by Ron Ducharme, vice president of business development, Covectra
Can you recall the iconic quote from the 1967 movie “The Graduate”? “I just want to say one word to you – just one word, plastics. There’s a great future in plastics.” That quote was right on the mark. Over the past 54 years, there have been a myriad of changes in the plastics industry. The changes range from the way plastics are manufactured to increased awareness of how plastics impact the environment and, most notably, how plastics replace traditional packaging containers and durables.
The reasons for the shift in how plastics are used can vary: lower-cost materials, lighter weight for the overall construction, easier and lower cost of manufacturing, increased versatility – along with an increased structural strength of plastics. Back in 1967, I doubt anyone would have thought soda containers, pouches for candy and medicine, squeeze tubes and the outer shell of some automobiles and other durable items could possibly be manufactured from plastic.
Along with the shift in the use of plastics, there has been a transformation in how commerce is conducted. That famous movie quote is relevant to this day. Plastics will have an impact on how brand owners protect their products from counterfeiting.
Growth in eCommerce
COVID-19 has forever changed the landscape for all industries, and it has fueled a dramatic rise in eCommerce. By the end of 2021, eCommerce is expected to grow to $4.13 trillion. Unfortunately, the dark side of this growth is the increase in counterfeiting.
There are over two billion digital buyers in the world. And, about 73% of all eCommerce will be conducted via a mobile device, and that totals roughly $3 trillion. This is an average of about $2,500 per person. The dark side indicates that up to 30% of these purchases have the opportunity to be counterfeited products. As an example, in 2020, the UK and European Union estimate they lost up to $1.7 billion in tax revenue due to counterfeit alcohol.
Plastics to the rescue
Around 2002, the labeling industry started to see an increase in white and clear plastic materials used for labeling. Previously, labels were PVC, polystyrene and polyester films as these were easy to print. However, to lower the costs and meet the increased demand, polypropylene and polyethylene were added to the films being utilized for labeling materials.
The 1982 Tylenol murders set the table for labeling material to be used to prevent tampering with containers. Why is this important? This use of labeling to prevent tampering led to the use of labeling for the prevention of counterfeiting and diversion.
To fully understand the concept of security labeling, one must understand the two levels of security. Overt security is the security a consumer is meant to identify. This can be in the form of a shrink sleeve over the cap or a simple skinny label that traverses over the top of the container showing the package still is sealed. Covert security is what brands do not want the consumer – or potential counterfeiter – to see. This can range from the tamper-evident cap seal under the container cap to a more specialized item, such as a hidden RFID antennae within the product or packaging.
For example, a clothing manufacturer experiencing a loss of profit and sales due to counterfeit pants being sold under its brand name decided to act. The manufacturer had a two-level security label created for the pants. The first level of overt security was a holographic image on the security label that was used simply as a diversion from the covert security. The second level – and covert security element – was the adhesive which had embedded fluorescent dye. Upon application of the label to the pants, the fluorescent dye would leave a trace on the slacks (which would eventually wash clean). The dye was detectable under the fluorescent lights in dance clubs and would illuminate the authentic brand. Although the labels were a bit pricy, the policing was somewhat inexpensive. As a result, the brand was able to shut down the counterfeiting.
Cost of protection
There is no question that there is a cost to brand security. Whether the cost is due to an increase in labeling expense, the implementation of a track and trace system, or the monitoring of the brand’s supply chain, the ultimate truth is the policing of brand security may not be the most expensive component. However, depending on the product, the cost of not employing a security protocol may be significantly higher.
Counterfeits can pose health risks
According to an article in the Sacramento Bee in 2018, a joint raid by the FBI and Los Angeles Police Department at The Santee Alley fashion district captured over $700,000 in counterfeit cosmetics in one day. Between April 2018 and May 2020, over 12,000 complaints were logged with the FDA over skin issues due to cosmetics. An analysis of the counterfeit cosmetics showed human and animal waste, along with arsenic and other dangerous chemicals.
Toyota revealed it found up to 30% of online automotive replacement parts “may be” counterfeit. If consumers order automotive parts online and they are substandard counterfeit parts and something tragic happens to the consumer’s family, who is responsible? For instance, I spoke with an auto body repair person who needed a replacement part for a folding rearview side mirror. The OEM part was about $1,400. The aftermarket part cost was about $800. Yet, he was able to find the “same” part online for just over $200. Although a rearview mirror may not be life-threatening, what if the repair person was purchasing brake pads or a new computer for a vehicle?
By implementing a supported track and trace system internally, along with an intelligent labeling security protocol, the responsibility for the counterfeit parts or pharmaceuticals easily can be traced. This system can provide valuable information regarding the incoming supply chain and the manufacturing process and then track the product to its final destination. By implementing a track and trace system along with smart labeling, these steps may prevent or eliminate expensive litigation.
Today’s counterfeiters are more sophisticated than in the past. eCommerce provides significantly more opportunities to sell fake products for a profit. As a result, multiple security levels are necessary to help fight counterfeit products.
Security labeling examples
Tamper evident – These range from the simple container closure to a more sophisticated labeling material that breaks apart when removed. These types of labels leave behind a residue showing the product has been tampered with – leaving a checkerboard or “void” image remaining on the container.
Holograms – A specific image is placed into or onto a film with a metalized coating to show the holographic image. Holograms are a static image, meaning many are manufactured at the same time all with the same features. Within a hologram, several layers of security can be placed, such as microtext, hidden messages and color-shifting properties.
Micro-taggants – These are tiny, engineered particles with a specific pattern. Using a single pattern for each individual product line protects and supports the product as being authentic. Specialty equipment may be required to identify and see these taggants.
RFID and NFC – RFID is single-direction transmission. RFID tags often are placed within an existing label, such as a box package, in an article of clothing or handbag. This technology is used in conjunction with an antenna typically seen at a store entrance, which sounds an alarm when the product passes between the antennas. RFID can be used in proximity up to 50’ if passive or 100’ if active. Active RFID does require a power source to expand to coverage. NFC technology is a two-way transmission between two electronic devices in proximity. An example of this is PayPal’s contactless payments.
Smart Labeling – No single source of security label can be used to prevent counterfeiting. Smart Labeling combines the use of both overt and covert technology. The overt technology utilizes a serialized QR code and the background patterns used to make each label unique. The covert technology is basically hidden in plain sight and is the specialized holographic flecks placed randomly within the label material. The app scans the QR code and then compares that code with the unique pattern and confirms the authenticity of the product labeled.
Plastics will continue to play a significant role in how companies protect the integrity of their products. The versatility of today’s package decorations expands brands’ ability to defend themselves from the growing threat of counterfeiters who stalk the online marketplace.
Ron Ducharme serves as vice president of business development at Covectra, a leader in track and trace solutions. He can be reached at [email protected].
