Monday, May 11, 2020

Freight Forwarders Must be Aware of New Rash of Supply Chain Crimes as Fake Goods Proliferate

Covid-19 Has Increased Criminal Portfolios - but Solutions are Out There
Shipping News Feature

WORLDWIDE – Like it or not those forming each link of the supply chain have a duty of care to ensure that anything they pass along is free from the whiff of criminality. This applies particularly to freight forwarders who now find themselves carrying more responsibility than ever before to ensure that every consignment is exactly what it says on the tin.

In the UK for example the legislation regarding Fulfilment Houses is titled a ‘Due Diligence Scheme’ putting the onus firmly on those responsible for storing and distributing the goods. Whereas the argument from a forwarder was traditionally that not only could one not see inside the outer packaging, but that the agent was prohibited in interfering in any way with the items i.e. one could not open it to examine contents.

The instructions from HMRC were a little slow in coming at first but, having established they would be prosecuting forwarders which neglected to not only keep full records of each transaction, went on to say it would be investigating why any possibility of fraud, particularly counterfeiting, had not been discovered by the Fulfilment House.

Put bluntly, the Customs authorities said, ‘As we are unlikely to catch those responsible for any fraud, we will be looking to you, the forwarder, to recover any fines from’. This put the agents in an invidious position and left, as so often with HMRC, the precise level of responsibility open to interpretation as it sees fit. As we have pointed out before, opening the packing seals on an electronic piece of technology priced at thousands of pounds may well render it unsaleable, a fact the customer would have no hesitation in pointing out.

Now the Covid-19 situation has revealed yet another layer of crime, which centring on goods in transit, means even more vigilance is required. Last month Europol issued a publication warning of the rise in counterfeit goods being produced under cover of offering solutions to the pandemic, particularly counterfeit pharmaceutical and healthcare products.

Europol, the law enforcement agency of the European Union (although it has no direct powers of arrest which makes one wonder about the EU definition of enforcement) says the situation has seen criminal enterprises rapidly adapt their product portfolios to exploit shortages of genuine products and the fear and anxieties of regular citizens.

The World Health Organisation has also warned about the growth in the number of fake medicines linked to coronavirus on sale in developing countries in Africa and other parts of the world, where counterfeiters are exploiting gaps in the market and the international trade in fake pharmaceuticals which is estimated to total in excess of $4 billion.

One weapon in the armoury against such crimes is claimed by the International Hologram Manufacturers Association (IHMA), a group of more than 90 of the world's leading hologram companies. The IHMA says that as the pandemic continues, and law enforcement and government agencies remain stretched in the face of the challenges faced in the current climate, brand owners and product manufacturers can be far more proactive in tackling the counterfeiting threat. IHMA chair Dr Paul Dunn, commented:

"Crafty criminals are taking advantage of the situation to use illegal global supply channels, sophisticated scams and fake documentation to obscure the origin of counterfeit products and their provenance. This is having a significant impact on consumer confidence and wellbeing during this time of global crisis. In particular, the dangers fake medicines and drugs pose to people's health and safety.

"These reports reinforce the role of holograms as effective weapons in the frontline fight against counterfeiters and fraudsters and will continue to enhance brand protection. All involved in the supply chain can be reassured by the presence of holograms on products, recognising the benefits they provide."

Dr Dunn says the use of well-designed and properly deployed authentication solutions, as advocated by the ISO12931 standard, enables examiners, such as fulfilment houses, to verify the authenticity of a legitimate product, differentiating it from fake products coming from counterfeiting hot spots in Asia and Eastern Europe. Even those that carry a ‘fake' authentication feature can be distinguished from the genuine item if that item carries a carefully thought-out authentication solution.