Guest Blogger: Frederick W. Mostert, Chairman of the Authentics Foundation

May 13, 2010 § Leave a comment

Innovation in Brand Protection

With the total number of websites on the Internet exceeding 205 million in March 2010, counterfeiting is a growing industry, especially since more valuable items have entered the scene. In fact, the Internet is the top destination for counterfeit sales. According to the Annual European Anti-Counterfeit report published recently by PriceMinister, 80% of counterfeit goods were purchased online in 2008. This situation causes serious downstream crime as well, as it is not uncommon for counterfeiters to be involved with organized crime and child labor practices. As a result, innocent third parties like distributors, retailers, and auction houses can unknowingly become involved in the risky aspects of the industry.

On the Internet, it is difficult for customers to spot fake products and it is hard for them to know if the seller is legitimate. To avoid being victim to counterfeiting, retailers must take extra caution to embed very specific markings in their products that distinguish fakes from legitimate originals. Despite elaborate branding measures, labels and markings are still subject to duplication, only to be spotted as fake by those in the industry with a sharp eye for detail.

Not only are counterfeit products a challenge for customers to detect, but retailers often have no secure way of verifying a purchaser’s true identity. E-commerce transactions are extremely vulnerable to identity theft because, aside from credit card information, many sites do not take additional steps to verify the identity of a credit card user. To authenticate transactions from both the purchaser and seller’s end, companies are using technology to help eliminate this uncertainty. Some of the technology-based solutions that help to ensure secure online transactions include: Verisign, RSA, Authentec, Ensure, and Authentify. Despite the development of new technologies to verify genuine products and retailers, ways to override these methods are constantly being created by those that benefit from the counterfeit industry. For instance, in 2009, UK financial institutions lost 14% more than the previous year, due to online banking frauds and accounted for the largest industry segment of total phish attacks, with a 36% growth despite their efforts (UK Payments Administration – March 2009). In order to offer a completely secure exchange, companies must implement a product that resists duplication or misuse.

Authus has been developed as a customer-focused solution for identifying authentic goods. Created by luxury goods company Richemont to protect customers of its portfolio of luxury brands, Authus is verification software that uses two unique ways of confirming the authenticity of both a buyer and seller. First, “The Smart Seal” is a way to positively and securely identify a website to a user. The seal is provided by a brand to its authorized retailers to help customers distinguish between online sellers who are operating with the brand’s permission and those that are unauthorized. The second method of confirmation is the, “Trusted Content Channel.” This refers to certified content from brands, credit card issuers, vendors, and endorsers, which is used to ensure secure transactions for large purchases, online banking, and transferring personal information such as medical records.

Unfortunately, due to the high value of luxury goods, the risk for counterfeiting or scams is high as well. Traffic diversion is estimated to cost online advertisers almost $2 billion while the amount of business lost to online counterfeiters is expected to top $137 billion in 2009, according to MarkMonitor. Authus bridges this gap and acts as an active security agent that, while hardly noticeable to the customer, ensures a secure and easy process for both the seller and the buyer and notifies the customer if an unauthorized party has duplicated the seal. Authus will help eliminate the buying and selling of counterfeit products by helping customers reduce their risk of unknowingly purchasing a counterfeit product, confirm credit card companies’ purchase protection plans, ensure reliable shipping practices, and verify retailer warranties. For online retailers, Authus offers them the ability to distinguish themselves as authorized retailers and build customer trust and loyalty which leads to long-term customers and increased revenue. By helping brands direct customers to authorized retailers and alert them of unauthorized sellers, Authus increases overall customer satisfaction by selling quality, legitimate products, and increases demand for truly authentic goods.

Alon Ben Joseph, CEO of Ace Jewelers Group headquartered in Amsterdam, The Netherlands, after installing Authus into his ecommerce site commented, “The addition of Authus to the Ace Jewelers eBoutique brought immediate response from our customers who recognized the Authus seal as bringing an unprecedented level of security, trust and authenticity to their purchasing with Ace. Authus seems simple, but is actually an ingenious technology that completely protects both the consumer and E-tailer by providing an absolutely secure environment for Internet shopping.”

While the internet has become the main platform to communicate with consumers, reduce cost of sales, acquire new customers and increase customer retention, brand abuse is now a critical business and cost issue. Using Authus will bring high returns on investments as it will not only protect revenues, it will also protect its consumers from fraud and counterfeiting, which will also increase revenues. By creating a safe transaction for both buyers and sellers, Authus guarantees a secure experience for all.

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