Countering the Counterfeiters
Globally, the cost of counterfeiting each year is estimated at a staggering U.S. $1.8 trillion. Put into context, that is more than the gross domestic product of Spain and Portugal combined.
According to the European Unions Intellectual Property Office, 60 billion each year is lost in revenue by European companies across 13 economic sectors, or the equivalent of 7.5 percent of all sales. That is 116 for every citizen.
It is not just high-end fashion brands that are copied. Pharmaceuticals, car parts and even lubricants are mimicked by fraudsters as a means of generating substantial income.
In 2018, Shell reported it found a problem with oil being sold under its brand in Malaysia. From samples obtained in stores and online channels, the company found that one-third of these were counterfeit.
Shell responded to the product issues it found in Malaysia by working with local law enforcement officials and advising its consumers to only buy official, genuine Shell lubricants displaying labels complete with QR codes, which can be used to authenticate that products have come from authorized outlets via Shells website.
Nigerian oil marketers, too, complained in 2017 that counterfeit products were costing their industry the equivalent of $200 million in lost sales each year.
With lubricants containing complex chemistry, in response to regulators demands for improved efficiency and end-users requirements for application protection and performance, these sophisticated products are being increasingly targeted by fraudsters.
Counterfeit products gravely hurt the brands they copy. They also impact consumer confidence in the industry. Poor-quality, sub-standard formulations or even repackaged waste oil are used by increasingly sophisticated fraudsters to rip off end users. So, what can be done to counter the counterfeits and fight back against the fraudsters?
Security measures already employed by companies include batch codes on product labels, which are a requirement of any quality management system. However, a counterfeiter may not care about the validity of a batch codes sequencing, and lubricants bought online might not include one at all. The batch code might be something the consumer overlooks entirely, so by the time an unwitting end user has taken delivery of the product, it may be too late.
The addition of oil-based markers and dyes to products are not new in the industry. Today, many classic car engine oils are sold with the addition of a colorant to aid consumer recognition.
Colorants and dyes can be problematic in operation, as a simple colorant can be easily and readily copied by the counterfeiters. They are also difficult to manage in operation, requiring extensive flushing of feed lines after blending to remove all traces of the color substance prior to the next fill.
More recently, chemical fingerprinting has been introduced as a means of proving the source of the product. Often included as an extra additive at the end of the blending process, these anti-counterfeit measures can provide extra brand reassurance for end users and distributors in the supply chain. Certain soluble markers that only show up under certain conditions, such as through a mass spectrometer, can also provide added security and product identification.
If these chemical fingerprints are to be effective, they still require scrutiny. But in the absence of concern from the end user, this might not always be the case.
The Technical Association of the European Lubricants Industry, or ATIEL, has introduced a global product compliance program that regularly assesses the technical specification of products making claims against the ACEA engine oil sequences developed by the European Automobile Manufacturers Association. Based on a limited set of technical characteristics, products that fall short of the mark can be readily identified and action taken to address areas of non-compliance.
ATIEL also runs a Letter of Conformance program for lubricant marketers making claims against the ACEA sequences. This registration system commits companies to agree to abide by its European Engine Lubricant Quality Management System, a comprehensive quality management system for automotive engine lubricants designed to assure end users of the quality of lubricants available in the market and the validity of any product claims.
The American Petroleum Institute also regularly carries out monitoring and compliance checks on products making claims against its standards. Companies making unauthorized use of the APIs numerous certification marks are named and shamed on their website.
Perhaps it is not enough for the sector simply to manage its own registration programs without playing a role in educating the end user to raise awareness of the existence and purpose of these systems.
Self-regulation for the sector has been established for a few years. For example, Fachgemeinschaft Schmierstoffqualitt, or FSQ, is a German lubricant association whose members submit their products for formal assessment on at least an annual basis.
In April, the Spanish lubricants association Aselub announced it had begun a pilot program of compliance testing of members products. Although this was a one-off, it could augur further testing programs in the future.
Finally the Verification of Lubricant Specifications allows individuals and companies to raise formal complaints made on products available for open sale in the United Kingdom to address issues of non-compliance.
As the chemical technology deployed in lubricants improves and the associated cost of development and product increases, companies will look to higher-level security markings and anti-fraud measures to protect the interests of their end users and their own reputation of their brands.