lawsuit jointly filed with Gucci in a US court). The same, however, is arguably less true for TikTok and its Chinese equivalent Douyin. Media reports, and our own enforcement experience, suggests that the extent of influencer counterfeiting on the platform is widespread and responses to takedown requests need to be improved. This also holds true for Telegram. Compounding the problem, Telegram offers users significant anonymity, thus potentially allowing rogue influencers to hide behind false identities and also evade offline enforcement actions.

Judicial precedents concerning influencer counterfeiting, and the obligations of social media platforms, remain few and far between. Late 2020, Amazon sued two influencers active on TikTok, Facebook and Instagram in the US, for allegedly working with a large network of counterfeiters to advertise and facilitate the sale of fake luxury products. The case, however, was ultimately settled on confidential terms.  In June 2022, Amazon and Cartier partnered to sue an influencer selling fake jewelery on Instagram. In contrast with the earlier case, the identity of the influencer was unknown and identified in court filings only by the handle “Phym9y3v”. While the outcome of the case is eagerly awaited, a recent precedent from the Delhi High Court in India is instructive. An English-language tutor, whose lectures and course materials were being uploaded and sold on Telegram without her permission, sued Telegram for copyright infringement. The plaintiff observed that she had sent takedown requests to Telegram, but new channels with the infringing content were popping up as soon as one was disabled.  Telegram contested the application on the ground that it was an intermediary and that its servers were located overseas, beyond the jurisdiction of Indian courts.  The court rejected Telegram’s arguments, observing that “conventional concepts of territoriality no longer exist” and that copyright enforcement “cannot be diminished merely due to the growth of technology, which has made it easier to hide and conceal illegal activities.” The court thus directed Telegram to disclose the mobile numbers, IP addresses and email addresses used to upload and disseminate the content, along with details of the servers and networks used.

The increase in influencer counterfeiting requires brand owners to pursue rogue influencers (both online and offline) and press for myriad forms of legislative intervention and diplomatic pressure, to truly reign in influencer counterfeiting and the platforms that facilitate it.

To learn more about Authentix online brand protection solutions, visit www.authentix.com/online-brand-protection.

Authentix National Fuel Integrity Programs: Enabling Governments to Optimize Tax Revenue, Reduce Carbon Emissions, Improve Fuel Quality, and Fund Public Infrastructure

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Author: Kathryn Olivier

  1. Why do National Governments Rely on Authentix to Implement and Operate National Fuel Integrity Programs?

In the last 25 years, dozens of national governments have selected Authentix to provide the technology and support services to start and operate national fuel integrity programs (NFIPs) with the aim of reducing illicit trade, smuggling, and adulteration of the country’s fuel supplies. Primarily, governments are quick to produce high returns on investments in and enforcement of these programs as illicit trade is reduced, and criminals are no longer able to profit through fraud and tax avoidance. Authentix also appreciates that markets are never static and new threats will always appear. Therefore, we design all our programs around continual improvement to constantly address the changing scope in illicit activity. Additionally, Authentix is committed to capacity building and knowledge transfer striving to empower and train the local workforce in utilizing the best-in-class technology.

Prior to implementing a NFIP, many countries had experienced between 30%-40% total fuels sales coming from illicit activity including several methods of illegal trading such as:

  • Smuggling non-taxed, low-taxed, or subsidized fuels from neighboring countries and selling these as fully taxed fuels.
  • Adulteration (commingling) with off-road, tax exempt, or subsidized fuels and selling as fully taxed fuels.
  • Adulteration/dilution of high-quality refined fuel with substandard or inferior quality products such as kerosene or waste oil and selling to the unsuspecting consumer as high quality, fully taxed fuel.
  • “Round Tripping” where untaxed products destined for export or transit through the country never leave the national borders and are dumped into the legitimate supply chain.

2. The Adverse Effects from Illicit Trade of Fuel Products

In addition to the obvious loss of excise tax revenue to the country from criminals who profit from these fraudulent activities, there are many detrimental outcomes when allowing this nefarious activity to go unchecked including:

  • Lower revenue collection by the government and less public funds for roads, schools, healthcare, and other important infrastructure needs of the citizenry.
  • Possible need for the government to increase marginal or other taxation rates on the citizens to make up the funding shortfalls caused by these fraudulent schemes.
  • Environmental damage and increased air pollution caused by low quality and sometimes dangerous adulterants present in the country’s fuel supply chain.
  • Lower fuel efficiency by vehicles where fuel or oil adulterants can reduce the fuel quality and engine performance standards.
  • Increased costs to consumers and industry via damage to motor vehicles and other motorized equipment caused from use of low-quality oil and fuel adulterants not specified for use by these vehicle manufacturers.
  • Reduction of legitimate and compliant retailers who cannot compete against illicit operators’ reduced cost basis.

3. The Quick Payback to Implementing Authentix NFIPs

In the dozens of NFIPs implemented by Authentix on behalf of governments around the world, the positive impact has been rapid, consistent, and substantial in counteracting these adverse effects and ongoing damages of illicit fuel trading. It is common to see significant reductions in illegitimate fuel in the supply chain within only a few weeks of the program’s inception. In fact, well within the first year of program inception to see previous fuel supply compromise rates easily cut in half and even greater reductions through the remainder of the first year. As the program gains velocity and following successful enforcement activity, it is common to see illicit activity drop below a 5% rate.

In case studies completed on various programs, it was common for the illicit trading of fuels to go from over a 30% compromise rate to less than 5% in a matter of months from enforcement starting. Through continued program operation and ongoing enforcement, countries have been able to sustain these single digit compromise rates perpetually. Given the increased collection of legitimate taxes, the program metrics means the client could easily pay for the initial NFIP investment within a few months. Continued enforcement through suitable legislation then allows these gains to be protected through the life of the program.

For most countries, excise tax collections from fuel sales can be a major component of the government’s budgeted revenue often exceeding over USD250 million in smaller countries and billions of dollars in larger countries. With such large numbers at stake, cutting fuel fraud even a few percentage points can result in a massive return on investment for the government, often more than 20 times the annual cost of the NFIP.  In many instances, Authentix clients have seen fuels excise tax revenues increasing by USD50 million to hundreds of millions per year. In a single client circumstance that was one of the first to institute an Authentix NFIP over 20 years ago, the total recovery of additional funds is estimated to be more than USD2 billion in the last 23 years.

4. The Environmental Benefits of Authentix NFIPs

While most governments are starting to consider implementing NFIPs due to the positive experiences of other countries who have already deployed a program, there are many more returns on investment to be realized beyond the large tax revenue increases. Reducing the amount of low-quality and harmful adulterants in the fuel supply has an immediate and extremely positive impact on air pollution and can allow a country to meet its commitments and be compliant with international air quality standards established through international and cooperative treaties. These treaties, such as the Stockholm Convention enacted in May of 2001, brought most countries together in a global, written pact agreeing to ban harmful Persistent Organic Pollutants (POPS) from being used. Many fuel adulterants being added to dilute legitimate high-quality fuels contain POPs, or precursors to POPs and are harmful to air quality and toxic to humans. By eliminating these adulterants from the fuel supply the government is also reducing air pollution.

With an Authentix NFIP, the chemical and covert markers to track and identify the fuel to confirm compliance do not affect the quality of the marked fuel and are environmentally safe. In fact, the proprietary and patented covert markers used by Authentix in these programs are made from Carbon, Hydrogen, Oxygen, and Nitrogen (CHONs) which are already compositional elements of high-quality diesel and petrol fuels today. Further, these covert markers are added to the fuel supply at extremely low concentrations, often at a low parts per billion (ppb) level. To fully understand and visualize something at, say a concentration of 10 parts per billion, imagine starting a trip to fly from Eastern Asia to the tip of South America, which is approximately 14,000 miles. As you begin the journey, you take a half step to pick up your bag. You have now traveled 10 parts per billion of the planned trip, just a distance of 8 inches out of the total 14,000-mile journey.

5. Authentix NFIPs Save Consumers and Vehicle Manufacturers Money

Authentix fuel markers cause no harm to combustible engines and are also approved for use in the fuels for many of the world’s largest branded fuel companies. Unfortunately, this is not the case for harmful adulterants and other oil waste products added to fuels through illicit trading. In today’s modern vehicles, carburetors, fuel injectors, real time oxygen sensors, catalytic convertors, exhaust filters and other expensive, computer controlled electronic components are all precisely engineered to work with specific fuels having minimum quality thresholds for composition including those able to utilize fuels containing percentages of ethanol. However, as non-fuel hydrocarbons and other substandard chemicals are intentionally added to dilute quality fuels for profit seeking, vehicle fuel systems and other components can be severely damaged even resulting in catastrophic engine failure. These costs are extremely high for both consumers and vehicle manufacturer warranty claims in countries experiencing prominent levels of fuel adulteration.

While many consumers try to purchase fuel from reputable retailers it is next to impossible to know if the quality of any fuel being dispensed to a vehicle meets the minimum government and vehicle manufacturers requirements. And it is not just the retailers who are suspect in these cases as even the most high-quality and well-intentioned branded fuel retailers can fall prey to the illicit wholesale transporters and distributors involved in fuel adulteration and supplying these retail stations. Regardless, implementing an Authentix NFIP is the first important step to improving overall fuel quality by eliminating these harmful adulterants and reducing repair and warranty costs to the consumer.

6. The End Result to Enacting a NFIP? It is the Citizens Who are the Ultimate Winners

While increased tax revenue and high return on program investment is an immediate and clear benefit from an Authentix National Fuel Integrity Program, it is the common citizen and consumer that ends up benefiting the most. With the increased excise tax revenues for the government, there is less reliance on taxation of consumer income or use tax that often becomes necessary to replace the lost revenue from illicit fuel trading. Also, as fuel quality in the country improves from less mixing of low-quality adulterants into the fuel supply, fuel efficiency improves, and costly repairs and unforeseen maintenance issues diminish. Citizens have improved air quality and governments have more resources to build improved highways, airports, and other infrastructure projects necessary to improve the quality of life for all its constituents.

7. Selecting the Right Solution Provider for NFIPs Makes all the Difference. With the Most Fuel Authentication Projects in the World, Authentix is the Market Leader and The Authority in Fuel Authentication

Authentix is the market leader in Fuel Integrity Programs with over 25 years of experience and more active National Fuel Integrity Programs deployed than any other company. Providing our clients with the most sophisticated marking technology, cloud-based software suites, mobile applications, supply chain management tools, documentation, and more is our only focus. Our driving purpose is to create a world of confident commerce and ensure the safety and integrity of products purchased by consumers and companies every day. For more information, please visit our website at www.authentix.com or contact us at info@authentix.com.

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Social Selling Has Empowered Counterfeiters: How Can You Fight Back & Protect Your Brand?

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Author: Kathryn Olivier

By Bharat Kapoor, Vice President of Online Brand Protection, Authentix

With online sales continuing to surge, companies are focusing on digital marketing and advertising products through various social media channels.

Not only has there been a rapid shift towards sales through online channels as a result of Covid-19, with corporations such as L’Oréal for example reporting a 62% increase in online sales across divisions and regions, the marketing of products through influencers has also experienced a dramatic uptick with the influencer marketing industry estimated to be worth US$9.7bn in 2020.

However, according to a report published by Instagram, 20% of the posts associated with top brands on social media featured counterfeit or illicit content.

The way customers interact with brands has been changing over time with two factors driving that change. One is technology where you have omnichannel sales and you’re getting messaging from social media feeds, e-commerce, marketplaces, influencers and so on. Customers buying products online also have access to delivery infrastructures that haven’t before existed in the way they do today. For example, if you buy something on Amazon in Southeast Asia, Asia or the US, it can come to you within hours. And what counterfeiters really take advantage of is exactly that: they find places where it’s easy for them to promote and sell anonymously and use this delivery infrastructure that’s been created by other legitimate businesses who have invested billions and billions of dollars in e-commerce.

The second thing that is helping smooth the path for piracy are payment systems that make it possible to move funds cross-border seamlessly, which are often associated with e-commerce and the rise of China’s cross-border ‘daigou’ trade. Via this method, counterfeiters will attempt to use the pricing gap between retail prices and grey market products to sell counterfeits.

Today, with the various means of transacting, getting money from someplace in Europe into China is also instant. This type of financial structure unfortunately is geared up to benefit fraudsters.

What we’ve seen is cross-border e-commerce channels becoming extremely popular because they offer crazy discounts. These deals are backed by sellers in a foreign country that will be responsible for delivering the product once a transaction is completed. For example, we found and investigated sellers in Singapore that have no inventory and they simply place a back-to-back order when they receive an order. This makes it more complicated for the police to take criminal actions against such sellers.

For the cosmetics industry for example from a brand perspective, it’s not only about counterfeiting, which may be 30-40% of the issue. But you will also find infringers using other brand assets – films, photos, design patents, a wide spectrum of IP – to sell a particular product that could be a counterfeit, or even a lookalike product.”

Finding Out Who’s Selling Fakes

SIPI has a unique strategy for discovering the online vendors who are responsible for dealing in counterfeit products and those dealing in legitimate goods via its proprietary online monitoring and enforcement solutions. The aim is not only to protect clients’ brand image and copyright, but also their customers and reputation.

SIPI uses machine learning-based algorithms to scale up analysis and identify hidden trends in data gathered both online and offline to identify high-value targets.

The process begins with data gathering, in which SIPI scrapes data for clients’ brands from around 500 different e-commerce marketplaces and social media platforms. This data is fed into its online platform for risk screening and risk-scored by SIPI’s proprietary algorithms, under which over 30 parameters (including price, images, keywords, customer reviews and seller activity) are taken into account.

In terms of the algorithms, you must approach your research and your study of a potential infringinglisting by looking at the listing in the wider context. It is sometimes quite difficult to identify a counterfeit product just by looking at the listing, because legitimate brand owners may also sell their products at discounted prices. They have other channels and many other ways of selling. So, you can’t just say that the price of a product being 30% or 40% below average is, alone, an indication of it being counterfeit.

You must be more diligent in terms of your assessment of a seller. And that’s what SIPI has trained our algorithms to do – to know what else to look at online. For example, you can look at customer comments, store rating, how old the stores are and the types of products that you see the store selling, such as luxury goods alongside very generic products, which may be viewed as being suspicious.

To identify offline targets, high-risk sellers are further investigated to create seller and product clusters, the name for groups of sellers concentrated in a region or dealing in a single product. A complete digital profile is created for high-value targets after which these leads are shared with an offline investigator for further investigation and action. The remaining infringing listings are reported to the respective marketplaces and social media platforms for takedowns.

SIPI currently protects over 200 brands and maintains a 94% success rate across platforms. While it strives to have a 100% success rate, certain major marketplaces in China and Asia make it extremely difficult to file complaints against each and every counterfeit instance.

And it is not simply a case of either how sophisticated or poorly-made the fake products are as to whether these are blatantly obvious versions. There are multiple avenues for illicit commercial activity.

SIPI has noticed a sharp increase in the number of sellers claiming to manufacture products and supply packaging materials that support the counterfeiting trade. There are also cases of verifiable and legitimate products being sold illegally.

Looking Forward

Given the wider e-commerce environment playing so well into counterfeit sellers’ hands, we believe the combination of Authentix and SIPI’s expertise comes at a beneficial time for brand clients. The acquisition of SIPI by Authentix increases the scope of its offerings to brand protection clients by integrating digital security technologies and online anticounterfeiting and content rights services for an end-to-end, comprehensive brand protection solution.

SIPI provides clients with solutions to digitize their supply chains and uses investigation techniques to determine instances of counterfeiting and diversion while attempting to keep the internet free of fakes by building effective online enforcement programs.

For a limited time, SIPI is offering a free online brand risk analysis to qualified brands. More information can be found here.

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The Sum of Its Parts: Well-Curated Authentication Technologies in the Fight against Illicit Trade

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Author: Kathryn Olivier

By the Authentix Brand Protection Team

Whether you’re a brand owner protecting a commercial product or a government authority issuing critical, high-security documents, you’re continually faced with the ongoing challenges of combating illicit trade and counterfeiters.

To counter these constant attacks on legitimate industry players, high security authentication solutions are needed to safeguard the integrity of global commerce and can include both physical and digital security solutions. Security can be added to documents, products, and product packaging or labels. In addition to adding these security features, the more advanced and effective authentication programs should also include track and trace capabilities that allow the tracking of protected products throughout the supply chain.

With a comprehensive and well-curated authentication program, brand owners and governments can take a more proactive approach to protecting consumers from potential health and safety issues and themselves from the financial impacts of counterfeiting and diversion.

Product Marking: The Foundation

Physical marking solutions can range from simple yet effective to highly sophisticated and extremely secure. A typical marking ‘toolkit’ consists of four basic elements, each of which performs a different function, ranging from detection, prevention, deterrence and engagement.

  • Tamper Evident – cannot be opened and reapplied without visible damage, therefore deterring and preventing nefarious actors from interfering with the product
  • Overt – visible to the eye and hard to copy, which deters from and ultimately prevents attempts to mimic the feature due to the high barrier to entry both from a cost and from a technical point of view
  • Semi-overt – visible to the eye upon performing a simple action, which means the brand owner can choose when to change a feature from covert to overt by timing the invitation to the public to engage in the authentication of the product
  • Covert/forensic – invisible to the eye, detectable using a hand-held device (covert) or laboratory equipment (forensic); being invisible, covert and forensic features do not prevent counterfeiting, but they facilitate unequivocal and quick in-field verification of authenticity and detection of counterfeits.

A combination of these features presents the most water-tight strategy against a number of illicit trade activities including counterfeiting, diversion, and infringement. To ensure successful implementation with minimal impact to current processes already in place, the most effective approach is to integrate the application of security features into existing processes within your manufacturing and vendor base, whether it is printing, labels, tamper evident seals or specialized overt and covert inks, using existing materials and packaging designs.

Going Digital: Connecting your Asset to the Cloud

Product marking is the foundation that supports digital security technologies, given that the physical form of digital identifiers can be validated when combined with robust printed security features.

Products become digital touchpoints by adding unique, item-level digital identifiers to the product or its packaging. Unique identifiers can be delivered in various formats such as overt or covert Datamatrix codes, QR codes, human readable alphanumeric codes, or embedded NFC chips, added to any part of the product or packaging or other carrier vehicle. These digital identifiers can also be embedded into an existing code format or added as a covert ‘twin’ of a visible code in cases where codes are at risk of being removed in an unauthorized attempt to destroy the traceability of the product.

In general, there are three main users of this technology:

  • Supply Chain Participants – manufactures, distributors, 3rd party logistics
  • Inspectors – a brand’s internal team, local law offices, law enforcement and customs agents
  • Consumers/e\End-Users – for authentication verification and engagement

What’s Next: Using your Connected Asset to your Advantage

Connected products are typically used in three different ways and for different objectives. These include journey tracking, authentication and consumer engagement as shown in this graphic.

 

Driven by a rules engine that is calibrated by the brand owner or government, each of these paths direct critical data back to them in the form of actionable insights and analytics that are leveraged for strategic decisions across multiple agency focus areas or corporate functions, such as legal, operations, supply chain, marketing and others.

Examples of data that can be gleaned include locations of suspicious activity, excessive scan volume, geo- fence violations, multiple scans/single ID alerts, top scanned codes, and more.

The Role of Data: Collect, Analyze, Act, Share

There are many areas in which data can prove exceptionally meaningful. These include:

  • Secure mark: validates if the product is genuine or fake
  • Distribution: routes, port of entry, freight forwarders, dates, etc.
  • Illicit activity: captures and ear-marks products/codes that are suspected as counterfeit or diverted
  • Source: increasingly important raw materials and components
  • Product: records product make or model, part number, batch and quality control data
  • Production: captures manufacturer, date and time of production
  • Location: identifies where was the product made, shipped, sold, or scanned
  • Consumer: opt-in driven consumer intelligence, contact data, location of scan, device, engagement

This data can easily be shared across internal teams, with law enforcement and customs, and used for benchmarking and best practices in discussion with other brands.

Examples of client dashboard in the Authentix DigiTrax™ platform

 

In summary, both physical and digital technologies play an important role in the fight against illicit trade. Creating digitally connected products turns them into valuable tools for inspection, reporting and communication. When leveraged to its full functionality, the combination of physical and digital technology is a game-changer for our industry.

To learn more about Authentix brand protection solutions, visit authentix.com.

Authentix® UK Ranks #6 on York’s Top 100 Business List

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Author: Kathryn Olivier

ADDISON, Texas, 8 April 2022 — Authentix, the authority in authentication and information services, has been ranked sixth in York’s Top 100 Businesses in an annual report published by The Press in conjunction with its partners, York St John University and City of York Council.

Moving up in three years from 50th to now 6th in York’s Top 100 Business List, the York-based Authentix team is proud to be a part of this list of significant businesses that have remained committed to investing in the local York economy. According to York St John Business School, a custom algorithm takes into account performance indicators such as turnover, profit, size and growth to determine the businesses that are key contributors to York’s professional landscape.

“We are honored to be a thriving part of the York business community. Being recognized in the York Top 100 Business List is a testament to our continued rapid growth and moreover to the Authentix team and all of our employees worldwide who are focused on our clients and helping to create a world of confident commerce,” said Kent Mansfield, Chief Sales and Marketing Officer. “Being named in the top 10 of these 100 excellent companies for two consecutive years, is an honor and our team is motivated to continue our company’s strategic focus to expand our reach as a global organization while still being grounded to the local communities we serve.”

The top 100 businesses were featured in a special supplement publication that was distributed along with the April 5th issue of The Press. The top businesses who were honored gathered at the university to launch the issue, network, and toast to the diverse range of businesses in York.

About Authentix:

As the authority in authentication solutions, Authentix thrives in supply chain complexity. Authentix provides advanced authentication solutions for governments, central banks, and commercial brand owners, ensuring local economies grow, banknote security remains intact, and branded products have robust market opportunities. The Authentix partnership approach and proven sector expertise inspires proactive innovation, helping customers mitigate risks, promote revenue growth, and gain competitive advantage.

Headquartered in Addison, Texas USA, Authentix, Inc. has offices in the North America, Europe, Middle East, Asia, and Africa serving clients worldwide. For more information, visit https://www.authentix.com. Authentix® is a registered trademark of Authentix, Inc.

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Using Data Collected in Brand Protection Programs

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Author: Kathryn Olivier

Protecting consumers and safeguarding your company’s brand identity and reputation is becoming increasingly challenging in today’s environment with the continued growth of counterfeit and diverted products entering the market. At the same time, consumers are taking a more proactive role in choosing to buy brands they know and trust, while expecting increased transparency in brand promise.

As supply chains become increasingly complex, brand owners are facing intense pressure to respond to traceability and transparency challenges by utilizing digital systems for collecting valuable data and analyzing and acting upon the visible trends to help consumers authenticate products at points of sale, or alternatively connect and engage with the brand owner directly via the web or app. A digital solution helps with monitoring product movement in the supply chain, as well as direct consumer feedback, to confirm legitimate or potential suspect product in the marketplace.

67% of consumers say brand trust has a great deal of influence over their buying decisions.

In todays connected marketplace, most companies already collect and use various forms of data analytics to drive ongoing business decisions and strategic initiatives. In fact, business action and decision making has become reliant on the use of data analytics to manage many day-to-day operations. Despite this growing reliance on data, most organizations have yet to apply the practice successfully when it comes to brand security. This can partly be attributed to the lack of reliable data available since the early adoption of digital track and trace capabilities for risk-based products is only beginning. The key to effectively using data in brand protection programs is to understand what data is available now, what data is needed that is not available, how to efficiently collect and analyze the data and lastly, what action can be taken based on this analysis to effectively reduce counterfeiting and diversion while simultaneously engaging directly with the consumer.

Data Identification

An enormous amount of meaningful data can be gleaned in digital tracking for brand protection programs including information about a product’s provenance, its journey through the supply chain, the location/date/time of associated transactions including consumer scan events, validation of authentication or suspected illicit activity, and even direct consumer marketing and engagement.

However, how to apply the data once collected can be different for each company. At Authentix, we collect supply chain and consumer interaction data from multiple sources and aggregate it into our secure cloud-based platform on behalf of our brand owner clients. From there we are able to configure rules and analyze data trends to provide our clients with complete visibility into the suspect events or grouped metadata revealing weak links or threats in supply chain operations that often point to product compromise.

Data Collection

The following are key areas for collecting data using digital track and trace technology.

  • Data Carrier Technology – includes multiple formats of barcodes, NFC and RFID technologies for supply chain tracking, purchase and post purchase consumer engagement, inventory movement, and theft prevention. These technologies vary greatly in terms of volume capacity, costs, application requirements and security levels, so it is important to evaluate the best types of code formats and integration to existing manufacturing and packaging processes that best meet the minimum needs that would produce a valuable return.
  • Track & Trace – can be accomplished during sourcing, manufacturing, distribution, and pre- and post-sale stages. During the printing, manufacturing or packaging process for example, the scope of implementation choices widen and we can provide multiple routes to enable tracking of product origin information, manufacturing location(s), production lines designation and more. Additionally, as the product nears closer to the point of sale, we’ll begin seeing authentication activity and the collection of meaningful data such as distributor and consumer interaction and engagement, and sustainability and circularity.
  • Authentication – in most digital track and trace systems, analysis of authenticity is often achieved via a smartphone. This can be by company inspectors using a proprietary mobile application all the way to the consumer who can interact with the product without having to download a mobile app. Using the Authentix DigiTrax™ track and trace solution as an example of direct consumer engagement, the smartphone user simply scans a proprietary and encrypted QR code which directs them to a custom URL experience that can include, among other things, the unique information associated with the individual product scanned. These consumer product scan events including geo location, date, time, product and product provenance information are submitted to the secure cloud-based DigiTrax platform where the information can be used to understand purchasing trends, market directly to the user, or allow the user to authenticate the product using proprietary codes or PINs. If designed for the purpose, the results of the authentication can be sent back to the user in real time. This technology also enables inspectors in the field and other key stakeholders to identify the authenticity of a product instantly using a more sophisticated mobile application. In addition, consumers may also use the DigiTrax platform to verify authenticity of other products or for the purpose of continuing engagement with brand owner purely for marketing purposes.
  • Online Surveillance and Enforcement – are methods, systems, and services used to identify, investigate and takedown unauthorized e-commerce websites that deal in illicit trade of counterfeit, diverted, or stolen products. This is accomplished through automated online tools and services such as marketplace monitoring, WeChat micro tasking, and machine learning which can identify risk levels, hot zones and image matching to police and eliminate unauthorized sales of product and illegal use of trademarks on the internet.
Putting Data to Use

Reliable and timely data feedback enables brand owners to quickly answer complex supply chain events, pinpoint trouble spots, and take corrective and even preventative action to reduce the instances and threats of unauthorized product entering the marketplace. Data can be used to assess multiple business-centric operations to increase sales and market share, acquire and build trust with new customers, and reinforce brand assurance, to name a few. In addition, as consumers become more reliant on smartphones for collecting and communicating information, brand owners can capture consumer data to tailor experiences and increase engagement and loyalty.

Using Data to Drive Success

Authentix customers are using valuable brand protection data and analytics in multiple ways with great success. In one customer success story, an international wine exporter faced counterfeiting and diversion issues in China, resulting in loss of consumer trust and risk to its strong market share and long term brand loyalty it had spent years building. Authentix helped the client implement a multi-layered digital authentication solution with covert and overt on-product features that flags, collects and analyzes all inspector and consumer scanning activity including the capability of retail product authentication by the consumer. The result? Over 150 counterfeit retail locations were identified and remediated. Also, through direct consumer engagement, loyal brand purchasers became more confident in product authenticity and the client was able to maintain premium pricing for their superior and quality products.

In another example, an international brand customer incurred online marketplace counterfeiting in Asia, putting consumer health, safety and loyalty at risk as well as decreasing revenues. Authentix helped the client implement a multi-phased online brand protection monitoring solution and services to identify and investigate the online sale of spurious product and locate complicit bottling and closure manufacturers involved in the illicit trading. Website takedowns were initiated, resulting a 90% reduction in fake products in Indonesia, 1,500 online listing takedowns in Malaysia, and 13 raids and enforcement actions conducted in China.

Start Big or Small. Just Start.

It’s important to point out that you do not have to implement a full scale approach to digital authentication initially and it’s easy to begin collecting and leveraging data – even if it’s just one product or product line for a particular geography. Alternatively, digital automation for brand protection programs can be implemented in a sweeping fashion as an end-to-end solution from the start with a full technology suite. Most clients choose to implement in logical steps based on risk assessment, ease of implementation, and to the most critical geographic areas. The key is to get a secure digital mark on your product and start the data collection process. Ultimately, it is how much data, the association of the data elements for analysis, and the conclusions and action you take that determines how much your brand protection program can be enhanced by bringing in digital track and trace automation. The key is to start, analyze, adjust, expand and continue until the data flow and insights provided are resulting in the development and refinement of actions and policies to take command of the risks faced each day.

Learn more about Authentix brand protection solutions, HERE.

Authentix Expands into Online Brand Protection Services

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Author: Kathryn Olivier

From Identification, Surveillance, Investigations, and Website Takedowns: Authentix now Provides Full Service Online Brand Surveillance and Enforcement

To expand its capabilities in digital brand protection for brand owners, Authentix has recently acquired Strategic IP Information Pte Ltd (SIPI), a leading online brand and content rights protection service.

For over ten years, SIPI has offered state-of-the-art services for brands to track unauthorized channels for counterfeit products through its proprietary online tools and array of customized services including physical enforcement, investigations, sample purchases, and taking down pirated listings. Using a team of dedicated analysts and sophisticated platform technology, we can promptly detect infringement and counterfeiting activity for rapid action and consolidated, insightful reporting for the 200 brand customers now serviced.

In the last two decades, counterfeiting has quickly grown from city sidewalks to the internet marketplaces. While e-commerce has opened new doors for traditional and start-up brands, it has also provided illicit traders lucrative access to a global customer base.  Online counterfeit goods now total an estimated $590 billion globally and according to a recent study by the European Union Intellectual Property Office, 1 in 10 online buyers has been deceived into buying a counterfeit product.

Tokyo Olympics – Example of Recent Target

As online marketplaces continue to be exploited by illicit traders there is a growing amount of peddling with convincing bootleg and falsified versions of branded products. This illegal activity increases during major global events such as the recent Summer Olympics in Tokyo for example. While there was ample licensed merchandise sold through the official online store of the Olympics, there was also falsified and unlicensed merchandise selling through illegitimate, third-party websites.

As Authentix/SIPI closely followed the action in the Olympic games, they also investigated licensed branded merchandise sold online, where it was discovered that marketplaces, social media and multiple 3rd party websites were offering unlicensed and infringing products. Using t-shirt sales as an example, the product offered on certain websites we investigated all displayed the Olympic branding TOKYO 2021. However, despite being held belatedly this year because of the COVID pandemic, the Tokyo Olympics retained TOKYO 2020, precisely because merchandise with the 2020 branding had been manufactured prior to the delay. Therefore, any merchandise bearing 2021 in the labels was quickly identified through automated means and was presumed to be suspect. To date merchandise bearing Tokyo 2021 is readily available on major marketplaces such as Aliexpress, Wish, Dhgate, ebay and Amazon. Discrepancies in branding and use of marks such as the TOKYO 2020 logo were also found to be compromised during our investigation.

There are many technological advancements such as product clustering, geo location mapping and machine learning based algorithms that can be used to find products compromised in the various marketplaces, discover major networks of illicit traders, and find many other forms of IP infringement. Once infringements such as the examples used above for the Tokyo Olympics are identified, viable and rapid action including shutdowns can be taken against the perpetrators, holding them accountable for their actions and helping to further prevent unauthorized products from being placed on the market.

To learn how Authentix Online Brand Protection Services can quickly work for your company’s on-line monitoring and enforcement needs, visit our website.

Meeting The Biofuel Compliance Challenge

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Author: Kathryn Olivier

By: Jeff Conroy, Chief Technology Officer, Authentix

Authentix is pleased to be included in the June/July edition of Tank Storage Magazine, a leading industry publication delivering the latest news and developments to the bulk liquid storage and terminal sector.

In our feature article, Jeff Conroy, PhD, Chief Technology Officer for Authentix, discusses the challenges and possible solutions for the quality assurance and source integrity of renewable biofuels which are increasingly relied upon to meet mandates greenhouse gas (GHG) reductions.

However, the production of biofuels from non-sustainable sources or energy intensive processes can lead to reduced environmental benefits or even an overall increase in emissions, so the pedigree of otherwise chemically identical biofuels becomes very important.

READ THE FULL ARTICLE HERE

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