Of all consumer goods, medicines, foods, and other tangible items bought and sold around the world every year, 8 percent are believed to be counterfeit.
Sound inconsequential? Well, consider that if counterfeit trade were a country, it would be richer than Australia. In 2008 worldwide counterfeit trade earned black market entrepreneurs a little more than $1 trillion, almost the exact amount of the gross domestic product of Mexico, the world’s 13th highest. And as more people around the world legitimately bypass traditional shops for Internet commmerce, sophisticated criminals find more chances to put knock-off goods into buyers’ hands.
At HP Labs in Colorado, director and chief technologist for the security printing and imaging program Steve Simske has a suggestion for minimizing the effects of high-tech fakes and keeping tabs on the sophisticated, computer-based trade in ersatz goods — printed labels.
Sound low-tech? Well, it is and it isn’t, as Simske will explain when he presents “Security Printing and Imaging: Stopping Counterfeit Products” at the Princeton ACM/IEEE meeting on Thursday, April 16, at 8 p.m. at Sarnoff. The event is free. For more information call 609-582-7086 or visit princetonacm.acm.org.
Simske, who graduated from the University of Colorado with a bachelor’s in biomedical engineering, began his career studying bone and immune systems after earning his master’s from Rensselear Polytechnic. His background in imaging led to HP, where he started in 1999 in the scanner division studying documents. As head of the security printing and imaging program he looks for ways to “improve the extraction of useful information from electronic sources — documents, repositories, and collections containing materials such as text, images, and speech.”
True colors. Printed labels, even the ones HP uses on its electronics and ink cartidges, which change color as you move them, are proceedurally simple to produce. You just need the right equipment. In practice, the color shifting HP uses on its labels is difficult to reproduce. Even if you could pull it off, the ink you buy and the ink HP itself uses are not the same — yellow dots will tell Simske whether it’s a real label.
Yellow dots are a subtle security measure, but HP’s labels carry a lot of overt information too. For starters, a genuine HP ink cartridge has a tracking number on the label, allowing customers to trace the origin and route of the cartridge. You could make up a number for your own phony label, but your customer will learn quickly that it is no good. And there is the placement of the labels, beneath the tear strip. Trying to remove the label or open the box another way will leave obvious signs.
Power to the people. In a physical store, customers who know what to look for can handle goods for themselves, and if they spot a fake, can walk away, report it, or buy it anyway. HP, Simske says, has been trying to use customers as a watchdog for its products by encouraging anyone who finds a questionable item to snap a photo of it with their camera phone and send it to the company. It is an easy – and free – way for any company to keep an eye on its brand.
The downside, of course, is that not everyone is motivated to report a fake. In fact, not everyone is even willing to snub a fake. Simske admits that in the game of brand security, some people seek out fakes because they showcase a popular name but for flea market prices. “Those are the people we can’t even reach,” Simske says. “We’re not even worried about them.”
When it comes to certain products — a Gucci bag or a pack of printer ink — a knockoff poses no immediate health risk. “People aren’t drinking our inks,” Simske says. Much more serious are counterfeit drugs. Though Simske admits that the makers of pharma knockoffs usually do put the right medicines in the right bottles, they are missing the vital quality assurance aspect. Watered-down or expired medicines generate a good black market income, primarily in poor areas of the world. But the victims of these drugs, believing they are getting the proper dosage of cancer or heart medicine, are everywhere. Remember the tainted Colgate toothpaste scare from 2008? It might not have been medicine, but it became a major public health issue and it proved how easily a bad product can infiltrate a global market.
Alibaba and the thieves. The critical area for quality control and brand assurance, says Simske, is in the middle of the distribution chain. This is where the fiasco of self-policing has led to a situation gone awry. Suppliers say they have a genuine article and buyers assume they are getting a genuine article, but the middleman, the vehicle for the sale itself, has washed its hands of responsibility.
The problem magnifies where online sales are concerned. Plenty of retailers (though Simske will not name names) cheat a little with HP inks by refilling cartridges themselves, he admits, but retailers are easy to cite if a law has been broken. Bigger problems come from the likes of eBay, and in particular its chief rival, Alibaba. “I’ve read where about half the items sold on Alibaba are counterfeit,” he says. “I believe it.”
While eBay is no stranger to phony goods, it at least operates out of an American office and could more easily be held accountable if there were a crime, and if it were directly responsible. Alibaba, based in China and favored in Africa and Asia, is less approachable. Besides, companies like Alibaba are not held liable for counterfeit goods in the first place.
Still, the problem for Simske is not so much that there is counterfeit merchandise being sold on eBay, it’s that eBay has repeatedly said it is impossible to effectively police its sellers. The results — sellers are left to police themselves, buyers are left to wonder how many of their items are the real deal, and the companies being copied have their credibility sapped by trade in phony goods.
Save us, Superman! Simske’s annoyance at online middlemen refusing to take responsibility is a frequent topic on his blog, www.communities.hp.com/online/blogs/securityprinting/default.aspx. He simply refuses to buy the idea that eBay can not monitor the products being sold through its site. While he acknowledges that eBay has removed thousands of sellers and millions of products after learning of shams, he chides the company for simply reacting to known problems, rather than taking steps to preempt them. And for saying that preemptive action is impossible.
“Self-contained perpetual motion machines are impossible,” he writes. “Protecting products through the requirement of full provenance records through registry with a trusted third party is possible. It’s just onerous.”
Digitized track-and-trade programs, operated and monitored by a third party, could be the answer, Simske says. One of eBay’s chief arguments for not being a good police force is that it never handles the merchandise being sold. But neither does it handle the money. Yet it operates with PayPal, a service it bought a few years ago that holds payments for goods in escrow until both parties are satisfied with a transaction. A more translatable example is Carfax, an independent online record that tracks the history of a vehicle’s repair and maintenance reports, sales, lifespan, mileage, and owners.
Then there are comic books. Comic book fans are a rabid bunch, and any attempt to pass off a fake copy of Detective Comics No. 27 as real would be easily spotted — and the would-be counterfeiter would be tagged for all fans to see. Simske knows that people are less attached to printer cartridges than to Bat-Man, but it shows that a network of checks, security, and notices to interested buyers can make a formidible barrier for anyone trying to sneak a fake through.
If nothing else, he says, traceable and verifiable — and publicly available — records of a sale can help build a case against counterfeit merchants. A major downside is that often a buyer, thinking he is getting the real thing, has no legal recourse when he finds he’s been duped. Especially by a foreign seller. But Simske says keeping track of these sales builds good cases, even abroad. HP works closely with police agencies around the world, and with Interpol, in its attempts to flush out and shut down counterfeiters.
Advertising as education. Advertising used be be just for promotion. These days companies hoping to protect their brands must advertise what makes those brands unique. HP’s cartridges come with an array of security features, but if no one knows to look for them they will do no good.
In Latin America HP delivers to stores with trucks that boldly display those safety features — the shifting color labels, security numbers, and tear strips. The company displays banners in stores and attempts to sway people to its website, where the information also is prominently displayed. As in the food and drug market, or even on checks, where tamper warnings are made obvious, HP takes no measure to hide the steps it is taking to ensure its authenticity.