If you talk to anyone but perhaps the counterfeiter the consensus would be that counterfeit goods are a negative occurrence. The question I have been pondering as of late is where and how best to authenticate goods. More to the point, who should be responsible or interested in authentication? The logical answer is both the producer and the consumer should be interested, but probably for different reasons. The producer is interested in authentication so as to help ensure the integrity of the company’s supply chain. The desire is to ensure integrity at near zero cost so as to maximize profit and reduce cost. The industry standard approach to this seems to be use of RFID. The cost of RFID has reduced in recent years but the reality is that there are very real costs associated with RFID systems (tags, reader, power, network etc.). The more integrated the RFID system the more expensive it will be, and with it a greater cost to the consumer. The irony being that that added cost of the RFID system makes the lure of lower cost counterfeit good more attractive. There have been surprisingly few options to RFID systems that have emerged, despite the apparent lack of security with RFID. For example, fake RFID chips in passports are known to exist.

Perhaps the best case scenario is that of a low cost track-and-trace system that is monitored by the producer during transit and then activated (reported) by the consumer after the purchase? The motivation of the producer is as mentioned above, supply chain integrity. What is the motivation for the consumer to authenticate their purchase? In general, I believe that the consumer trusts that purchased goods are authentic, and is not motivated to report their purchase. Of course, this all changes if the consumer suspects they have purchased a counterfeit product. For example, how many times have we not sent in the registration information in on a newly purchased item? One option is to build in a simple ‘reward system’ so that the consumer is motivated to report their purchase to the producer. This option is the proverbial win-win situation where both producer and consumer potentially benefit. An interesting wrinkle to this scenario though is that rewards might be taxable by the IRS.

Both producer and consumer reporting of the flow of commerce helps assure an end-to-end secure supply chain but it does not fully thwart the counterfeiter. Multiple scenarios present themselves, for example, if counterfeit goods are able to be integrated with legitimate product supply chain. In that case the reporting data would itself might be compromised. Another scenario is where the counterfeiter manages to develop a bogus consumer reporting system, giving the consumer a false sense of security.

In addition to reporting/registering goods what is the answer? Probably the best option is to follow the ten steps recommended by the U.S. Department of Commerce and U.S. Chamber of Commerce:

  • Scrutinize labels, packaging, and contents
  • Seek authorized retailers
  • Watch for missing sales tax charges
  • Insist on secure transactions
  • Seek quality assurance in the secondary market
  • Report questionable spam and faulty products
  • Be vigilant when buying abroad
  • Teach your kids about counterfeits
  • Warn friends and family of illegitimate product sources
  • Trust your instincts

I note that recommendation #6 above is to report questionable products.