Can the Consumer Join in the Battle to Prevent Counterfeits Using NFC?
Brand owners are fighting the counterfeit war on three fronts: 1) Traditional on-the-ground investigation to find the counterfeiters in the supply chain, 2) Customs and boarder protection to stop counterfeits as they try and penetrate the country and 3) a new online threat to prevent counterfeiters from being sold directly to consumers on-line.
Consumers search online for authentic products at the very best prices. Unfortunately, they have no way to tell if they are purchasing a knockoff. Perhaps it is time for a change.
How big is the problem? We have a lot of data. U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement's Homeland Security Investigations (HSI) report $1.2 billion in counterfeit seizures in 2014 (23,000 seizures of fake products). This would indicate that on the ground investigation is very challenging.
How big is the problem online? We have data on that too. Alibaba removed 90 million fake goods from its online store ahead of its IPO. eBay removes thousands of fake items every week. It is estimated that 70% of products sold by Amazon third-party sellers are counterfeit. The problem is not limited to large ecommerce platforms. Federal law enforcement officials announced they'd seized about 700 website domain names selling counterfeit merchandise. It is also easy to circumvent customs and boarder protection because products are shipped in small quantities directly to the consumer.
How can consumer participate in the fight against counterfeits?
Radio Frequency Identification (RFID) has proven itself in the supply chain to improve efficiency. Near Field Communication (NFC) is RFID for mobile devices that enable consumer interaction. It is gaining popularity for mobile payment (Apple Pay and Android Pay). The NFC Forum introduced an open, interoperable security standard for NFC tags that guarantee the authenticity of the tag. This means that any consumer can check the authenticity of an item that carries an NFC tag. As a consumer I can check to see if the item is in fact authentic with my smartphone. If an item is not authentic then I can do something about it. I can return it and report the abuse. Online fraud would be quickly thwarted if consumers were participating.
As a bonus the NFC tag connects me to the brand owner via the Internet. It's a great way to get product support, updates, promotions, etc.
What are the downsides to NFC?
- There is definitely a cost to adding NFC tags to products. NFC tags have to be embedded in products somehow but there are lots of lessons learned from RFID tags. Economies of scale will drive this down to pennies per item tagged.
- NFC is relatively new to smartphones in the last few years. However, it is rapidly being adopted for payment (Apple Pay and Android Pay). In Japan and London, NFC-enabled phones are also used to access to public transportation. I believe young internet-savvy consumers will get this very quickly. Just tap and go.
- Can a consumer be tracked with NFC technology? This depends on what is on the NFC tag. The Signature standard does not define what is signed. It certainly can be made so that users can't be tracked. The process of taping an NFC tag is completely voluntary for the consumer. If a URL is on the tag then that can be tracked in tools like Google Analytics just like any URL.
Is NFC worth it for consumers? Well, I'm a consumer and it would be fabulous to check that the item I bought online was authentic. And it would be nice to receive product support, updates and the occasional promotion for being a loyal customer.