Several years ago, some evildoer stole my American Express card number, and I only found out about it when I got a call from AmEx and they told me. (Ironically, the miscreants had used my number to buy anti-spyware.) So I asked the AmEx person, “How did you figure out that it wasn’t me?” And they said, “We don’t tell people because we don’t want the bad guys to find out.”

Such is the dilemma that the organizers of the Brand Protection Conference must face. The conference, held in conjunction with Graphics of the Americas, showcases the latest technologies and strategies designed to prevent counterfeiting. Thursday comprised a host of sessions that spotlighted cutting-edge tools for printers and their clients to protect their packages and their brands—which is, ultimately, the point of anti-counterfeiting.

On Friday, the opening session was called “Fraud, Forgery, Counterfeits, and Deterrents,” featuring renowned security printing consultant Richard Warner. Last year, Mr. Warner used his Brand Protection Conference presentation to showcase a “shocking demonstration” of a forged pharmaceutical label, how easy they are to knock off, and how the “good guys” can spot the fakes. This year, Mr. Warner looked at counterfeit retail coupons.

But first, Mr. Warner provided some background of the economics of various types of fraud and counterfeiting, such as:

  • the cost of attempted check fraud from 2005–2007 amounted to $12.2 billion
  • in 2007, the amount of actual check losses came to $969 million

Mr. Warner then turned to the topic of retail coupons, which, despite the recession, are on an upswing. For example, according to data from the Newspaper Association of America:

  • in 2007, 257 billion coupons were delivered in Sunday newspapers
  • “consumer incentives” (read: coupons) total more than $320 billion
  • free-standing inserts were up 1.5%

Despite the prevalence of Internet coupons, hardcopy coupons still account for 73% of all coupons used, as opposed to 27% downloaded from the Internet. It should come as no surprise to anyone that coupon counterfeiting has become a problem. While it may seem silly to think that saving 25¢ or even $1 on some item can pose any serious economic threat, the fact is that coupon scams can be far more involved—and far more lucrative for the miscreants. The scam is that counterfeiting rings 20 or so strong mass print fake coupons for $1, $2, or whatever off some product. They go and purchase those products, redeeming the coupons. Then, some time later, they return the product for full price. The difference is then the “profit.” It may sound like small potatoes, but with enough people and done enough times, can add up. Meanwhile, employees of retail stores can surreptitiously swap $1- or $2-off coupons for actual money. (In one somewhat famous case, an employee of a popular fast food chain made $15,000 using this scheme.)

In addition to the more or less organized counterfeiting rings, there are also what Mr. Warner calls “nuisance counterfeiters,” or everyday people who produce phony coupons just for the heck of it, to save a few bucks, or only to “stick it to the man.” There are even Web sites where “helpful” consumers share coupons, discount codes, and even “production notes” that explain how to print the coupons, which specific locations are less strict than others, and so forth.

Ultimately, coupon fraud costs retailers and manufacturers millions of dollars a year.

Clipping Coupons

The highlight of the session was another “shocking demonstration” of how a coupon was forged, and what protections were built in to let the “good guys” catch the perpetrators. Frank Kanonik of Digital Print Info described how eerily simple it was to produce a fake coupon—and how a quick print shop can be recruited as an unwitting accomplice.

The target was a coupon for a fictional store called Best Foods Market. (They had wanted to use an actual store but, as Gary St. Onge of Security Printing Systems, the company that created the fraud protection mechanisms, explained, he was reluctant to use an actual client as the guinea pig.) Using an $800 Dell computer, an Epson scanner, and Photoshop, Kanonik was able to scan the original litho-printed coupon at a high resolution and clean it up in Photoshop. He could have output the fakes to an HP Color LaserJet, but he needed full-bleed 8½ x 11 printing, so he took his file to a quick print chain (which he declined to name, for reasons which will become obvious). Even though Kanonik explained to the store manager who he was, that he was printing fake coupons, and that it was for a Brand Protection Conference project, the manager said “No problem” and asked no questions, asked for no identification, or anything—which was perhaps the scariest part of the whole process. (This same unnamed quick print chain was also sued some years ago for being complicit in the production of real fraudulent coupons.) Ironically, when Kanonik went to pay for the job with a $100 bill, the manager examined it with a special counterfeit detection lens!

Kanonik then handed the podium over to SPS’s Gary St. Onge, who then identified the various protections that had been embedded in the original lithographically printed coupon. St. Onge’s company uses what is called the 3P Shield System: prevent, protect, prosecute, a set of tools and technologies that help thwart would-be counterfeiters, protect the brand and the client, and provide evidence that can be used in the event of litigation.

Some of the components of the 3P Shield System include:

  • HALO—an invisible image or text hidden in a colored background, but becomes visible when looked at through a special lenticular viewer. If the viewer is rotated, different combinations of images or words can be displayed, adding an additional layer of protection.
  • Disappearing Screen Pattern—It is possible to print lithographically backgrounds or parts of backgrounds that are invisible to the optics of a copier or other capture device. This means that when the duplicate is printed on a toner-based machine, the background won’t print, making it easy to identify a fake.
  • Sentinel VOID—Similarly, when a particular original litho-printed coupon is copied, parts of the background in certain areas drop out, revealing the word “VOID,” a pretty clear indication that the coupon is a fake.
  • Microprinting—Offset presses can print text as small as 1 pt., which can be used to form a rule line that appears solid, but when viewed through a loupe actually contains text. When copied, the text is not captured legibly, if at all.
  • False Positive—Coupons can also have small patches imprinted with a special ink formulation—similar to what is used on U.S. currency—that changes color when a special counterfeit detection pen (CDP) is applied.

All of these items and more (for obvious reasons, anti-counterfeiting solutions providers don’t give away all their secrets) can be used alone or in some combination.

Ultimately, the goal of any effective anti-counterfeiting strategy is to make it not worth a counterfeiter’s while to go to the trouble. After all, as Kanonik said, “counterfeiting is a business” that has its own return on investment. Are the rewards to be gained from the forging of a coupon worth the effort?

And in today’s economy, devising security measures that are cost-effective is of paramount importance.

The Public Printer

The Brand Protection Conference keynote speaker on Friday was his Honorable Robert C. Tapella, the nation’s 25th Public Printer. The Public Printer is the head of the Government Printing Office (GPO), is nominated by the President of the United States, and must be approved by the U.S. Senate. By law, the Public Printer must be highly skilled in the areas of “bookbinding and printing” to qualify, although skills in electronic information dissemination have become even more crucial. Mr. Tapella was nominated for his post in 2007 by then-President George W. Bush following the retirement of former Public Printer Bruce James, and was sworn in on October 10, 2007.

Mr. Tapella spoke about the history of the GPO (it was officially created in 1860) and the position of Public Printer, a post created by Benjamin Franklin. Much of his talk touched on the gradual incorporation of digital media into the GPO. Indeed, the 2009 Budget of the United States was the first time an important government document was delivered electronically, requiring the GPO to develop a special “seal of authenticity” that ensures that electronic documents are in fact official GPO products.

The GPO has also been instrumental in the production of U.S. passports, and the development of the new e-passports that debuted in 2005. (The U.S. passport was invented by—big surprise—Benjamin Franklin.) The e-passports combine traditional printed information with an integrated circuit that contains the same information in electronic form, as well as other types of security features. By the end of 2008, said Mr. Tapella, more than 30 million e-passports have been issued. The GPO is also developing various types of smart cards, or credentials for employees of various types of government agencies.

Like just about anyone anywhere these days, the Government Printing Office has one foot in print media, and one foot in electronic media. And the third foot is exploring cutting-edge technologies that meet the needs of the Government, serve the public interest, feature the latest security technologies, and navigate changes in the ways that people prefer to access information.

What would Franklin think?