Counterfeiting is a worldwide epidemic that is becoming increasingly difficult for luxury brands to ignore. In 2016, U.S. law enforcement agencies seized 31,560 shipments containing counterfeit goods at a value of $1.4 billion had they been genuine. A large percentage of those goods included high-end luxury items, such as handbags, jewelry and watches, perfumes, cosmetics, and wines.

There is also growing counterfeit activity for luxury items on social media platforms. A 2016 study, “Social Media and Luxury Good Counterfeit: A Growing Concern for Government, Industry And Consumers Worldwide,” concluded that 20 percent of 750,000 posts on Instagram about top fashion brands featured counterfeit or illicit products.

The counterfeit challenge is also prevalent in a scheme commonly known as warranty fraud. Crafty perpetrators buy an authentic product from the retailer, return a fake to the store, and then sell the authentic product for a profit online.

For example, a Virginia woman was sentenced in 2016 for reselling authentic designer bags online after returning a fake to the department store. The scheme defrauded more than 60 department stores in 12 states of more than $400,000, according to the U.S. Attorney’s office.

The concern for luxury brands is real. Customers pay good money for high end products and want to be sure that they’re getting the real thing. Retailers don’t want to be defrauded, and brands stand to lose millions of dollars and a loss of reputation if customers spend their money on a fake.
 

Strategies to Curb Counterfeiting

Packaging continues to play a central role in helping to curb counterfeiting so long as brand protection used does not negatively impact the shelf appeal of the package design. This is especially true for luxury goods.

Luxury brands benefit by not utilizing some common overt brand protection solutions such as a hologram, which can be easily copied. Printers can instead incorporate security features and marks directly on packaging that consumers wouldn’t recognize.

Consumers have proven to be an unreliable resource in authenticating whether a product is real or fake, but almost all of them have an important tool that could help in the fight against counterfeiting right at their fingertips—a smartphone.

By adding a simple mark, which can be as small as 1/8-inch by 1/8-inch, to an existing package design, label or tag which is sewn directly into the product, such as a handbag or apparel, consumers can use their smartphone to verify product authenticity. By performing such an action, the consumer is also sending data to the brand which can be used to understand consumer behavior and create an extensive repository of data on the product in the field.

By using crowdsourcing techniques, brand owners effectively establish a massive force of brand inspectors in the field. The generated data helps to pinpoint counterfeiting problems and allows the brand to target for further action. If there are 10 failures of product authenticity in a single store, there is a good chance that the retailer ended up with a counterfeit product shipment.
 

Hiding Marks From Counterfeiters

Authenticity strategies like the one described above can also be performed covertly. For example, a consumer could be compelled to scan to register a product or to download a coupon for a product on the shelf. The product is being authenticated, but the result may never be made visible to the consumer. Instead, they receive the coupon or register the product while the brand receives the data on authentication.

Retail stockers or investigators can use a similar technique by scanning some products to ensure they are real. This type of technology enables retailers to potentially help stop a counterfeit product from making it to shelves. Similarly, in the warranty fraud example, retail workers can scan the product upon return to ensure authenticity.

The advantages for brands are significant. They can build a mobile engagement strategy while at the same time collecting data, securing their product line, scanning and registering the product instantaneously, and even automatically obtaining photos of counterfeit product.

Multi-layered Approach

It is important to note that there is no “silver bullet” technology to brand protection, and different products require varying levels of security. A flexible and multi-layered approach, which combines several overt and covert security technologies on one package or directly on the product, may be advisable. It is up to the brand to develop a strategy and work with vendors to create an approach tailored to its individual needs.

Other overt features that can be used on a package that are clearly visible and do not require detection can include: color shifting inks that appear to change color when viewed at an angle, metachromic inks that seem to change color based on the light source, and thermochromic inks which change color based on temperature.

Covert solutions offer additional security when paired with overt solutions. They are often implemented for internal or trusted personnel to use as a second line of defense. First-level covert solutions include invisible fluorescent inks, which are invisible in daylight but exhibit distinct fluorescent shades on exposure to UV light. Colored fluorescent inks are visible in normal light but have a strong fluorescence under UV light.

High-level covert solutions will contain some form of taggant that is only visible or detectible through more sophisticated but simple-to-use hand-held readers, which range from laser pens to proprietary readers with controlled distribution. Through the incorporation of forensic markers, suspicious packaging can receive laboratory analysis, which can not only play a very important role in identifying a fake, but also serve as evidence in courtroom situations.

Covert images can also be encoded into original art on the packaging. One of the advantages of this is customized messaging, where multiple images can be hidden as words, logos or pictures. Implementation is simple since no special inks or print techniques are required.