Keeping it real: Technology designed to erode impact of counterfeit luxury goods

Counterfeiting and malicious grey market activity has been a consistent challenge for luxury goods brands. In fact, the counterfeit market is now considered the biggest illicit trade in the world. 

The OECD estimated that it was worth roughly $464 billion a year, or 2.5% of world trade, in 2019. It’s clearly a lucrative industry for criminals, and immensely damaging to any luxury brand’s reputation as well as their bottom line.

Defending against counterfeiting ultimately requires the luxury goods sector to evolve its approach to product authentication. But as more fraudulent products continue to hit the market, how can luxury brands protect their intellectual and physical property?

Fortunately, innovative technology with embedded security features has the potential to revolutionize organizations’ approach to product verification and digital tracking. Near Field Communication (NFC) and blockchain technology underpin these solutions, becoming essential tools for robust brand protection and product authentication today.

Blockchain is often linked with cryptocurrencies, but this immutable and decentralized database is also key to achieving clear product traceability and authentication. When paired with NFC chips, which enable communications between electronic devices over short distances, it can deliver extremely robust security for physical products. 

So, how does it work? 
Luxury brands can embed an ultra-thin NFC chip within their product. This gives their customers the ability to authenticate the product with a simple tap of their phone. When integrated into a bag, jacket, watch or piece of art, the chip not only guarantees product authentication, but offers customers insight into the item’s lifecycle and wider supply chain visibility too.

Accessibility and simplicity are essential if luxury retailers, and their customers, are to engage with this technology. Solutions need to be turnkey, meaning ‘ready to go’, straight out of the box, but they must also be non-intrusive to protect the customer’s experience when using the product. 

Small and lightweight NFC chips make this possible. These durable, waterproof, temperature-resistant chips are extremely robust, yet easy to hide at only 0.5mm thick. This allows for seamless and versatile implementation with products across luxury goods industries, especially for high-end fashion such as clothing, footwear, or handbags. 

Importantly, the blockchain-based infrastructure behind these sophisticated NFC chips provides a transparent data audit trail. With an unalterable record of transactions available to view and secure data storage, customers have full visibility over each stage of a product’s journey and a guarantee of authenticity.

State-of-the-art protection
Data is only as good as the security infrastructure that underpins it. As the tools used within the grey market to create counterfeit products have become more sophisticated, luxury brands must also keep in step by utilizing the most secure techniques and tools available to secure their goods.

The latest NFC tags adopt the needed security and privacy features to make this possible. For instance, using NFC tags with advanced elliptical curve cryptography – one of the most powerful forms of encryption available today – allows brands to achieve the highest levels of security, prevent digital tampering and ensure product integrity.

Connecting with people
Embedding semiconductor technology into luxury items will set a new standard for verification and digital tracking but can also help brands to deepen their connection with people. Once a customer has tapped the NFC tag with their smartphone and connected to the product’s digital certificate, the brand has more opportunities to engage with them.

Whether it’s offering personalized marketing content or using the interactive platform for broader engagement, brands can provide dynamic and diverse digital experiences for their customers. With a smartphone, customers can be closer than ever to their favorite luxury brands – encouraging loyalty and boosting overall brand trust.

Given the growing interest in sustainability, brands can also use NFC chips to highlight exactly where materials were sourced and how products were made. This has quickly become a significant purchasing decision for consumers. In fact, research from PWC indicates that people are willing to pay a premium and forgo cheaper alternatives when factoring in sustainable practices.

Digital verification is a simple way for luxury brands to provide assurance that they are acting responsibly, and be transparent about their sourcing, manufacturing, and logistics processes. Leveraging NFC technology to visualize the supply chain for luxury and fashion product owners can improve brand reputation while offering a more in-depth and interactive customer experience.

Tiny NFC tags, huge potential
Luxury brands can take action against the persistent threat of counterfeiters. While the tools available to bypass authenticity and verification controls are becoming more sophisticated, the latest NFC chip technology bolsters security so brands are in the strongest possible position to protect their intellectual property and prevent their customers falling for counterfeit goods.

By deploying blockchain architecture and cutting-edge encryption technologies, luxury brands have an opportunity to guarantee product authenticity, protect their reputation, and create new routes to deepen engagement. Ultimately, this makes it more difficult for criminals to create successful counterfeit products, while strengthening customer trust.

-- Romain Pardo, Product Marketing, NFC / RFID tag ICs, STMicroelectronics.