New AI Cryptographic Technology Can Help Combat Counterfeiting
Co-Founder of Rocket VR Health.
Today, the market for counterfeit goods is massive and is estimated to be over $1.8 trillion, more than the GDP of most countries. When discussing counterfeit goods, most people think about luxury items like handbags and watches, but criminals have been expanding into medical equipment and even pharmaceuticals for years.
In an extreme example of this, counterfeit medicines are estimated to cause the deaths of over 250,000 children worldwide every year. These deaths occur due to the lack of any mechanism to verify the authenticity and origin of these medicines. Drugs moved from low-price nations to countries with higher prices lead to major profits and no legal consequences for produces. Scammers create fake drugs and camouflage them using refilled empty containers, fake labels and copied QR codes.
The explosion of e-commerce during Covid-19 has also created an environment that allows counterfeiters to sell their elicit goods easily on major platforms. This has led to a partnership between major pharmaceutical, e-commerce and shipping companies and Homeland Security Investigations (HSI). But most people don’t realize that the majority of listings on Amazon are actually from third-party sellers. For every e-commerce platform that cracks down on counterfeit goods, a new “seller” emerges that allows goods to be shipped directly from the fraudulent manufacturers.
Up until recently, companies have been placing physical-digital seals on products to uniquely identify and authenticate them. Unfortunately, these stickers are easy to replicate, reuse or fully remove. Companies leverage this conventional track-and-trace model to follow products throughout the supply chain using unique product identifiers (UIDs). Unfortunately, this model doesn’t bring any level of protection against counterfeiting since it can be easily duplicated.
New innovative technology has been developed to add an invisible cryptographic signature to packaging and uses cryptography and AI to deliver an authentication that can be done through any smartphone. This cryptographic code embedded into the packaging makes counterfeiting impossible and also has the ability to educate and engage customers using augmented reality.
The biggest innovation here is that the cryptographic seal is fully hidden and undetectable outside of retailers/manufacturers and can be applied to any type of packaging regardless of the size. This technology was first invented and patented by Ennoventure in 2019 and has since been deployed on over 1 billion packages, according to the company. The company’s co-founder, Padmakumar Nair, has developed multiple machine learning models to spot suspicious signals from a deep neural network to enable counterfeit product lookalikes to be spotted quickly.
Another company leading the way in anti-counterfeiting technology is Neurotags. Its AI-based technology provides companies with the ability to provide a unique, secure and traceable identity for each product. Its software continuously monitors any attempts of unauthorized distribution; however, this code is not invisible unlike the one offered by Ennoventure.
And last year, researchers in Singapore unveiled an invention of anti-counterfeiting tags that are not easily damaged by environmental conditions such as extreme temperatures, chemical spills, UV exposure and moisture. The security label they have created can be attached to goods and authenticated by checking the physically unclonable function (PUF) patterns. These tags could be applied to products like medicines, jewelry and electronics.
The anti-counterfeit industry is very large and is projected to reach $189.9 billion by 2026, but it is still dominated by legacy solutions. New invisible tags embedded in the packaging could be the innovation that slows down the fraudsters. Time will tell how fast the adoption of cryptographic solutions will take, but Ennoventure seems to have the leading features and is well capitalized to disrupt the industry after a $5 million investment by Fenice Investment Group.
The production and trafficking of counterfeit goods not only hurts real companies but, most importantly, these actions pose a significant safety threat to consumers when it comes to medicine. The ability to implement an invisible cryptographic seal into existing packaging without changes to existing manufacturing and supply chain processes could transform the ability of companies to stop counterfeiting. Business leaders should explore using these new technologies to safeguard their brands to help build trust and transparency and safeguard consumers.
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