Dealing with counterfeiting and tampering: a primer on choosing security Labels
by Dr. Andrew D. Dubner

Industry data tells us that 5-7% of world trade, or approximately US $280 billion, is lost to counterfeiting each year, and that the problem is increasing.

To brand owners and packagers, this translates to lost revenue, damage to your reputation, and a risk to the safety of your end user consumers. The need to build more security into packaging to protect your products not only from counterfeiting, but also from tampering has never been greater. This much everyone can agree on. But how best to do so?

The short answer is that security labels can be a very effective way to authenticate your products or identify tampering attempts. To increase the chances that a particular label will be effective, however, you need to ensure that it fits with your business and addresses the specific fraud issues you are dealing with. For example, if your problem is the appearance of counterfeit goods on the market, a label designed to deter theft in the supply chain will not likely solve the problem.

Choosing the right security label begins with an understanding of your problem and the threats it brings to your business.

Understanding your security problem
Is the problem counterfeiting? Often referred to by other names like duplication or simulation, the term counterfeiting refers to a situation where products that are not genuine corrupt the legitimate supply chain.

For consumers, counterfeit products generally mean unrealised value - not getting what was expected. In some cases, counterfeiting can also pose a direct threat to consumer health and safety, a much more serious problem. For brand owners, counterfeiting means lost revenue. The negative impact of counterfeit products on consumers also means a loss of future business for brand owners, based on the perception of poor quality. Retailers do realise revenue from the immediate sale of counterfeit products, but like brand owners, are threatened by the possibility of lost future business based on unrealised consumer value.

Is the problem tampering? Alteration and substitution fall into the same category - a situation where changes occur to your products as they travel through the intended supply chain.

Like counterfeiting, tampering results in unrealised value for consumers. The disparity between what was received and what was expected may be even more tangible than in a counterfeit situation, however - consumers may receive empty packages, a substituted lower value product, or products that have been made unsafe. Retailers may be bigger losers in a tampering situation than in a counterfeiting situation - in addition to lost repeat business, they forfeit today's revenue through the return and replacement of goods. Brand owners stand to lose future business as a result of tampering.

Once you understand what your security problem is, it is also important to know where and how your products are being counterfeited or tampered with. This helps determine the kind of security packaging solution you require and can also prevent you from investing in programs that will be ineffective in combating your particular problem. Is the problem isolated to a particular geography, or is it global? Can the problem be isolated to a particular point in the distribution channel? In many cases, solving a localised problem can have a positive impact on global results.

Finally, it is important to consider who needs to be educated about the problem and the solution you plan to implement. How will your products be monitored? Are you relying on consumers to do the verification? When building your security program, don't forget to account for communication and training for those who will be performing verification functions.

Understanding your options
Armed with a good understanding of your specific issues, the challenge becomes sorting through the myriad of available security features to know which is the best authentication or tamper indicating label for your situation.

An authentication label is used to confirm, through the use of one or more authentication features, that the product reaching the consumer is a genuine product, and therefore is designed to address the counterfeiting problem.

Overt authentication features are those that do not require a tool for verification - they can be verified by the eye, or another sense like touch. An example of an overt feature is a hologram or colour shifting inks. Overt authentication features are often selected when the end user customer is the intended verifier, however trained investigators or customs officials may also be the verifiers of overt features. Overt authentication features are sometimes included on a label for their visual appeal, to enhance the appearance of the packaging.

Covert authentication features require a tool for verification, but the verification can be done in the field. A good example of a covert feature is one that can be seen with a particular kind of light, like 3M TM ConfirmTM retro reflective material. Covert features require tools and training, and are most often selected when the intended verifier is a trained inspector. Covert features, however, are sometimes selected when the aim is to have consumers verify the feature, generally when the verification tool is relatively inexpensive and can be included as part of the packaging or as a point-of-sale display.

Forensic authentication features also require a tool for verification, but unlike covert features, the verification often takes place in a laboratory environment or requires a sophisticated hand-held tool. Forensic features by their nature preclude verification by consumers, and are most often used in conjunction with covert investigations.

If your authentication label will not be destroyed when the package is opened and discarded, it should also include transfer resistance features. This prevents the authentication label from being removed from a genuine package and used on a counterfeit package. Transfer resistance can be difficult to attain - it generally relies on the use of very good adhesives, combined with a fragile film or security slits to make it likely that the label will tear if removal is attempted.

A tamper-indicating label such as the TamperGard Security Seal from 3M is used to identify, through visible changes to the label, attempts to open a sealed package, and is therefore designed to address the tampering problem.

Any attempt to remove, lift or cut the label results in an immediate and irreversible change to the label, alerting the consumer to the possibility of tampering.

To prevent a tampered package from being re-sealed with a counterfeit label, tamper indicating labels should also contain authentication features.

Turn to the experts
Building on more than 25 years experience with security materials and more than 75 years experience with adhesives, 3M offers a full range of security labels, and has provided customised brand and asset protection solutions to major customers in many industries around the globe.

Benefit from our expertise when you need to develop and implement a security program to address a counterfeit or tampering problem. Our proven step-by-step methodology starts with assessing and analysing your situation. We'll recommend options and help you choose and test a solution. We'll help you develop a roll out plan and then review and revise the program based on results.

For more information about how 3M Security Market Centre can help you combat counterfeiting and tampering, contact us today.

or visit www.3M.com/security