E-commerce has made a nearly infinite variety of goods and services available at the click of a mouse. Increasingly, when they need a new TV, a new pair of shoes, to refill their medications, or get a new car seat for their child, people are turning towards online marketplaces like Amazon and eBay. But when those products arrive on the doorstep, how are folks supposed to open the package and feel confident that that TV, or those shoes, or that medication, or the new car seat are genuine? In an era of increasingly sophisticated counterfeiting and illicit activity, the answer is a combination of implementing security and transparency best practices at the platform level, along with expanding the adoption of physical security solutions at the individual unit level and improving public education about the use and function of physical security features.
There is little debate about the endemic nature of counterfeiting in the global marketplace. A recent report by the Department of Homeland Security (DHS) cited research from the Organisation for Economic Co-operation and Development (OECD) showing that the value of counterfeit goods traded internationally has increased by 154 percent between 2005 and 2016, from $200 billion to $509 billion. Counterfeiting activity is pervasive across multiple industry sectors – including apparel, electronics, and pharmaceuticals – and, along with more ‘traditional’ methods of counterfeiting and distribution, it is powered by the very same innovation that promises greater convenience and lower costs for consumers - the rapid growth of e-commerce, particularly third-party marketplaces.
As the sophistication and prevalence of fake goods make it more difficult to differentiate authentic products from counterfeit ones. As a result, governments, businesses, and consumers face very real threats to public health and safety, national security, and economic growth. Fake pharmaceuticals that are nearly indistinguishable from genuine products pose an imminent risk to public health and safety; the infiltration of counterfeit products into sensitive supply chains like defense threatens to undermine our national security; and the economic cost is staggering - it’s estimated that by 2022, counterfeit goods will displace more than $1 trillion in global sales from legitimate companies. These broader threats are reflected in the experiences of individual consumers – depriving them of resources expended on, at best, inauthentic products and, at worst, products that could put them and their families in danger.
So, in the face of this extensive, sophisticated counterfeiting, what can be done to architect trust across global supply chains – all the way from when the product is manufactured to when it shows up on the doorstep? How can we ensure that anyone – without sophisticated technology or resources - can look at a product and know whether it is authentic?
In its recent report, DHS focuses primarily on how government agencies can update their enforcement frameworks to cover illicit e-commerce activity, and how companies with online platforms can effectively identify and eradicate counterfeit goods being sold through their marketplaces. However, the response to increasingly widespread counterfeiting cannot be limited to better regulation of the platforms through which fake goods are sold. Along with stronger accountability and the implementation of best practices at the platform level, a critical third leg of the stool are physical product security solutions implemented by manufacturers and brand owners that allow anyone to more readily distinguish legitimate products from counterfeit ones at the unit level.
Today’s cutting-edge technology enables governments and businesses to leverage a full range of product security solutions, from overt markings that allow for quick, visual identification of products to covert solutions that embed security at the molecular level, which paired with secure digital codes allow for traceability and support accountability across the supply chain. Counterfeit-resistant product security features – like SICPA’s overt QUAZAR® solution - are a means of addressing counterfeiting across both ‘traditional’ and e-commerce platforms. Many leading companies already use physical product security features, and more widespread adoption – especially on what DHS deems “high risk products,” like medications, infant formula, and electronic components – coupled with greater consumer education about what to look for, would complement platform-level efforts to eradicate the distribution of counterfeit products.
As counterfeiters become more sophisticated, and increasingly use online platforms to dramatically expand the marketing and distribution of counterfeit products, continued innovation and collaboration on the part of governments and businesses is essential to building trust with individual consumers, and to protecting public health and safety, our national security, and our economy. Taken together with stronger enforcement frameworks and increased efforts to identify illicit actors, physical product security features must be leveraged to ensure greater transparency and accountability across complex supply chains, and public education must be expanded to ensure that consumers are informed about the nature of physical security features and what to look for, in order to provide greater confidence at the point of sale.
To learn more, visit: https://brandprotection.sicpa.com/