Lessons Learned from Elaborate US Counterfeit Scheme of Energy Drinks
Incorporating covert security marks into your shrink sleeve packaging can prevent the dangers of fake goods.
Each day counterfeit products enter the market and unwitting consumers pay the price. Combatting this proliferation of fake goods requires products that can be tracked throughout the supply chain and packaging that cannot be duplicated. Another helpful deterrent is the threat of monetary damages if counterfeiting entities are identified, charged, and brought to justice.
The landmark case involving 5-Hour Energy serves as an important precedent. As the first U.S. criminal prosecution for counterfeit food and beverage, this case puts product counterfeiters on notice. Enforcement officials seized two million fake bottles with fraudulent contents with $20 million in damages awarded to 5-Hour Energy.
Counterfeit goods are a sophisticated, global problem.
It’s easy to think that fake goods are only an issue associated with overseas manufacturing, but as the 5-Hour Energy case illustrates, that is simply not the case. All brands should be aware that print technology can make “close-enough” package graphics to fool consumers. In the 5-Hour Energy case, “the counterfeit bottles were similar in appearance to authentic 5-Hour Energy shots, but slightly shorter and without a raised “pimple” mark in the center of each bottle cap.” (Source)
One of the other key takeaways from this case is that it provides a clear view of the complexity and depth of counterfeit operations. This wasn’t just a small producer creating fake beverages in his garage and marketing it to local outlets. The 5-Hour Energy example depicts a highly advanced criminal operation involving many parties that were profiting from the legitimate brand’s reputation. In this case, over 70 individuals were named as contributing to the product falsification.
Dangers of fraudulent goods
Counterfeit food and beverages threaten brand reputations and the health of consumers. Falsified products produced in unregulated and unsanitary environments have the potential of exposure to toxic chemicals that can cause serious negative side effects if ingested.
Bottom line: Advanced brand protection technology can help brands and their consumers from suffering from the ill effects of counterfeit goods. To achieve this, companies need to employ both overt and covert anti-counterfeiting mechanisms.
- Covert Solutions
This technology is hidden and cannot be seen without aid. Only brand owners, inspectors, and authorities are aware of its presence and possess the technology to view and verify the authenticity of the product. Examples include microtext, invisible infrared ink, taggants, and intentional defects.
- Overt Solutions
These approaches are easy to see, can be integrated directly onto products or packaging, and may be leveraged to promote consumer engagement. Holograms, guilloché patterns, serialization, barcodes, QR (quick response) codes, and NFC (near-field communication) are types of overt technology used for anti-counterfeiting.
- Tracking Solutions
Track and trace systems capture product movement throughout the supply chain and can also employ advanced dashboards and analytics to detect when a product is found and scanned in an unauthorized region (diverted goods). The brand owner can investigate the bad-actor in the supply chain and ensure compliant distribution.
Taking a proactive approach to thwarting fake versions of products entering the marketplace benefits everyone. Companies should invest the time and resources necessary to find a solution that works for them and can fortify their supply chain –before they have to initiate lengthy, expensive lawsuits to protect their brand and work to restore consumer faith.
VerifyMe is a leader in product authentication, consumer engagement, and brand protection. Learn about how to use overt and covert technology to prevent counterfeiting in the VerifyMe blog.