Secure in the Knowledge

July 8, 2005

As brands become even more valuable in a globalized market, owners seek to protect them against counterfeiting and other fraudulent practices. Label converters can help them.

Self-adhesive labeling now occupies a front line position in the fight against counterfeiting, retail theft and product tampering. The armory of security features is growing, although arguably not as fast as crime itself. Narrow web technology as practiced by label printers plays a key role because it so versatile. It offers at least 20 different overt and covert security features, with holograms and security inks among the more popular. Markets and opportunities for security (or intelligent) labeling are expected to grow by around 20 percent each year over the next five years.

The sheer scale of the fraud problem would suggest easy pickings for security-minded converters, especially as the price-per-label factor is not the prime issue here. However, as with similar specializations, converters need to overcome some formidable barriers. An ability to print and process different grades of paper, film and foil is obviously essential. Less evident is the need to develop specialist marketing skills and adopt a consultant-type role.

Anti-counterfeiting products allow users to authenticate products at every level of the supply chain. Proving the authenticity of a product, however, may involve several covert and/or overt features since no single solution is entirely secure. Manufacturers, brand owners and other end users often find it hard to identify the most suitable solutions, or know where to find them. Consequently, some larger companies are combining their various technologies into separate product and brand protection divisions. The situation for most smaller, single-product companies is much more complicated. A lack of exposure in a fragmented industry explains why so many seemingly good ideas fail or only slowly become accepted.

Three-way cooperation between different suppliers, the converter and the end user is therefore vital. Also, there are such issues as who carries out the verification, whether it is the producer, distributor or end-user. That is not the converter's job, but some input is inevitably needed, perhaps at a consultancy level.

Counterfeiting might include faking the entire product and its packaging, falsifying a package or container to give the impression that the contents are genuine, using a brand name in an unauthorized manner, or using a brand name on a false product. Forgery/fraud relates more to the alteration of documents, including credit cards, checks, currency, certificates, high-value tickets and many other documents of intrinsic value.

Nobody knows the true figure, but independent research from Label & Tag Security International (LTSI) — based in the United Kingdom but with a large international membership — suggests worldwide losses from counterfeiting and forgery (including altering information on negotiable documents) cost an estimated $300 billion.

That is a huge part of world trade and it is largely in the hands of organized criminals, drug barons and even terrorist groups. Counterfeiting and forgery make ideal fronts for laundering money. They can generate large profits with little capital outlay and least risk, employing skilled and highly intelligent fraudsters. Of course, they have ready access to the latest graphic arts equipment to produce forged packaging and labels that look as convincing as the fakes themselves.

Large-scale public apathy compounds the problem. Many people see counterfeiting as a "victimless crime" and knowingly buy fake products like watches, videos and fragrances. They fail to see that the same criminal mindset is responsible for life-threatening crimes, such as pushing fake pharmacy drugs and counterfeit parts for automobiles and airplanes.

Experts estimate retail theft, whether by staff or "customers," to account for some 1.8 percent of retail sales and nearly 20 percent of profit. Total worldwide losses are said to be around $90 billion. This scale of loss has prompted many retail store groups to appoint senior-level staff to examine anti-theft technology. Others have grouped together to call for the eventual application of anti-theft labeling and packaging to all products sold retail. Again, a wide range of solutions and opportunities is open to enterprising label producers. Among the latest developments, which some retail groups are adopting, are so-called "super tags" and "super labels." They carry encodable information, allowing the entire scanning of a cart load of goods without removing each item from the cart. One scan allows the production of an itemized slip, with appropriate prices. Press technology can also play a part, allowing the incorporation of electromagnetic, radio frequency, microchips or other electronic article surveillance systems into labels, tickets or tags.

Tampering of goods in stores has grown steadily to account for annual worldwide losses of some $10 billion. Baby foods, milk, pharmaceutical products and other food and drink periodically suffer from large-scale tampering. Therefore, anti-tampering labels, materials, technology and application systems offer prime opportunities for converters looking for new markets.

Many specialized laminators offer tamper-evident materials for labels, tapes and security seals for retail or industrial applications. Some seals contain features that immediately show whether they have been removed and reapplied. Acetate labels may have security cuts that cause fragmentation when they are removed. Destructible vinyl in a choice of colors is available, top-coated for overprinting things like bar codes. Polyester is a common material for labels that leave a residual message, such as "void" or similar messages, when removed illicitly. That is, they leave a "fingerprint" of the label's existence.

Holographic films and foils coated on fragile materials offer an additional and higher level of security because end-users can specify a custom design combined with nontransferable materials. Some reveal hidden messages when activated by a light source, while others include hidden messages, which users activate with pens containing particular chemicals or simply by rubbing. Proprietary devices like these guard against tampering and provide some anti-counterfeiting protection.

Warning and/or advisory labels offer similar opportunities to those serving the food, medical, pharmaceutical and medical services markets. Some new products give a visible warning or indication of changes of temperature in chill or freezer cabinets. Others apply to sterilization and autoclaving methods.

Secure examples
Examples include a transparent optically-variable device (OVD) from Advantage Technology Inc. that changes color from orange to green when viewed from different angles. The color change cannot be duplicated. While principally used for protecting documents of value from alteration and counterfeiting, variations include specially-coated seals and labels.

Alcan Canada's Aluminum Security Seals (Hidden Message Stock) are said to resist counterfeiting, alteration, duplication and simulation. The labels and closures use a base polyester layer, a thin layer of aluminum and an ultra-thin colored optically active layer. This contains a hidden specific message, revealed by any attempt to remove or tamper with the label or seal. Under normal examination the hidden message is undetectable. Tampering produces an instantaneous and irreversible color change to clearly show activation.

Bridgestone Graphic Technologies offers tamper-evident holographic labels and hang tags that self-destruct when removed. The labels can protect videocassettes, CDs, cosmetics and pharmaceutical products. A range of serialized holographic hang tags have overt and covert anti-counterfeiting properties to protect licensed products, offer brand authenticity and aid product tracking and distribution.

Barco Graphics has for some years developed possibly the largest selection of electronic origination developments for security designs. They include micro texts, linework fractals, guilloches and background screens. In a similar vein, there is the Scrambled Indicia method of scrambled images, used alone or integrated into the design of the label or packaging. Avery Dennison offers the GenuGraphics version for labeling. Security inks and varnishes have evolved mainly from the document security world for protecting currency, checks, vouchers, bond certificates and much else. Among those found in labeling are metameric ink pairs. They are visually similar under daylight conditions, but change when viewed in different light sources. Photochromic inks change color when exposed to UV light, but revert to the original color when returned to normal light. They offer a simple recognition method to determine whether a printed item is genuine. Reactive/color change inks contain a chemical reagent which will affect a color change if the ink is subjected to another re-agent. Then there are over-varnishes that contain substances. One may give a clear appearance, but it will glow brightly when exposed to UV light sources.

There are also many ingenious proprietary security products designed to correctly identify products and/or individual batches of products to be as genuine. For example, biocodes use a range of monoclonal antibodies generated to specific marker chemicals. Users add tiny concentrations directly to both liquid and solid products. They can then easily identify marked products in the field using antibody-based test kits, although it is impossible for counterfeiters to break the codes. This method lends itself to security labels and packaging that needs protection against counterfeiting or tampering.

Similarly, microtaggants comprise microscopic particles of plastics, each with a series of layers of different colors. The color selection and their sequence (in up to 10 layers) make up a unique code for authorized usage. The codes are readable with a pocket microscope and can be added to many products or mixed within a clear varnish for printing on a document, carton or label. Microtrace Inc. is one of several license-holders in the United States and Europe.

As can be seen, the world of security labeling contains many potent and ingenious devices to help guard against fraud, forgery and wilful tampering. None are foolproof, of course, and a few may only have a short serviceable life. The security industry has no illusions of who it is up against. If someone can make it, someone else can fake it, given sufficient time and money.

Related Labels & Packaging:

Related Supplies: