Blog

Protecting Brands, Consumers, and Communities from Counterfeits

May 01, 2023

Last week we had the opportunity to speak with U.S. Customs and Border Protection's John Leonard, Deputy Executive Assistant Commissioner of Office of Trade, to discuss the current state of counterfeiting and what manufacturers, retailers, and shoppers can do to stay safe. 

The U.S. Customs and Border Protection (CBP) is the largest law enforcement organization in the country – formed after 9/11, CBP serves under the Department of Homeland Security. Chartered to protect the U.S. against the importation of counterfeit goods across industries, the organization conducted over 20,000 seizures in FY2022, equating to 25 million items of all shapes, sizes, and values across industries. If the items had been legitimate, the total market value would be over $2.9B.  

The Rise in E-commerce 

The good news: CBP stopped 25M counterfeit items from entering the market in 2022, protecting consumers, brands, and communities. The bad news: The rise in e-commerce is making it easier for counterfeiters to infiltrate the market. Over the past 15 years, e-commerce has revolutionized international trade, with the recent pandemic making e-commerce the norm.  

E-commerce sales have contributed to large volumes of low-value, small packages imported into the United States. CBP defines a small package as any item under $800. It is challenging to capture counterfeit data on these packages, typically shipped through international mail channels. Alternatively, CBP can capture a large amount of data on big shipments to stop counterfeit items valued over $800 from entering the market. Small packages pose the same health, safety, and economic security risks as large, containerized shipments. 

The Top Five 

According to Mr. Leonard, in 2022, the top five product categories for counterfeit goods were: 

  1. Luxury items, including handbags 
  2. Apparel and accessories 
  3. Watches and jewelry 
  4. Footwear 
  5. Pharmaceuticals and personal care 

The top four create a substantial financial impact for brands, industry, and consumers, but pharmaceuticals cause one to pause and consider the enormous health and safety risk. CBP believes these items will continue to trend because anything that can be trademarked can also be counterfeited.  

Fighting Back with Innovation and Collaboration 

During the webinar, CBP’s Mr. Leonard shared the importance of cross-industry collaboration and global cooperation when implementing the regulations, processes, and innovative technology required to fight counterfeiters. CPB is implementing pilot projects with major consumer brands including a pilot project designed to overcome the inability to capture counterfeit data on small packages. All brands are invited to participate in the “Section 321 Data Pilot.” You can learn more at this link, including how to submit to participate. 

AI and machine learning also holds promise for analyzing imports and risk assessment. When asked if the consumer goods industry can better use technology to protect brands, consumers, and communities, Mr. Leonard said, absolutely but with a caveat.  

“Public-private partnership is critical to the fight against counterfeits. This said, it is fundamental that companies register trademarks with CBP,” he said. “Registering allows brands to benefit from real-time information provided by CPB while informing CPB on how to enforce protection for the brand.” 

Mr. Leonard shares CBP’s authentication technology donation acceptance program. He also provides an update on a joint initiative with the U.S. Chamber of Commerce to combat the importation of counterfeit goods.  

The Power of Data 

We agree the efforts being put toward tackling counterfeit goods are proving successful; however, this battle needs to be fought constantly. As Mr. Leonard shares, the more data we can capture about a product’s supply chain journey, the better equipped we are to keep counterfeit products from ever entering the market. 

Product digitization and technologies like digital watermarks and other digital data carriers can help brands and organizations like CBP capture critical data throughout the product journey, including where and when the product was made, batch or lot number, ingredients, and more. Through the digitization of products at scale and the use of AI and machine learning, brands have a powerful competitive weapon to build direct-to-consumer relationships and gain access to unprecedented amounts of data to aid in the battle against counterfeit products.  

To close, Mr. Leonard went back to the fundamental importance of knowing your supply chain. You can listen to the entire webinar, including insightful polls and questions with the live audience, here: Counterfeiting Brands Across Borders & Beyond.

Learn more about Digimarc’s proactive brand protection and product authenticity product, Digimarc Validate.

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