Winning the Fight Against Counterfeiters in the COVID-19 Era

With stay-at-home restrictions easing across the country, what does the future landscape of retail look like? What do consumers face when ordering products online? We do know with the global pandemic that e-commerce has skyrocketed. Unfortunately, with the shift to e-commerce, we've also seen massive amounts of counterfeit products as well as products that were diverted being sold. This activity not only diminishes profits in an already difficult retail environment, but makes reinvesting in companies nearly impossible.

A study commissioned by the International Chamber of Commerce's (ICC) Business Action to Stop Counterfeiting and Piracy (BASCAP) and the International Trademark Association estimates that the total global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022. More than 25 percent of consumers have unwillingly purchased counterfeit goods online.

Re-Establishing Trust With Consumers

Two important concerns for a retailer are how to regain the consumer’s trust and to be as transparent as possible. With increasing technology in the consumer’s hands, the consumer is the most powerful policing force a retailer can use to develop trust and brand loyalty. The use of mobile technology by the consumer helps track, trace and authenticate products purchased — whether it's online shopping with in-store pickup or online shopping and home delivery. The transparency of a track-and-trace system policed by the consumer will add integrity and trust to the purchase.

Tracking and Tracing Products With Serialization

Along with a security label, a track-and-trace system that instantly verifies that the product information is valid is needed. Widely used in the pharmaceutical industry due to the enactment of the Drug Supply Chain Security Act (DSCSA), which requires that all pharmaceuticals be serialized, track-and-trace systems are gaining traction in consumer goods. Track-and-trace systems use unique product identifiers (e.g., serial numbers) to track individual products throughout the supply chain, from production to end consumers. It also helps manufacturers significantly reduce counterfeiting by ensuring products can be easily identified. Modern track-and-trace systems are cloud-based and provide 24/7/365 access for product verification. 

Intelligent Next-Generation Labeling

The least expensive and most effective way to help rebuild trust is in product labeling. In the past, most security applications used invisible or covert technology. Now, the most effective labeling technology solutions against counterfeiters are multifaceted and, therefore, exceedingly difficult to replicate. They combine both overt/covert labels into the package decoration, incorporate unique holograms, take a fingerprint of the label, leverage GS1 barcoding for serialization, and utilize the consumer’s smartphone and an app to authenticate the product.

The basic tamper-evident label only lets the consumer know if the product has been tampered with — e.g., the cap has been removed or the container has been opened. With these labels, a “void” pattern or some residual has been left behind. The need to outsmart even the best counterfeiter can be difficult. Next-generation labeling combines overt and covert technology into the label in such a way that the label is nearly impossible to counterfeit.

Consumers can use their mobile device to scan the label’s unique barcode, which reveals hidden information that's analyzed and validated to determine the product’s authenticity. Within an instant, a consumer will know whether the product is fake or not. The GS1-certified barcode allows the consumer to track and trace the entire trip the product took through the supply chain to get to them. When combined with a unique fingerprint of each label, the consumer can access a landing page or a loyalty program for the selected product. When consumers have tools to authenticate products instantly, they will feel less anxiety shopping online and boost their trust in retailers and brands, creating the transparency required to rebuild loyalty.  

Ron Ducharme serves as vice president of business development at Covectra, a leader in track-and-trace solutions. Ron can be reached at rducharme@covectra.com.