Tuesday, August 22, 2006

Auctioneer, Heal Thyself!

It's not easy being the world's largest flea-market. Just like their trestle-table and tarp brethren, eBay suffers from sellers hawking fakes. eBay has come under attack several times recently from companies (such as Tiffany's) and trade groups (such as the French Luxury Manufacturers), upset at the fact that eBay makes a commission on the sale of counterfeit goods. The law is murky grey here - after all, are newspapers liable for the goods sold in their classifieds? eBay provides brand owners tools (called VeRO) to shut down suspicious auctions. "Not enough", say the brand owners, who want more proactive measures.
Leather goods maker Louis Vuitton, a unit of LVMH, the world's largest luxury goods group, last year found 235,000 examples of counterfeit articles on 340 eBay pages. In one case, it tracked more than 100 copies of the same article being sold within one hour, said Jamet, who is also a senior executive at LVMH.

In 2004, Tiffany secretly purchased about 200 items from eBay in its investigation of how the company was dealing with the thousands of pieces of counterfeit Tiffany jewelry. The jeweler found that three out of four pieces were fakes.

But is it feasible that eBay (or Yahoo, or classifieds for that matter) can authenticate the 60 million products that their members sell on their sites? Then there's alibaba.com, a positive Alladin's cave of products.

As eBay and other online auctions grow, a better method for easily authenticating products is required - certainly if buyers are to trust these sites.

Sunday, August 20, 2006

More Reasons to Whine

Last week the Wall Street Journal published an in-depth article on the problem of fake wine. We've discussed this persistent problem previously (for example fake Canadian Icewine). What's extraordinary is how little manufacturers have done to protect their products. There are no security features - and all the discernable characteristics (label, bottle, foil capsule) are easy to counterfeit.

"Counterfeiting is always on the rise," says Giuseppe Fugaro, head of the Ministry of Agriculture's antifraud unit in Naples. Last month, he pulled 15,000 bottles of fake Falanghina, an appellation of white wine produced around Naples, from Italian store shelves. In 2005, he rounded up more than 6.6 million bottles of bogus Falanghina in Italy.”

“In Italy, the fakes that have turned up in recent years have forced producers of top appellations such as Chianti Classico to rack up more than $1 million in legal fees fighting fraud at home and abroad.”

“Winemakers acknowledge that no vineyard is safe. French winemaker Baron Philippe de Rothschild SA says its growth in China came to a halt a decade ago because of counterfeiters there.”

Some manufacturers are talking about embedding RF devices behind the label ... not that this is much help to the average quaffer, of course.

The New Tylenol Scare? Explosives disguised as cosmetics and sports drinks

Following the foiled plot to blow up planes leaving the UK, manufacturers of cosmetics and beverages are facing a new and unexpected threat: use of their packaging to conceal explosives. Airports have responded by not only banning liquids and gels - but also creating 'sterile' zones beyond security. The question, of course, is: how can one tell that the products haven't been tampered with? Most foods and beverages have tamper-evident packaging - but many liquid products do not. Most concerning was the revelation that one of the plotters worked at the airport. A new level of product integrity is required: the ability to determine with high confidence that a product has not been maliciously tampered with.