Counterfeiters are flooding markets with fake masks, coronavirus test kits, PPE worn by frontline workers, medicine and medical equipment used for healing patients afflicted with COVID-19.
Last week, the European Anti-Fraud Office announced that they had already identified 340 companies trading in counterfeit products linked to the COVID-19 pandemic. The large majority of these fake goods are ineffective if not downright dangerous, and deceive both patients and doctors who trust that they are using genuine and effective treatments. This reduces the likelihood of patient recovery, and generally disrupts efforts to stop or slow the spread of the virus.
Traceability and transparency
That counterfeiters have quickly seized on this new market opportunity shouldn’t come as a surprise. Whether a luxury handbag or watch, a medication or a bottle of wine, anything with a brand name attached to it will be counterfeited. The exterior or packaging of many counterfeits look identical to the genuine products, while the product itself is usually malfunctioning, made with inferior components, or at the very least does not adhere to proper manufacturing practices. The only challenge for counterfeiters is to insert their imitations into legitimate distribution channels without getting caught. For this reason, counterfeiters love opaque, long and complex supply chains that leave many opportunities for distributing the fakes wide open.
Traceability systems bring that much-needed transparency to supply chains. They rely on serialised, unique identifiers embedded in barcodes or radio-frequency identification (RFID) tags placed on product packaging during manufacturing. As goods move through supply chains, products — as well as the cases or pallets which contain them — are scanned for inspections or to add traceability data. Every new scan generates additional data points, building up the traceability history of the product. When products reach the store shelves, consumers can scan the product identifier to verify a product’s provenance, expiry date, or any other information associated with it. All these scans culminate in creating the traceability and transparency of supply chains.
The limitations of regular QR codes
One of the most used versatile identifiers for products is the QR code, a type of matrix barcode that is now ubiquitous all over the world. Each time I log in to my bank account, I scan a QR code with my smartphone without a second thought for security. Yet the question remains: how can a QR code be relied on for stopping counterfeiters and fraudsters? QR codes that are displayed on a screen to activate transactions can generally be trusted, as they contain encrypted information and, more importantly, they can be updated for every new scan or transaction. For example, in China, this kind of dynamic QR code has become one of the key technologies for fighting coronavirus. They are used as a health status indicator that citizens display on their smartphone to verify their health status as they enter public places. However, when a unique and encrypted QR code is printed on a product, it remains the same for the lifetime of the product, and as such it is entirely vulnerable to copying. Put an authentic QR code and its photocopy side by side, and a smartphone scan will not be able to discern which one is a photocopy and which is the original.
Despite the ease with which they can be copied, brands and even governments are increasingly using serialised QR codes as a means of monitoring supply chains to detect counterfeiting and illicit trade, and they are being promoted to consumers as a way to verify product authenticity. Indeed, if the same QR code is used on many fake products, then statistically it will be scanned several times and eventually flagged as counterfeit. The pragmatic, underlying assumption is that counterfeiters will not be able or willing to collect valid unique identifiers on a large scale, which would be a sure way to defeat QR codes used for product authentication. While monitoring of scans certainly raises the bar for counterfeiters, simple QR codes are fundamentally vulnerable to copy attempts, and consumers will eventually reject them. Trust is not something that comes in degrees: you either trust, or you don’t.
Counterfeit-proof QR codes
Fortunately, the technology for securing a printed QR code, as well as other types of barcodes, exists. One such technology is called the copy detection pattern, or secure graphic. A secure graphic is a random digital image that is optimally designed to irreversibly lose information whenever it is printed or copied, such that copies always contain less information than original prints. By embedding a secure graphic into the digital image of a QR code during the printing process, it becomes a secure QR code which is intrinsically secure against copy.
I started working on mathematical methods for detecting counterfeits nearly 20 years ago. At the time, such methods had limited use and impact, as QR codes were unknown to consumers and mobile phones did not have cameras. With the vast improvements in camera optics, smartphones can now take high-resolution macro pictures of QR codes with the level of detail needed to detect sophisticated counterfeits. Using machine learning-based authentication algorithms processed on remote servers, smartphones have become powerful authentication devices. Such technology is mature and already deployed on mass scale products. With QR codes now mainstream in many places, the main barrier to mass adoption of such authentication technologies has now been overcome.
Blockchain has frequently been put forward as an enabling technology that will bring much-needed traceability and transparency to supply chains to help fight counterfeits. Certainly, blockchain can ease data collection through distributed and more secure record keeping as well as facilitate data-sharing among entities that don’t necessarily trust each other. It overcomes the limitations of traditional centralised data-keeping that is typically under the control of one stakeholder, by enabling the use of governance models in which multiple stakeholders have their incentives aligned in cooperating and sharing traceability data. However, at their core, the reliability of blockchain systems depends on the secure and reliable identification of physical goods and assets via a secure, unique identifier that helps to bridge the transition from the physical to the digital world. Therefore, before considering a blockchain-based solution, it’s critical to first develop an approach to securely digitise products as the first step in building connected supply chains.
Secure QR codes are a solution to the weakest link in the chain of both standard and blockchain-based supply chain traceability systems. They are a key tool for maintaining the trust of consumers who increasingly rely on scanning products. It is time to use the technology at our disposal to stop counterfeiters, and to put an end to the immense damage that they have been causing to our health, safety, and economy.
Justin Picard is co-founder and chief technology officer, Scantrust.
This article is curated from the World Economic Forum.