De La Rue publishes paper - Brands under attack: how to fight against the fakes

De La Rue publishes a new paper on “Brands under attack: how to fight against the fakes” outlining its position on Brand protection. A copy of the document is as follows:

Brands under attack: how to fight against the fakes

By Robin MacKenzie, Marketing Director, De La Rue

Never before have brands and consumer goods been so vulnerable to potential attack from fraudsters around the world.

With more globalised supply chains, the explosion of e-commerce and the increasing sophistication of counterfeiting techniques, the integrity of products across many different sectors are at risk of being compromised. Everything from children’s toys to pharmaceuticals are being targeted, which not only jeopardises brand reputation, in turn rocking consumer trust and loyalty, but also has potentially serious implications for the health and safety of customers.

Counterfeiting also has a clear and detrimental effect on both national and international economies, with the United States alone estimated to be losing up to $600 billion each year to counterfeit goods, software piracy and the theft of copyrights. The counterfeit market is also growing rapidly every year and is set to reach US $2.3 trillion by 2022.

With the increased sophistication of counterfeiters, more complex supply chains and the proliferation of sales channels, brands and products need greater protection than ever before. This means that brand owners must have a clear and detailed understanding of the journey of their products from manufacturer to consumers, especially as there are six potential areas of attack that they need to be aware of.

At De La Rue, we have identified three in the ‘black’ market (where goods are exchanged illegally) and three in the ‘grey’ market (where goods are sold outside of authorised distribution channels):

Black Market

  • Counterfeit & Pirating
  • Theft
  • Tampering and Adulteration

Grey Market

  • Overproduction
  • Diversion
  • Returns and Warranty Fraud

Most at risk are those products and brands that are sold across online platforms, with studies suggesting that as much as 20% of the products purchased online are counterfeit and pirated (in comparison to 5% of goods sold elsewhere).

A few of the larger online marketplaces have recently begun to adopt various tracking technologies in an effort to show consumers that they are taking a more proactive stance to this problem. Unfortunately, these measures are limited in scope and only address particular aspects of the six points of attack mentioned.

Successful anti-counterfeiting solutions must address all forms of attack across both the ‘black’ and ‘grey’ markets, as e-commerce continues to provide rich opportunities for criminal activity to grow and flourish. In order to tackle all the identified areas of attack, a comprehensive and holistic approach is needed, these are the five areas De La Rue has identified that must be addressed:

  1. eVerification codes need to be made more unique - Commonly known as Track and Trace, in its simplest form it is a barcode printed on the product package which connects to a central database. Unfortunately, the barcode alone does not provide failsafe protection from replication so more sophisticated code solutions, that make physical and digital cloning more difficult, need to be implemented.
  2. Checks across the entire supply chain need to be applied as standard practice - Brand owners should be able to ensure that their authentic products are delivered to the customer in the same state as they are distributed. Products pass through many hands in a typical supply chain, many of which are not controlled by the brand owner, leaving room for unreliable scanning and authenticity verification along the way. In fact, historic studies have shown that eVerification scan participation rates are less than 1% once they reach the customer! Stricter enforcement of scans and tighter controls are key to ensuring the authenticity of products throughout the supply chain.
  3. E-commerce retailers need to apply an authenticity model to their products - While many online platforms have been helping to remove counterfeit listings, they do nothing to prevent ‘grey’ market listings. E-commerce retailers must find a way to authenticate their products, helping consumers understand how to spot an original compared to a fake.
  4. Authentication solutions need to blend both digital code and physical identifiers to become more secure - Experience has shown that the most effective method of addressing ‘black’ and ‘grey’ market threats is to blend sophisticated markers that are readable by humans, with the latest in eVerification and tracking technologies. Neither alone can offer the full protection brand owners need.
  5. Consumers need to become a first line of defence - In recent times, brand protection companies have begun to enlist savvy, educated consumers who are eager to join the fight against counterfeiting. While many brand owners are hesitant to publicly acknowledge the possibility that their products could be counterfeited, the most successful brands realise that most consumers already assume that almost all products are vulnerable to counterfeiting. Consumers are therefore being actively encouraged to report counterfeit goods, helping the brand owner maintain loyalty to the brand.

In an increasingly online world and globalised economy, brand owners must be aware of all the lines of attack their products are under across the black and grey markets, especially those outside the authorised supply chain.

Our five-point strategy demonstrates a comprehensive brand protection solution that is simple, intuitive and effective, giving brand owners the protection and reassurance they need and consumers confidence to shop without the fear and dangers of being duped.

 

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