Counterfeiting lubricant products and their packages is an enormous business in many countries in the Middle East and Africa. This dodgy trade spans from roadside collectors who fill discarded bottles with fake or used oil to blenders that use real products to make substandard fluids with fraudulent performance claims. Both practices damage end users vehicles and the reputation of the whole lubricants industry.

Attempts to deceive end users – mainly retail consumers – include putting bogus or diluted products in used packages or, worse still, fake products in counterfeit packaging designed to look like the original.

This often starts as an opportunistic crime by lone operators, escalating to increasingly sophisticated criminal gangs and then to full-scale businesses. Each is met by countermeasures taken by lubricant companies, which in turn are undermined by redoubled efforts by the fraudsters.

The greatest opportunity for counterfeiting lies with do-it-for-me markets, where the end user is far removed from application, Charles Djaelani, a United Kingdom-based independent consultant with many years of experience in lubricants and fuels supply chain operations, told LubesnGreases.

Lubes Criminal

Small-scale counterfeiting begins with individuals collecting legitimate lubricant packages and refilling them with any fluid that looks and pours like the product that was originally in them. The next step up is that they buy used bottles from filling outlets. But once unscrupulous workshops see that there is money to be made, they begin to refill genuine packs and use them in-house themselves.

Steve King of SJK Marketing Services Ltd. spent many years in the Middle East as a marketer for Castrol and recounted a common story from the days of metal cans.

Years ago, I saw an oil change shop where the one-liter tins of genuine brands were displayed on the shelf upside down. If a customer asked for the genuine brand, the mechanic took the tins from the shelf and punctured the top – actually the bottom, because the tins were upside down – and poured the fluid into the engine. What I realized was that if he could later get a new base for the tin, he could then display it again the right way up. When the next customer chooses it, the top is still genuine but with a false base on the bottom, hoping the customer will not look at the bottom of the tin.

Lube marketers then developed deposit and return schemes for packs, but these had limited success because these oil change shops could often make more money from filling empties with counterfeit oil than by returning the container to the lubes marketer.

The cost of collection was high, and the oil companies then had the problem of what to do with the packs when collected, explained Djaelani, who thought the idea may have been ahead of its time. If a lubricants marketer now thinks of end-to-end stewardship of its products to reduce environmental impact, it would have to implement a similar scheme to collect packs.

Moves to plastic packs, labels that cannot be forged and holograms have only limited interest in many markets. King recalled a competitors perspective of the market leaders attempts to move to more secure plastic packaging in the Middle East.

The market leader advertised a lot about the closures and seals so that consumers would be aware of what to look out for. But they lost business…the average consumer was not interested in a corporate advertisement about tamper proof seals and closures. Not all publicity is good publicity, in this case.

At that time, some consumer sentiment was that metal packs (still in use by most competitors) were better. The consumer did not want plastic packs, even though they contained the genuine fluid. This led to counterfeiters filling in old-style cans and the trusted person doing the oil-change telling the customer that they were using the genuine product.

These issues are still prevalent in many countries – new packs, holograms, labels or caps are introduced, but the consumer doesnt completely understand the detail, and the forgers and counterfeiters continue to make money.

Other high-tech measures have been offered. Oil majors Shell and Total, for example, print anti-counterfeit product identification codes hidden under a peel-off label on their bottles, which the consumer can then verify online or via text message. Other methods include unique serial codes, product authentication tracking and tracing of the supply chain, and physical product tampering prevention.

Plastic packs are now the norm for consumer volumes, and the challenge is to keep them intact once filled with genuine fluid. Most plastic packages have single-use caps, but criminals can source near-identical materials. There are many companies willing to mould plastic for a customer without asking too many questions about where the products are going. Once the supply chain for closures was established, it was only a matter of time until counterfeit packages arrived with counterfeit labels.

In my experience any anti-counterfeit measures are only effective for a little while until the counterfeiters catch up, said Djaelani.

Fraud with Danger

All these attempts to replace packaging, labels or closures are about selling a fluid that has lower cost and inferior performance. In some places in the Arabian Peninsula, this is perceived as a victimless crime, as the recommended oil drain interval for passenger cars is thought to be too short for any damage to be noticeable. But it is not a victimless crime where industrial users are concerned.

A gear oil delivery was intercepted and adulterated with rubber processing oils. When gearbox failures came to light weeks later, the customer claimed that the supplier had reduced additive treat rates, Djaelani recounted.

The customers first assumption was that the blender was ripping them off, not that the supply chain had been compromised between the blender and themselves.

This is where the supplier needs a good relationship with the customer to demonstrate that the adulteration could not have happened in their supply chain. If trust has been lost, the supplier may not be able to gain access to samples from the customer to demonstrate that they are different from retained samples at the plant. Of course, good practice at the plant is also necessary to retain samples.

The incident was highly significant for the blender, as the customer was a global original equipment manufacturer. Djaelani and his colleagues spent weeks painstakingly investigating the whole supply chain. Fortunately, the OEM customer still had some drums of product in stock. The first breakthrough in uncovering the fraud came when they discovered that the shipping details on the drums were fictitious.

The product had crossed a national boundary, so the lubes marketer was able to ascertain all import volumes in the period and found that less gear oil had been declared than the contaminated order. This volume was balanced with an import of rubber processing oil. Suspicion fell onto operations in the bonded warehouse where the gear oils and process oils had been held. This was under the control of the customers haulier. Once the customer began to accompany its hauliers drivers during the transfer of products from the bonded warehouse, no further issues were encountered.

Staying Ahead

Djaelani and King agree that this is a problem that is rife in developing countries. Where wages are low, the margins on an adulterated bottle or drum of oil are a significant temptation.

It is a problem in the Middle East, but similar problems exist in Africa, Asia and Latin America – most of the developing regions, King said.

It is also a problem that is in proportion to the stature of the company being attacked. According to Djaelani, who worked for Shell, part of the issue was that our products carried a premium in the market and therefore made it attractive for counterfeiters to falsify.

Some countries are beginning to put effective enforcement in place. For example, last year five government agencies in Dubai, United Arab Emirates, including the police, joined together to curb illegal lubricant trading. But there are still countries with no adequate consumer protection legislation and/or inadequate enforcement organizations.

The leading brands try to pursue these counterfeiters, if they know who they are, and attempt to get them prosecuted and closed down. Sometimes they have success, King said.

Both also agree that in many countries, the only practical solutions are in the hands of the oil marketers.

You have to stay ahead of the game. These people are very resourceful and inventive, and they will find new ways of doing things and continuing their activities, King warned.

Trevor Gauntlett has more than 25 years experience in blue chip chemicals and oil companies, including 18 years as the technical expert on Shells Lubricants Additives procurement team. He can be contacted at trevor@gauntlettconsulting.co.uk