RFID tagging
How RFID solutions can support
the fight against fake goods

Introduction
Counterfeiting and piracy are a global epidemic,
and over the past decade these criminal acts
have been growing at an increasingly rapid rate.
By 2022, studies have estimated that goods
worth up to $1.95 trillion (€1.57 trillion) could becirculating in the global market, costing the world
economy up to $1.87 trillion (€1.51 trillion) anddisplacing more than 5 million legitimate jobs.
This trend of accelerated growth can be linked toincreasingly complicated and lengthy supply chains,
and the increasingly globalized nature of trade.
With grey market trade thriving in numerous
jurisdictions, brand owners are seeing their value
undercut and their reputation diminished. To tackle
these issues, industry should look to the future and2find more effective and secure ways of identifying andtracking authentic goods.
This paper looks at the benefits of RFID tagging andhow the latest technology of micro-RFID tags can be
integrated into products, enabling businesses to better
track their entire operation during the supply chain. Withsecure authentication, real-time alerts and the potential
to integrate trackers and sensors relaying crucial locationand condition information, RFID can empower firms tofight back against a growing tide of counterfeit goods
and the rampant and costly grey market.

By 2022, studies haveestimated that goods worth
up to $1.95 trillion...could
be circulating in the
global market

The scale and cost of counterfeiting
Counterfeiting is a global issue - and one that appears to be on the rise.
While the underground nature of this typeof theft can make the true scale of the issuedifficult to measure, the figures that we dohave paint a picture of a rapidly
worsening problem.
Over the past half-decade, between 2013 and2018, counterfeiting has been growing at anaccelerated rate, with estimates suggestingthat international trade in pirated orcounterfeit goods will continue to increase byaround 9% per annum. When counterfeiting
increases, so too do its negative effects
on businesses, individuals and the wider
economy, bringing brands into disrepute andharming innovation.

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Almost $2 trillion in counterfit goods in the market by 2022
As the scale of counterfeiting and privacy
goes up, so does the level of damage doneto the economy, the job market, private
enterprise and consumer trust. In manycases, brands whose goods are counterfeited
lose some of their reputation and market
value, while in others - such as counterfeitedfood and medicine - lives can even be
put at risk.
Recent estimates suggest that in 2013, thetotal value of counterfeited goods around theworld was $710 - 917 billion (€572 - 740

billion) - with a volume of goods worth $461 billion(€372 billion) traded internationally and $249-456
billion (€201 - 368 billion) worth of goods
produced and consumed within domestic borders.
With this type of theft rising at a rapid rate,estimates suggest that by 2022, the total valueof pirated and counterfeit goods circulating in
the global economy will be $1.52 - 1.95 trillion(€1.23-1.57 trillion). Of this, $991 billion (€799
billion) will be traded across borders, while $524 $959 billion (€422 - 773 billion) will be produced
and consumed in a single country.

Over the past half-decade, between 2013 and 2018, counterfeiting
has been growing at an accelerated rate of 15.6% each year

15.6%

The cost of counterfeiting and the global grey market
41 Million goods
were seized inEurope in 2016
In global terms, Europe sees particularly high levelsof cross-border counterfeiting and piracy attempts.
In 2016, European Union customs officials reported
that 41 million counterfeit or fake articles had
been seized by border officials - an increase of two
percent against the previous year - with a total
market value of €670 billion.
While counterfeit goods make up, on average,around 2.5% of global trade, the proportion ofcounterfeit and pirated goods comprises around
5% of EU imports, making Europe a prime target
for counterfeiters and the grey market.

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Grey market goods are thriving internationally
In tandem with the growth of counterfeit
goods, big name brands are increasingly having
to contend with an ever-more powerful andpersistent grey market. This grey market –comprising both counterfeit and genuine goods
sold via unauthorized or unofficial channels – hasbeen growing by around 15% per annum over the
past few years and is estimated to soon be worth
around $1.5 trillion globally.
The problem is increasingly severe for high-end
and luxury brands, who can easily fall victim toundercutting in the grey market. In the case ofdesigner watches, a wealth of online marketplaces
has recently sprung up offering significant discounts
on well-known designer brands, vastly undercutting
the usual retail pricing for such products.

According to the estimates of one analyst,
grey market goods currently account foraround 20 percent of the global market for
high-end watches, putting a significant
dent in the industry’s profits.

The grey market isestimated to soon
be worth around$1.5 trillion globally

Grey market and fake goods damage investment, value and trust
When counterfeit goods and grey market goods
enter circulation, company revenues can be hit
dramatically - and the indirect effects of poorquality counterfeit goods also lead to increased
costs, reputational damage and potentially longterm reductions in sales.
If consumers unknowingly buy grey market or
fake goods, it has a negative impact on theirlevels of trust in and loyalty to a brand. At worst,
these products could potentially harm theirhealth, as is often the case with counterfeit foodproducts and ineffective pharmaceutical drugs.

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Meanwhile, businesses often incur costs for repairs
or replacements of faulty counterfeited items, aswell as facing increased complaints about unsafe
or ineffective products sold through unofficial
channels. In severe cases, companies can facewrongful legal action, see their market share eroded
and lose possession of valuable industry secrets.
Looking to the future, the displacement oflegitimate and secure jobs is also a huge concern:by 2022, the net job losses from counterfeiting andpiracy are estimated to reach 5.4 million - more thandouble the 2.6 million estimated losses in 2013.

...businesses often incur costs
for repairs or replacements offaulty counterfeited items...

In brief: The cost of counterfeiting• The volume of counterfeit andpirated goods was estimatedto be as much as $917 billion in
2013. In 2022, this could rise to$1.95 trillion (€1.57 trillion)• The problem is particularly
severe in the EU, where 41
million goods were seized at
the border in 2016 with a
total value of €670 billion• The global grey market is
growing by around 15 percent
annually, undercutting brandvalue and putting immensepressure on company revenues• Counterfeiting has widereaching effects on brandreputation, company value,
innovation and thewider economy

15%
annually€670
billion

REAL

6

FAKE

• Experts predict that, by 2022,
counterfeiting will have led to
up to 5.4 million job losses, andcould cost the world economy up to$1.87 trillion (€1.51 trillion) annually

II: RFID solutions for secure product authentication
Most of the trade in grey market and counterfeit goods begins at somepoint in a firm’s internal supply chain, where weaknesses in auditing andauthenticating products leave rooms for unauthorized activity to occur.
Barcodes and holograms are vunerable to fraud
While special authentication features can be a key
weapon in the fight against fraud, popular methods ofverifying products have tended to be inadequate whenmatched against today’s sophisticated counterfeiters.
At present, holograms and 2D barcodes / Matrix digitalcodes tend to be among the most widely used forms of
product authentication, while watermarks and colorchange inks have also been utilized to tell legitimate
branded products apart from their counterfeits.

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Part of the problem with the use of holograms andbarcodes is that they must be clearly visible on the
packaging, taking up valuable design space and offering
an easily accessible target for counterfeiters to forge.
Due to the ease of replication for many of today’scounterfeiters, it can be difficult for customs officials andretailers to verify that the barcode or hologram is genuine
and has been produced by the official manufacturer orretailer of a branded product.

RFID solutions could be future of asset idnetification
While solutions like holograms and barcodes
are still commonly used for authentication, thetruly secure solutions of the future can be more
readily found in the world of electronics. Radiofrequency identification - otherwise known as
RFID - allows key information to be stored in
an object-tag and transferred wirelessly andautomatically to nearby readers, providing anatural option for secure product authentication.
Compared with barcodes and holograms,
RFID tags have the distinct advantage of being acovert mode of authentication, making it much
more difficult for potential fraudsters to uncover
how an item is being identified and attempt to
replicate or tamper with it. With each RFID tag

8containing a unique serial identifier (UID/TID),
handlers at every stage at the supply chain could
instantly verify the authenticity of the item andfind out other key data such as the country oforigin and the country of sale.
An enormous amount of information can be
stored on certain types of RFID tag or stored intheir data servers by their UID/TID, allowing for apotentially large data set relating to the product’s
materials/ingredients, manufacturing process
and intended country of sale which could also be
used to confirm that the item has genuinely been
produced by a certain brand or company, and isbeing sold in the correct regulated markets.

Equally, using secure cryptography makes unique
RFID tags incredibly hard to reproduce - creating
yet another barrier for counterfeiters trying toenter the supply chain or suppliers looking to sell
products in grey markets. With all these benefits- and the elimination of a large amount of humaneffort and error - RFID remains a low-cost, highvalue option for firms looking to future-proof
their authentication methods.

In brief: benifits of RFID for authentification• As a method of authentication, barcodes
and holograms are highly vulnerable toreplication and tampering due to theirvisibility and ease of replication• RFID tags offer an ideal alternative with greater
protection from counterfeiting via a unique serial
identifier and other key product information,such as country of origin and country of sale

• RFID tags use secure cryptography and canbe used covertly, making them incredibly
difficult to identify and counterfeit• RFID requires little human labor, andrepresents a low-cost, high-value option
for product authentication

9III: Real-time traceability from production to POS
One of the major challenges faced by modern global firms is the difficulty of accurately
and efficiently tracking the delivery of products through an extensive distribution chain
and across long distances.
Not only does this cause problems
for suppliers and manufacturers of
products who struggle to track theirown goods during transit; it also
creates difficulties for inspectors andretailers at POS to work out whether
they are handling grey market orcounterfeit goods.
Blind spots in the distribution process
leave a window of opportunity forcounterfeiting and tampering tooccur, resulting in financial losses
and diminished brand trust.

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Electronic asset control systems
Electronic asset control systems utilizing RFID tags and collected
accurate and real time big data can help to fill in these blind
spots, allowing for easy monitoring and inspection at each stage
in the supply chain. By integrating RFID tags, product owners caneasily keep track of crucial product information such as transit
trail, recent handlers/owners and identity. Moreover, the item’s
condition and a current location can also be determined withthe use of additional sensors and GPS trackers.

Successfully handled, big data can be a hugely effective
tool in the fight against counterfeiting and grey market sales.
In fact, recent advances in the way we accumulate, store,
analyse and deliver data have revolutionized our ability tocombat fraud on a large scale.
Starting with crucial information contained on RFID tags, bigdata algorithms can be utilized at all stages of the distribution
and sales process to provide detailed information about thehistory, characteristics and location of products, as well as
flagging up any anomalies in the stock distribution process.

Instant feedback helps businesses act fast
In the fight against counterfeiting and thegrey market, rapid action is crucial. A good
asset management / track-and-trace systemshould be able to deliver instant feedback andreal-time updates to allow businesses to chart
problems at any step in the supply chain.
Due to anti-collision technology, RFID readers
can process information from a significant
number of items simultaneously, allowing
for efficient and accurate processing ofvast amounts of stock. While barcodes
traditionally require a degree of manual labor
due to the fact that scanners must be pointed
directly at each label individually, several RFID
tags can be read instantly without requiring
any line of sight between the tag and theequipment. This means that an entire room of

11stock can be read in minutes, cutting down on
inventory time and giving businesses the edge
over potential criminals.
With a RFID solution connected to theInternet, assets can be easily managed andtracked remotely. Alarm systems can also be
integrated for improved security, generating
real-time alerts if an item’s location changes
without authorization or unexpected items
are detected.
Equally, by using cloud-enabled platforms,
updates and information gathered during
inspections can be delivered in real-time backto a firm’s anti-fraud departments and used
to better manage the supply process andmonitor stock levels at all time.

In brief: improving the
track-and-trace process• Effective asset control / track-and-trace systems are crucial in
the fight against crime and the grey market - particularly with
the increasing complexity of modern supply chains• RFID tags can revolutionize the way a business operates,
allowing for instantaneous remote monitoring, rapid
stocktaking and real-time security updates• GPS systems and sensors can be easily integrated
with RFID tags to offer
important information on
location or item condition• Big data and machinelearning allow for rapid
processing and analysisof large amounts of stock
information at every stage ofthe supply chain

IV: Consumers to check brand authenticity
Until now, it has been incredibly difficult for consumers tospot fakes in the market - a problem that has only got worse...
Mobile solutions allow consumers to verify authenticity...as counterfeiters and pirates have become increasingly
successful at imitating the trademarks of key brands.
Research carried out in 2017 found that 45% of shoppers
were concerned about buying counterfeit goods over the
winter holidays. While 91% of respondents said they would
not knowingly buy a fake product as a present, around a third
said they had been tricked into purchasing fakes in the past.

With an RFID-tag authentication system, brands caneasily set up mobile apps that allow customers toverify the authenticity of an item on their mobile phone.
These proprietary apps work in conjunction with theunique serial identifier contained in a product’s RFID
tag, enabling the consumer to rapidly verify whether
an item they plan to purchase is genuine.

There is strong evidence to suggest that a significant
proportion of consumers who buy counterfeit products doso accidentally, believing that they are buying the real thing.
To bring these consumers on-side in the battle against
counterfeits, firms must give them the tools they need toquickly identify whether a product is fake or genuine.

When considering a purchase, the customer can now
use their smartphone to read the product’s unique
identification number; data which is then sent to
a company database held on a secure centralized
server for authentication. An alternative, moresecure verification process could also be achieved

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via a decryption process built into the app itself,
meaning that authentication could occur using thesmartphone alone.
Once this process is complete, the consumer will
receive an instant notification informing themwhether the product is genuine or not. If it isgenuine, they will have assurance of the quality
and regulatory compliance features that areassociated with branded products. If not, data
relating to the location of the fake item could
be delivered directly to the firm, offering further
opportunities for identifying intellectual property
violations and stamping it out for good.

Improving customer relationships
through communication
As well as giving consumers more control over the goods they purchase,mobile verification apps can be an effective customer relationshipmanagement (CRM) tool, fostering greater trust and better communication
between brands and consumers.
Customers who use these apps can have access to a wide number of
incentives, such as rewards and warranties when they purchase genuine
branded products. Based on their purchase history and account activity,
firms would also be able to provide targeted recommendations and offers,
as well as giving them easy access to full, in-depth product information
including compliance and health and safety details.
Fundamentally, mobile authentication apps linked with RFID tags can open
better channels of communication between a brand and its customers,
allowing for mutual sharing of data. To enable even better CRM activity,
the apps can also be linked up with existing marketing schemes and social
media accounts, giving firms a wealth of data to work with to improve thecustomer experience.

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In brief: RFID puts authenticationin the hands of the consumers• A large proportion of consumers who buy counterfeit
products do so unknowingly, having been fooled byauthentic-looking branding and the characteristicsof the fake item
• By combining RFID tag information with brandedauthentication apps, companies can empower
consumers to make more knowledgeable purchases• Using a smartphone, customers can quickly readthe unique serial identifier contained on the RFID,
authenticating the product via an in-app decryption
process or a central company database• As well as giving consumers more choice, these apps
can be used to keep track of consumer purchasing
preferences, provide incentives for purchasing authentic
products, and streamline marketing communications

AUTH
ENT
BRAN ICD

V. Latest developments: discreet RFID tag solutions
Design considerations have been a major factor holding back the widespreaduse of RFID solutions in authentication and track-and-trace systems
In particular, the size and appearance of bulky RFID
tags can have a negative impact on the look of a
product, making it less appealing to consumers andplacing greater demands on marketing and design
departments.
Clip-on RFID tags tend to be highly secure and are
well known as an anti-theft protection device in retail
environments, but obtrusive tags can occasionallyhave a negative impact on customer experience andefficiency, potentially making repeat custom lesslikely. On the other side of the coin, RFID-taggedlabels can be easily applied and removed - so while
efficiency and design is improved, items may still bevulnerable to tampering and theft.

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Fortunately, the latest developments in thedevelopment of RFID technology have meant that amuch wider range of tag sizes are now available on
the market. With components manufacturers finding
groundbreaking ways of miniaturizing RFID tags, RFID
can be seamlessly integrated into existing productdesign and be used as an authentication methodon small and medium-sized items.
Equally, with RFID technology
working well over potentiallylong distances - and with noneed for the tags to be in theline of sight of the reader there is no reason why RFID

tags should always be placed on the packaging ofproducts. To deliver on even better security withoutcompromising on customer experience, micro-tags
can be hidden in the product itself, enabling covert
authentication that is far less susceptible
to tampering.

"...micro-tags canbe hidden in the
product itself..."

So while RFID had previously
offered better customer protection
at the expense of aesthetic value
and experience, several vendors
now offer miniaturized tags that areboth durable, discreet and easily
integrated into existing productdesign - delivering on both counts.

In brief: tackling design challenges• Previous manifestations of RFID
tags have posed design challenges
for manufacturers and have had anegative impact on the look of abrand and customer experience• RFID can deliver on better customer
protection, while also offering a highlevel of customer experience• Improvements in methods ofminiaturizing RFID tags means thata wide ranges of tag sizes are now
available on the market• Micro-RFID tags can now be integrated
seamlessly into existing product designand even hidden inside the product for
greater security

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Conclusion
The status quo of product authentication is no longer
working for today’s globalized and complex market.
wIf industry is to reverse the trend of growing
counterfeiting and the thriving grey market, a new system
is needed that offers greater efficiency and highly accurate
tracking of large volumes of goods. With their high-grade
security features and ability to store large amounts ofkey data such as a unique serial identifier, RFID tags could
represent the future of authentication, and a key weapon
in the fight against fraud.
Together, RFID tags and accurate big data represent a
vastly improved method of authenticating and tracking
products over whole operation, replacing the timeconsuming and insecure barcodes and spreadsheets of thepast. With the latest technology in play, manufacturers are
now able to receive real-time alerts delivering information
on a product’s whereabouts and condition - information

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that can be processed and handled rapidly with the latest
machine learning algorithms. With branded mobile apps forreading RFID tags, brands can also empower consumers toverify the authenticity of products for themselves.
Now, advancements in miniaturizing RFID tags meansthat brands no longer have to compromise on customer
experience or appearance. Durable micro-tags withpowerful data-storage capacities can be placed inside theproducts themselves, offering a secret weapon against
would-be counterfeiters and seal of quality for customers.
With these technologies, firms will be better equipped thanever to foster brand trust and loyalty, regain revenues lostto counterfeiting and hinder the work of criminals who
attempt undermine their intellectual property rights.