Your Phone — A Weapon Against Counterfeit Merch?
WHY YOU SHOULD CARE
Because buying fake products is not only a rip-off, it’s a safety issue as well.
By Joe P. Hasler
When it comes to fraudulent foodstuffs, no other product can match the rich history and big bucks of the fake olive oil game. The 4,400-year-old Ebla tablets include descriptions of royal inspectors scrutinizing the olive mills of ancient Syria on behalf of the king. The Romans employed an extensive system of labeled and sealed jars to prevent adulteration in the Mediterranean olive oil trade. Fast forward to 2017: Olive oil is still Europe’s most fraud-prone food. One expert estimates that as much as 80 percent of the extra-virgin olive oil sold in America is substandard — and a major driver of the Italian underworld’s $16 billion “agromafia” business. Beyond the financial impact, there’s also a significant health risk associated with any food product that isn’t exactly what it claims to be.
With so much at stake, it’s no surprise that this ancient industry is pushing forward with a new form of fraud-fighting tech. Late last year, in an effort to thwart counterfeiters and combat diminishing consumer trust, several Tuscan producers announced plans to deploy labels equipped with digital tags capable of confirming authenticity with the simple tap of a smartphone.
We can totally prevent counterfeiting if manufacturers are willing to embed [NFC] tags into their products.
Tony Rosati, head of innovation, TrustPoint
These tags rely on Near Field Communication, or NFC. It’s the same technology that enables services like Apple Pay and Android Pay, as well as the tap-and-go Oyster card used on the London Underground and the Bay Area’s Clipper card. Now, a diverse array of industries is looking at NFC as a way to fight the booming fake-goods market, which accounts for 2.5 percent, or $461 billion, of world trade, according to 2016 estimates from the Organization for Economic Cooperation and Development.
In his role as chair of the Security Technical Working Group of the NFC Forum — an industry organization comprised of the major players in the NFC ecosystem — Tony Rosati is an evangelist for the use of NFC as a foil to counterfeiters. According to Rosati, who is the head of innovation for the Ontario-based company TrustPoint, current anticounterfeiting is a combination of bar codes, paperwork, visual inspections and packaging. “All of these are weak systems,” Rosati says, and can easily be tampered with, circumvented or duplicated by expert fraudsters. “[Using encrypted NFC tags] solves that problem. We can totally prevent counterfeiting if manufacturers are willing to embed tags into their products.”
Paula Hunter, the executive director of the NFC Forum, also sees great potential for NFC in enhanced brand engagement. Tapping a tagged Maria&Donato handbag from Spain, for example, with an NFC-enabled smartphone not only confirms the bag’s authenticity, but it also directs the consumer to additional information about the brand and product and provides exclusive e-commerce opportunities. (Both Maria&Donato and Tuscan olive oil producers use NFC tags from the Norwegian company Thinfilm.) “I like to draw the analogy to politics, where you have the contrast of the politics of fear versus the politics of hope,” Hunter says. “There’s a lot of hope in NFC marketing. You have the potential to fight counterfeiting, yes, but authentication spells opportunity … when you can couple it with a service or a benefit [to the consumer].”
So, what could possibly slow the widespread adoption of this seemingly airtight solution to counterfeiting? One major consumer concern is privacy. Rosati notes that “when you start talking about embedding anything, people want to know, ‘Can I be tracked?’”
Then there’s Apple. Although its iPhones use NFC transmitters for the Apple Pay feature, unlike most other devices, they are not equipped to read NFC tags embedded in a product. Until that happens, don’t expect the average American consumer to go around tapping luxury handbags, fancy shoes or expensive bottles of Cognac.
Craig Tadlock, founder and CEO of GoToTags — a Seattle provider of software, hardware and physical tags — calls the Apple holdout “a today problem,” and expects the tech giant to eventually embrace the full potential of NFC. “It would be great if the iPhone could do it,” Tadlock says. “For marketing, brand engagement and product-affinity purposes, obviously the iPhone is a big deal. But the people who really care about this stuff are in the supply chain.”
Less expensive RFID tags, which cost a penny or less to deploy compared to 15 to 30 cents for an NFC tag, already are common in manufacturing, where they function as an electronic serial number — or a glorified bar code. Basically, they just show where something is as it moves through the supply chain. According to Tadlock, NFC tags are a more robust product, capable of transmitting additional information about a product and providing extra layers of security. They also have the potential to leverage the emerging digital ledger technology known as blockchain.
One company leading the way is Chronicled. The San Francisco firm recently introduced a product prototype called CryptoSeal, with potential applications in medical equipment, consumer electronics and even fine art. A particular market is pharmaceutical security, which requires total confidence in chain of custody and unquestionable provenance. Writing on the company’s blog, CEO Ryan Orr compared NFC-embedded, tamper-evident, blockchain-registered CryptoSeal to the wax seal and signet ring in days of yore: “The signet holder is analogous to the registrant of the CryptoSeal, the wax to the chip inside of the seal and the stamping of the signet [to] the signing of the CryptoSeal to the blockchain.”
So perhaps the solution for an ancient problem like counterfeiting is one rooted in the age-old technique of labels and seals. After all, it worked pretty well for the Romans.
- Joe P. Hasler, OZY Author Contact Joe P. Hasler