Band-Aids & Better Solutions

The government and industry have a made a couple of moves within the past two weeks in the interest of protecting the supply chain: UPS is requiring ID before shipping products from retail outlets; and the US government has seized more than 80 Websites found trafficking in counterfeit goods. Neither is a permanent solution to the fundamental problems in the supply chain, and the application of technology would enhance them both immeasurably. (See: Cargo Security Measures Expanded.)

Requiring ID enables shippers — in this case, UPS — to compare the identification against “watch lists” similar to those used by airport security. UPS didn't indicate if this was the intent of the measure, but doing so would make sense. The biggest flaw in the plan, as EBN readers point out, is the ability to fake IDs. The technology exists that would make IDs more difficult to fake: fingerprint scans; facial recognition; embedded microchips; holograms; RFID; and microscopic materials are just a few of the techniques being used in other applications today.

The problem is, most of these solutions are used in a “closed loop” — within the four walls of a company or organization — or suffer from a lack of standards. Does your company's ID card work at a major customer's site? As another example, let's say Company A, a supplier to Company B, uses microchips to ID its products. Company B uses RFID to ID its subassemblies. The end-customer, Company C, has to be able to verify the microchips and the RFID tags to thwart counterfeiting, but uses bar-codes to track its own products. See the problem?

In terms of personal ID — within the US alone — widely used identification like drivers' licenses differ from state to state. Right now, states use social security numbers and/or random numeric codes to match licenses with people. Photo IDs are eyeballed by clerks and security personnel. Automated verification would require one uniform ID and technology for nationwide use. Unless the US government mandates that and pays for it, that's not going to happen anytime soon.

Anyone with a computer and an Internet link knows shutting down a Website is a temporary measure at best. Just before the so-called Cyber Monday, the US Immigration and Customs Enforcement (ICE) executed seizure orders against 82 domain names of commercial Websites engaged in the illegal sale and distribution of counterfeit goods and copyrighted works. The move was part of Operation in Our Sites v. 2.0, an ongoing investigation.

The operation targeted online retailers of a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, and sunglasses as well as illegal copies of copyrighted DVD boxed sets, music, and software. During the course of the operation, federal law enforcement agents made undercover purchases from online retailers suspected of selling counterfeit goods. In many instances, the goods were shipped directly into the United States from suppliers in other countries using international express mail. (Would UPS's ID policy have helped here?) If the goods were confirmed as counterfeit or otherwise illegal, seizure orders for the domain names of the Websites that sold the goods were obtained from US judges. Individuals attempting to reach one of the Websites will now find a banner notifying them that the domain name of that Website has been seized by federal authorities.

The same technologies mentioned above can be used to identify and track authentic items. Additionally, there are hundreds of solutions for monitoring Web traffic inside and outside of governments and businesses that could be applied to internation online commerce. Again, the expense and red tape make this practically a fantasy — not to mention the legal implications.

But if government and industry were to apply the money spent on closed-loop systems and Website stings to cooperate on a single standard that combines technology and practices, the security possibilities are endless. In the meantime, let's hope Band-Aid solutions like ID and site seizures help stanch some of the bleeding.

6 comments on “Band-Aids & Better Solutions

  1. stochastic excursion
    December 8, 2010

    The kind of visibility mandated by recent expansions of security requirements recalls data-visibility trends in commerce.  Data such as negotiated pricing has long been held to be proprietary and sensitive with respect to a company's competitive position in the marketplace.  Now there is a trend to make this data more visible in order to streamline the management of supply chains.

    The visibility of personal data is by human nature (or the laws of the jungle) something most people try to eliminate.  However, a government that must provide a measure of safety to the public, necessarily must counter this tendency of people to hide their private information. 

    It's an interesting paradox that the internet, which conveys information at incredible rates, is also built-in with a minimum of identifying information about its end users.  Perhaps that explains much of its appeal.  No way would I risk associating my name with the bold comments I occasionally post, if only because so many great men have historically cleaved to anonymity when they published their opinions.

    The technology necessary to make personal data routinely visible, however, is only of value as long as this expanded security lasts.  After all, when the war on Al Qaeda is over, these procedures will be unnecessary, right?

  2. t.alex
    December 8, 2010

    Using RFID on products certainly imposes some costs as well. And this also introduces cost along the supply chain, for example ID readers. If there is a standard established, law enforcement also play an important roles.

  3. DataCrunch
    December 9, 2010

    A recent ruling by the US   Court of Appeals in the case of Tiffany v. eBay, in which the courts ruled in favor of eBay.  Tiffany was suing eBay for allowing counterfeit products to be sold on eBay, but lost the appeal.  Tiffany claimed that eBay profited from the sale of counterfeited Tiffany products in the amount of $4 million over a period of 3 years.  Internal Tiffany research claimed that 73% of Tiffany product listed on eBay is counterfeit; eBay knowingly stated it is more like 30%.

    Is this verdict a blow to retailers and should eBay have been held responsible for counterfeit products listed on its site?

  4. SP
    December 9, 2010

    Security is always a big issue. Yes we agree that US has really strict laws and policies when it comes to identity. But these cargo services would also have offices other than US, and there the security is not that tight. If we really want to make it safe and secure the policies and procedures have to followed globally.

  5. Violet
    December 10, 2010

    I feel like I'm living in my small North GA community and have no realization of what is really happening in the world around me! We have one newspaper that is delivered once a week – there is no mention of world news, Tiffany v. eBay, UPS and counterfeiting, etc. etc. I must read sites like EBN just to find out what is happening! and is eBay really, truly correct that it is only 30%??? Should I believe them? Hmmm, interesting question you have proposed!

  6. elctrnx_lyf
    December 12, 2010

    It is really very complex thing to make sure the online commerce is actually selling the right products. I think the responsibility lies in the hands of the companies that ship products to the ecommerce companies and at the same time with the actual ecommerce companies. The consumer should be able to verify the goods received are proper by actually verifying it in the database of the product maker. There should be standard body formed by the government and at the same time there should be a association for the ecommerce companies. By establishing right procedure we can definitely avoid the counterfeiting.

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