PR: New study examines evolving challenges posed by counterfeit and illicit trade

The challenges posed to brand protection programs by counterfeit and illicit trade are pervasive, numerous and ever-evolving. Unravelling these challenges is a complicated task that the Alliance for Gray Market and Counterfeit Abatement (AGMA), a non-profit organization solely focused on intellectual property (IP) protection for the high-tech industry, risk intelligence services firm FiveBy Solutions and De La Rue PLC, a leading provider of product authentication solutions, have teamed up to tackle. The companies have issued a new report titled, “Brand Protection Insights from Industry Leaders in Gray Market, Counterfeit and IP Fraud Mitigation,” which spotlights the trends and challenges related to counterfeit, fraud, grey market risk and prevention, and supply chain security that are impacting the high-tech sector.  

E-commerce has been on a rapid growth trajectory, providing a large conduit for fraud. Fraudsters are savvier, sharing information among each other and producing counterfeit at an accelerated pace. Brand protection programs are being impacted in ways they never imagined, with increasing scope and scale. Mitigating counterfeit, reducing channel grey market and preventing various fraud are more crucial to brand survival than ever. According to John Solheim, principal research consultant at FiveBy Solutions, “While practitioners of preventing fraud risk and grey market have been at this for several decades, this year we see new threats emerging that make companies realize the need for upping their game and deploying more targeted expertise.”

Seeking to better understand what industry leaders view as opportunities, gaps and unmet needs, as well as where brands may be exposed to greater risk and hidden costs, co-sponsors AGMA and De La Rue facilitated a collective effort – supported with FiveBy as the research firm. Study participants included some of the largest and most influential brands in the world: AGMA members Cisco, De La Rue, Hewlett Packard, Hewlett Packard Enterprise, IBM, Juniper, Microsoft, Tech Data, and Texas Instruments.

“The dynamics of the global marketplace are evolving in unprecedented ways, and we wanted to understand how industry leaders might be seeing the need to think of their brand protection programs, technologies, partnerships and businesses differently,” said Sherri Erickson, director at De La Rue. “This report reveals not only insights on changes for others in the industry to consider but puts a spotlight on emerging issues that may have unforeseen impacts on brand protection.”

Several clear consensus points emerged in this discovery undertaking, including top of mind concerns regarding global influences, industry trends and legacy challenges.

The Shifting Dynamics of a Global Marketplace

Surveyed industry leaders across the AGMA community noted several global issues that are influencing brand protection in unprecedented ways:

•    The capabilities of counterfeiters are on the rise. Counterfeiters and fraudsters are expanding into new markets, while they continue to advance their capabilities as fast or faster than brands can address them through current programs and technologies.
•    The pandemic has expanded market vulnerabilities. COVID-19 has introduced both direct and indirect impacts on the way the global market purchases and sells goods, and the scale at which counterfeit and illicit trade is propagated.
•    Trade has gotten a lot more complicated. GDPR and geopolitical issues involving trade conflict are contributing to increased complexity and adding more obstacles to the distribution of legitimate products into certain regions. At the same time, these issues are limiting investigation capabilities and global brand protection program effectiveness.

Independently, these issues add complexity to thwarting counterfeit and illicit trade. Collectively, they represent the need to rethink and re-engineer brand protection programs altogether.

Emerging Trends Affecting Brand Protection Approaches

Participating brand protection leaders together identified four trends they expect to have an impact on the industry at large, their organizations and their roles, either directly or indirectly. These trends include:

•    Corporate responsibility initiatives: Surveyed AGMA members broadly support and are focused on attaining sustainability, carbon neutral goals and fair-trade practices, and are beginning to push these requirements out to their supply chains.
•    The Internet of Things (IoT): The IoT presents challenges and opportunities for brand protection leaders to thwart bad actors before they take advantage of vulnerabilities by introducing malware, exploiting systems, accessing data and disrupting business.
•    Refurbished devices: Study participants categorically agree that the refurbished device channel has historically been at high risk for fraud, the introduction of counterfeit, and security-compromised technology – a risk that is likely to grow.
•    Right to repair legislation: While device manufacturers are increasingly concerned with pending legislation that could impact the management of device repairs, most do not yet have plans or solutions in place to address it when it becomes law.

Additionally, technology trends sparking interest from survey responders include big data and analytics, automated monitoring and removal services, blockchain, modular customization, and intra-component communication.

Legacy Challenges

While much of the study is forward looking, it also revealed a myriad of existing obstacles that are proving difficult to overcome. Four challenges emerged as common themes shared among responders: customer engagement, component verification, supply chain and business group misalignment, the most prominent being the latter two.

“This study is the industry’s most current analysis of key illegal activities that impact brand protection efforts,” noted AGMA President Sally Nguyen. “It was conceptualized to inform and guide tech industry leaders that are concerned that it has become more difficult for brands to distribute legitimate products, thwart illicit trade, protect revenues and reputations, and protect their IP.”

As an industry association, AGMA is chartered with addressing key threats to intellectual property in the high-tech industry. To read more about how the dynamics of the global marketplace are driving the need to rethink programs, technologies, partnerships, and businesses, download a copy of the report in its entirety here: https://www.delarue.com/authentication/thought-leaderships.

About AGMA

AGMA is a non-profit organization comprised of influential companies in the technology sector. Incorporated in 2001, AGMA’s mission is to address grey market fraud, parallel imports, counterfeiting, software piracy, and service abuse of technology products around the globe. The organization’s goals are to protect intellectual property and authorized distribution channels, improve customer satisfaction and preserve brand integrity.

AGMA welcomes technology manufacturers, as well as persons or entities that own or hold intellectual property rights to finished goods outside the technology industry; government and law enforcement officials; product and service providers who provide goods and/or services to combat grey market fraud, counterfeiting and warranty and service abuse threats. AGMA uses a variety of avenues to cultivate change in the marketplace, including event speaking, educational initiatives, benchmark studies, industry guidelines, and, where appropriate, public policy advocacy.