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How can you detect and prevent counterfeit versions of your products?

Counterfeiting is the illegal act of creating fake goods or products that mimic genuine brands. It can lead to substantial losses in sales, severe damage to brand reputation, increased customer dissatisfaction, and, most critically, pose serious risks to consumer health and safety.

In some industries, such as pharmaceuticals or food, counterfeit products can directly endanger lives. This infringes upon copyright, trademark, and intellectual property rights, undermining years of investment in research, development, and brand building.

 

The impact of counterfeiting extends beyond immediate financial losses. It erodes consumer trust and loyalty, potentially causing long-term damage to a brand's market position. But how can you protect your brand from counterfeit and other fraudulent activities?

 

SICPA, with its century-long expertise in security solutions, combining material, digital and data science technologies, has helped companies worldwide prevent counterfeiting, thereby enabling them to retain their brand reputation and ensure consumer safety. A Swiss private company, SICPA is also well known for protecting the majority of the world’s physical banknotes and supporting the effective governance of nations.

 

In this article, we discuss how product counterfeiting is affecting businesses globally, the methods to detect it, and practical tips on how to prevent it, ensuring the continued success of your business in an increasingly complex marketplace.

How Counterfeiting is Affecting Global Trade?

 

Counterfeiting not only undermines legitimate businesses but also poses significant risks to consumers and economies worldwide. Recent statistics paint a concerning picture of the counterfeiting problem's magnitude.


According to the latest joint report by the European Union Intellectual Property Office (EUIPO) and the Directorate-General for Taxation and Customs Union (DG TAXUD), titled 'EU enforcement of intellectual property rights: results at the EU border and in the EU internal market 2022', the scale of counterfeiting is staggering.

 

These figures underscore the persistent and widespread nature of the counterfeiting problem, highlighting the need for continued vigilance and improved anti-counterfeiting measures:

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Counterfeiting has a negative impact on multiple stakeholders, with consumers being the most critical of them. Here are the various industries where counterfeiting is causing a threat to consumers and the other parties involved:

  • Pharmaceuticals: Counterfeit medications not only lead to substantial financial losses for pharmaceutical companies but also pose severe health risks to consumers. The World Health Organization (WHO) estimates that close to $83 billion worth of counterfeit drugs are sold annually, and one in 10 medical products circulating in developing countries are substandard or fake.

     

  • Consumer Goods: Luxury brands and fashion houses are particularly vulnerable to counterfeiting. The sale of fake designer goods, clothing, and accessories can lead to significant revenue losses and brand dilution for authentic manufacturers.

     

  • Electronics: The electronics industry faces substantial challenges from counterfeit components and devices. This can often lead to safety issues with many cases of short circuits reported - resulting in consumer injuries.

     

  • Automotive: Counterfeit auto parts can result in accidents and deaths in some cases.

     

  • Food and Beverage: Counterfeit food and drink products not only impact the bottom line of legitimate producers but also pose serious health risks to consumers. For example, several cases of death have been reported due to the consumption of illegitimate alcoholic products.

     

Addressing the global counterfeiting problem requires a multi-faceted approach involving governments, businesses, and consumers. Enhanced border controls, stricter penalties for counterfeiters, improved supply chain tracking, implementation of product authentication technologies, and increased consumer awareness are all crucial elements in the fight against this global threat.

Methods to Detect Counterfeit Versions of Products in the Market

As counterfeiting techniques become increasingly sophisticated, businesses must employ a variety of methods to detect fake versions of their products in the market. Here are some effective strategies to identify and track counterfeit goods:

 

Best practice #1
ONLINE MONITORING TOOLS

In today's digital marketplace, online monitoring is an effective method for brand protection. Specialised software can track unauthorised listings across e-commerce sites, social media platforms, and online marketplaces. These tools use advanced algorithms to detect suspicious listings, unauthorised use of trademarks, and other indicators of counterfeit activity.

Key benefits of online monitoring tools include:

  • Real-time alerts for potential infringements
  • Automated takedown requests for infringing listings
  • Data analytics to identify trends and hotspots of counterfeit activity

 

Best practice #2
USING A COUNTERFEIT DETECTION DEVICE

Advanced technology plays a crucial role in the fight against counterfeiting. Counterfeit detection devices are a game-changer in this regard. They use a range of technologies, from simple visual identifiers to more complex chemical or digital markers, to verify the authenticity of products quickly and accurately.

The general features of counterfeit detection devices include:

  • Portable, handheld scanners for field use for professionals
  • Integration with mobile apps for easy authentication
  • Ability to detect both human-verifiable overt features (visible anytime, anywhere) and specialised covert security elements

 

Best practice #3
CUSTOMER FEEDBACK

Your customers can be valuable allies in detecting counterfeit products. Pay close attention to customer complaints, especially those related to:

  • Unexpectedly poor product quality
  • Unusual pricing (significantly lower than normal)
  • Packaging discrepancies or errors
  • Unexpected side effects (particularly crucial for pharmaceuticals and cosmetics)

Implement a system to collect, analyse, and act on customer feedback promptly. This could include dedicated hotlines, email addresses, or social media channels for reporting suspicious products.

 

Best practice #4
MARKET SURVEYS AND TEST PURCHASES

Proactive market research can help identify counterfeit products before they become widespread. Consider these strategies:

  • Conduct regular market surveys in high-risk areas
  • Hire professional investigators to perform test purchases from unauthorised sellers
  • Analyse purchased products to verify their authenticity with counterfeit detection devices

This approach not only helps detect counterfeits but also provides valuable evidence for potential legal action against infringers.

 

Best practice #5
COLLABORATING WITH DISTRIBUTORS

Your authorised distribution network can be a powerful asset in detecting counterfeit activity. Strengthen your relationships with distributors and implement the following practices:

  • Provide training on how to identify genuine products and spot counterfeits
  • Establish clear communication channels for reporting suspicious activity
  • Monitor sales patterns and investigate any unusual fluctuations
  • Create a system for distributors to verify the authenticity of products they receive

By fostering open communication and collaboration with your distribution network, you can create a robust early warning system for counterfeit products.

 

A combination of these methods will significantly enhance your ability to detect and respond to counterfeit versions of your products in the market. The key to effective counterfeit detection is a multi-faceted approach that leverages both technology and human intelligence.

Preventive Measures to Combat Counterfeiting

 

Protecting your brand from counterfeiting requires a multi-faceted approach. Here are some key measures that businesses can implement to prevent counterfeiting.

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Best practice #1
TRADEMARK REGISTRATION

One of the fundamental steps in protecting your brand is registering your intellectual property. This includes:

  • Trademarks: Register your brand name, logo, and slogans
  • Patents: Protect your unique inventions and technological innovations
  • Industrial Designs: Safeguard the visual design of your products
  • Licenses: Properly document and register any licensing agreements

Registering your intellectual property provides legal protection and makes it easier to take action against counterfeiters. It's advisable to register in all countries where you conduct business or plan to expand.

 

Best practice #2 
ANTI-COUNTERFEIT TOOLS FOR E-COMMERCE

Leverage anti-counterfeiting solutions and programs offered by various platforms and organisations. For example:

  • One program helps brand owners protect their registered trademarks on a major e-commerce site, offering tools for reporting violations and proactive brand protection measures.
  • Another program allows intellectual property owners to report listings that infringe on their rights.
  • A different platform enables brands to submit takedown requests for counterfeit listings.

These tools can significantly reduce the presence of counterfeit products on major e-commerce platforms.

 

Best practice #3
SUPPLY CHAIN MONITORING

You can strengthen partnerships with trusted suppliers and conduct regular audits to ensure compliance with quality standards and anti-counterfeiting measures. Make use of robust track-and-trace systems to monitor products throughout the supply chain, providing real-time visibility into each item's journey from production to point of sale.

By fortifying your supply chain with these multi-layered security measures, you create a formidable defense against counterfeiting and bolster consumer trust in your brand.

 

Best practice #4
TRAINING EMPLOYEES AND PARTNERS

Education serves as a powerful tool in the fight against counterfeiting, creating a network of informed stakeholders that significantly enhances your ability to detect and prevent counterfeiting.

Conduct regular training sessions for employees, particularly those in sales, marketing, and quality control, to ensure they're well-versed in identifying genuine products and spotting potential counterfeits. Extend this education to your partners, distributors, and retailers, providing them with the knowledge and skills necessary to distinguish authentic items from imitations.

 

Best practice #5
CONSUMER EDUCATION

To facilitate customer education, provide clear information on your website about how to verify product authenticity, ensuring customers have easy access to this vital knowledge. Leverage social media and other communication channels to educate consumers about the risks associated with counterfeit products, raising awareness about the potential dangers and consequences.

Additionally, consider creating educational campaigns that highlight the unique features of your products, helping customers distinguish between authentic items and imitations.

 

Best practice #6
SECURITY AND AUTHENTICATION FEATURES

Incorporate difficult-to-replicate security elements into your products and packaging:

  • Special codes: Unique identifiers that can be verified online or through an app.
  • Invisible inks: UV-reactive inks that are only visible under specific light conditions.
  • Microprinting: Tiny text that's difficult to reproduce without high-quality printing equipment.
  • NFC tags: Near Field Communication tags can be embedded in products and scanned with smartphones for verification.
  • Dedicated apps: Develop a branded app that includes authentication features, product information, and a way for customers to report suspected counterfeits.

 

The key is to use a combination of overt (visible) and covert (hidden) security features to make counterfeiting as difficult and unprofitable as possible. These can help businesses significantly prevent counterfeiting and protect their brand integrity. Remember, the fight against counterfeiting is ongoing, and strategies should be regularly reviewed and updated to stay ahead of counterfeiters who are constantly coming up with new ways to produce imitations and fakes.

 

Best practice #7
LAW ENFORCEMENT

Develop robust collaborations with local, national, and international law enforcement agencies, including customs officials, police forces, and specialised units like Homeland Security Investigations (HSI). These partnerships are crucial for:

  • Intelligence sharing: exchange vital information on counterfeiting trends, known offenders, and emerging threats.
  • Joint operations: coordinate raids, seizures, and investigations to disrupt counterfeit supply chains.
  • Training and capacity building: provide law enforcement with product authentication expertise and stay updated on legal procedures.
  • Border control enhancement: work closely with customs to improve detection of counterfeit goods at entry points.
  • Legal support: assist in building stronger cases for prosecution, increasing the deterrent effect on counterfeiters. By leveraging the authority and resources of law enforcement, brands can significantly amplify their anti-counterfeiting efforts and create a more formidable defense against illegal trade.

SICPA – LEADING THE FIGHT AGAINST COUNTERFEITING

Product counterfeiting remains a significant threat to businesses worldwide, impacting global trade, consumer safety, and brand integrity. The staggering number of seized counterfeit goods underscores the urgent need for robust anti-counterfeiting measures.

 

To help address this issue and help brands, SICPA has made huge strides in this field by developing new-age anti-counterfeiting technologies and is working closely with some of the largest brands in the world. By doing this, SICPA is promoting ethical business practices and creating a positive impact on global trade and the economy.

 

Learn more about our product and brand protection capabilities here