From Banknotes to Electronics, E&T continues its special on fakes.
B is for banknotes
If you haven't been lucky enough to hold one in your hot little hands yet, you may not be aware that the new £50 note which entered circulation in November 2011 features the 18th-century business partnership of inventor James Watt and entrepreneur Matthew Boulton.
Appropriately for currency that depicts one of engineering's great pioneers, the Bank of England has taken advantage of the latest technology to incorporate new and enhanced security features, which it hopes counterfeiters will be hard pressed to duplicate.
Immediately obvious in the new batch of notes are the print quality, which ensures lines and colours are sharp, clear and free from smudges or blurred edges, and special paper that gives notes a unique 'feel'. The print is raised in areas such as the words 'Bank of England' and in the bottom right corner, around the number 50.
Closer examination reveals the 'motion thread' of five windows woven into the paper along the length of the note that contain images of the pound symbol and the number 50. Tilt the note from side to side and the images move up and down. Rock it up and down and they shift from side to side, with the number 50 and the pound symbol switching places.
Holding a note up to the light reveals a metallic thread embedded in the paper, which appears as a dark line, and an image of the Queen's portrait together with a bright £50. Irregular shapes printed on the front and back combine to form the pound symbol.
Microlettering beneath the Queen's portrait giving the value of the note is only discernible using a magnifying glass. And a good quality ultra-violet light highlights the number 50 in bright red and green, the five windows of the motion thread in bright green, and randomly spread bright red and green flecks on both the front and back of the note.
C is for celebrities
A social media profile on sites such as Twitter is perceived by many celebrities as crucial free publicity, offering a candid glimpse into the lives of the rich and famous. Lady Gaga is one celebrity to have reaped the rewards of social media; she is currently the most popular tweeter in the world with over 17,800,000 followers hanging on her every utterance.
It's difficult to calculate the publicity value of each individual follower on a social networking site. But with so much value placed on good publicity, there is much at stake when a celebrity affiliates themselves with a Twitter account, particularly when a new strain of cyber-impostors called Phweeters (phoney tweeters) exist simply to target specific personalities.
An influx of counterfeit accounts opened in the name of VIPs including David Letterman and even His Holiness the Dalai Lama have exposed loopholes in the site's verification process. This culminated in the 'verification' of a fake account opened in the name of Rupert Murdoch's wife Wendi Deng in December last year.
Security complaints have plagued Twitter's administration, highlighting threats to carefully cultivated celebrity profiles. Twitter confirms the authenticity of each celebrity profile with a 'tick' verification symbol beside the celebrity's name, thereby apparently circumventing the problem of impostors.
The verification process is a secret, but those who have experienced it claim the site requests a combination of a biography, a personal email address, a manager's contact details, a personal phone number and even a third party reference.
In Deng's case, Twitter verified her account without contacting her at all, meaning an impostor was able to post as her for some 48'hours before the mistake was realised.
But why would anyone want to sustain such fake celebrity accounts? One motivation is the publicity it generates for the Phweeter. Affiliate marketers are able to direct traffic to their own or a client's website by visitors clicking through to an 'official' fan site link placed on the fake Twitter profile.
But what many celebrity hackers do not realise is they run the risk of legal action by setting up fraudulent accounts, as it can be construed as a form of identity theft.
D is for drugs
In recent years the counterfeit and fake drug industry has become one of the most lucrative businesses on the black market. Last year, the Metropolitan Police and the MHRA (Medicines and Healthcare Products Regulatory Authority) shut down over 13,000 websites peddling fake medicines manufactured overseas. China is cited as one of the biggest manufacturers of counterfeit drugs; in November last year one police raid uncovered $315m worth of counterfeit drugs and packaging in Beijing.
The Center for Medicine in the Public Interest estimates that in 2010, the counterfeit drug trade held approximately 16 per cent of the global legitimate pharmaceuticals industry, which is harming not only the industry itself, but also the patients that are using the drugs. One study of the medical care of AIDS patients exposed sufferers that were using fake versions of Serostim, a growth hormone used to treat HIV-related wasting. On inspection, the drug contained no active ingredients, meaning patients had been sold a placebo in the place of an effective therapeutic treatment.
The most profitable medicines for counterfeit include alimentary or weight loss drugs, antiretroviral for the treatment of HIV and AIDS, anti-malarial tablets and antibiotics. Other popular fakes include erectile dysfunction medication, cancer treatments, cardiovascular drugs, anti-diabetic treatments and hypertensive medication.
Obviously, there aren't too many reliable statistics about the amount of counterfeit drugs in circulation, but in developing parts of Asia, Africa and Latin America it is believed that up to 50 per cent of all drugs are fake, meaning they are unlicensed, contaminated or lacking in active ingredients.
The counterfeit drugs trade costs the pharmaceutical industry $40bn per year in lost sales, so the focus of giants such as Pfizer and GlaxoSmithKline is on stronger patenting laws, which prevent copies of patented drugs being made for up to 20 years. National drug-regulatory authorities (DRAs) in developing countries authorise medication based on quality and safety of each product, wheedling out convincing sub-standard or counterfeit medicines.
But drug regulation in developing countries by comparison is notoriously substandard, as many of the drugs in circulation are unpatented. With the support of the World Health Organisation (WHO), Interpol launched a counterfeit drugs raid in west Africa in September last year, seizing 10 tonnes of counterfeit drugs throughout the region. The raid, named Operation Cobra, is one of three operations launched by Interpol in developing countries to deter the sales of potential harmful counterfeit medicines. Operation Mamba seized more than 200,000 pills in Eastern Africa, while Operation Storm in South East Asia seized 36 million pills, the majority of which were erectile dysfunction treatments. Interpol's online battle against counterfeit drugs, dubbed Operation Pangea, seized over $6.3m-worth of counterfeit drugs sold via the Internet last year.
Aesthetically, many counterfeit drugs are indistinct from the genuine product, with minor alterations such as package colouring or font style undetectable to the casual observer. In response to the increasing intelligence of drug forgery methods, there has been an influx in the rate of new anti-counterfeit technologies produced by the pharmaceutical and labelling industry.
"As technology has advanced, more and more technically wonderful solutions are being brought to the industry," says Ray Collia-Suzuki European systems sales manager at labelling and identification solutions provider Prisym ID. "Some of the mechanisms that are applied to these technologies are dependent on lab equipment to perform the verification processes, ranging from sophisticated pack design and labelling using special inks, holograms, tags and tamper-evident seals to field agents actively investigating instances of counterfeit product."
Whilst some companies are opting for complex and often expensive technology to combat counterfeiters, many are looking at comparatively inexpensive technologies that provide increased security without the requirement for specialist equipment.
Providing an 'e-pedigree' for each drug lot manufactured is considered to be one of the most cost-effective tracking measures. Essentially an e-document tracking the history of each lot, an e-pedigree allows every stage of the supply chain to trace a particular lot back to manufacturing stage to prove a drug's authenticity. Software providers such as Rockwell Automation and Oracle have released e-pedigree managers that aim to integrate the e-pedigree process into the supply chain, but global standardisation of the anti-counterfeit medication process is arguably still a long way off yet.
The promising effect tracking and serialisation has had on anti-counterfeiting last year resulted in the approval of a new counterfeit drug law by the European Union (EU). The approval follows increased concern from Europe with regard to counterfeit drugs entering the continent: the rate of seizures increased dramatically by 400 per cent since 2005, a rise that is believed to have affected around 77 million people in Europe. The law dictates each lot must be stamped with a unique serial number that can be tracked across the EU in order to verify its authenticity to dispensing pharmacists. Industry experts predict that during 2011 the counterfeit drugs market will have grown by 13 per cent, generating revenue of $75bn for counterfeiters.
E is for electronics
The chances are, you will have bought fake electronics and not realised it. Counterfeit electronic components are entering the UK market in alarmingly huge numbers, costing the economy an estimated £1bn a year according to the UKEA (UK Electronics Alliance).
The explosion is driven by many factors: increased industrial globalisation, extended supply chains, the growth of brands and weak law enforcement in certain territories. Moreover, the impact of the Internet as a conduit for cheap components has also made it easy and affordable to copy manufacturers' products.
In addition to the advent of the Internet, globalisation has had the effect of blurring the edges of once geographically-based markets, often impinging upon an organisation's ability to maintain brand image by selling only in premium channels.
The result is a burgeoning grey-market economy – where legitimate goods are produced in unauthorised quantities or diverted to a market in which a retailer has no right to sell them – with exclusive, aspirational, often counterfeit products turning up for sale anywhere in the world.
The grey economy is challenging today's global market place, threatening revenue streams, eroding margins, damaging corporate reputations, adding extra stress to distributor and retailer relationships and generally opening up the opportunity for service and warranty fraud on a grand scale. Such problems are compounded in the electronics sector by health and safety concerns for a product range where performance and reliability are key.
Tackling the issue typically requires the marking of individual items with a unique serial number or 'licence plate'. These can then be tracked through the whole supply chain process from the production line to final point of sale.
The Trading Standards Institute has also indicated that the amount of seizures of counterfeit components and accessories, destined for use with consumer devices, is growing.
In addition to the possibility of causing critical failure, if used in conjunction with a device, trading standards officials also warn that most counterfeit storage components and accessories (such as USB keys, memory cards and digital photo frames) contain viruses or other types of malware that could compromise the security of consumers' personal data.
Whereas the cost of failed hardware can be easily quantified, the loss or compromise of personal data is more difficult to put a value on. Ultimately, the brand suffers, whether the legitimate manufacturer is at fault or not.
The origin of most counterfeit components is China, but India is also a major source of counterfeit components. Much of the counterfeit consumer electronic components originate from 'grey' and 'green' market sources.
The green market, unlike the grey, is the trade of second-hand and used goods. Both forms of trade are legal and often necessary for aftermarket support. Are they really counterfeit? They are if the public is being deceived.
There is evidence that these goods are often passed off as new and sourced directly from the original manufacturers by brokers who trade through Internet brokerages.
The green market is growing particularly fast due to trade in e-waste recycling where goods are often transported to India and China to be broken down so the materials and components can be harvested for reuse.
Although manufacturers and retailers might unwittingly be selling sub-standard products to consumers, the real victims are those who have to work in hazardous conditions to harvest these components.