8 major risks you face if your Digital ID is not secure
As brands adopt digital IDs and product passports to support traceability, consumer engagement and sustainability strategies, it’s essential to put in place measures to ensure their security.
Simply because a product’s ID is digital and unique to each individual product doesn’t mean that it’s secure and its ID can be robustly authenticated.
The pitfalls of insecure digital product IDs
We have covered the reasons why not all Digital ID implementations can provide secure authentication, and what are the characteristics of a secure digital product identity in previous articles. In this article, we will cover the eight major risks brands face if they adopt insecure Digital Product ID implementations.
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Exacerbate counterfeiting
Brands that use insecure IDs are more vulnerable to attack, as they provide counterfeiters with a simple and undetectable way to replicate and sell their products. If not implemented securely, the Digital ID can become a product's Achilles' heel. A solution aimed at reducing counterfeits may inadvertently worsen the problem, ultimately harming the brand, consumers, and the environment.
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Product identity theft
When counterfeiters clone a product's marker they effectively steal the identity of the product and the information that goes with it. The theft of a product's identity, product passport or digital twin not only gives counterfeiters a simple way to make their products appear more authentic and increases a brand's risk of becoming the target of counterfeiters. Cloned IDs can be applied to any illicitly produced product to benefit from certifications and content. Illicit products risk disrupting the performance and efficiency of a brand’s ecosystem of services if they are not prevented from entering.
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Erosion of consumer trust
Digital IDs for products raise consumer expectations, and insecure IDs can lead to conflicts between brands and consumers over product authenticity. This issue becomes more pronounced in re-commerce, where consumers rely heavily on authentication when buying and selling used items, increasing the likelihood of encountering cloned IDs. If a brand cannot differentiate its genuine products from fakes with cloned IDs and manage consumer experiences in these sensitive cases, consumers may avoid the brand altogether. It is therefore crucial for brands to implement secure digital ID systems to maintain consumer trust and avoid negative repercussions.
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Reduced sustainability
Inadvertently giving counterfeiters the opportunity to create more convincing fakes, and having no means to intercept, recognise and manage the issue, means that fakes will circulate in greater numbers and negatively impacting the brands sustainability.
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Reduced brand appeal
Brands that focus on protecting only their ecosystem of services and ignoring the issue of fakes that are free to circulate in the ecosystem of third parties such as resale market-places face punishment from the market. Market-places face growing regulation to protect consumers from fraud. Brands that provide third-parties with the support and tools to help them reduce their exposure to legal risks will inevitably be favoured over those that don’t.
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Non-compliance
Upcoming regulations are expected to require secure authentication for products. Failure to comply with these regulations can subject brands and manufacturers to legal and reputational risks. Counterfeit products can also raise concerns regarding manufacturer responsibility. If authorities are unable to distinguish between genuine and non-conforming products with cloned IDs, the brand could be held accountable for the production and distribution of illegal products, even if they were not directly involved in production.
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Low organisational trust
Insecure serialisation can compromise the reliability and accuracy of data, leading to a lack of trust among manufacturers and brands. This, in turn, can discourage investment in system improvements, further exacerbating the risk of counterfeiting and fraud. The integrity of the entire supply chain can be undermined as a result.
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Supply chain ungovernability
To identify the root cause of counterfeit or substandard products, it may be necessary to trace them back through the supply chain. However, an unreliable or insecure serialisation system can impede this process, causing delays and supply chain disruptions.
Conclusion
Brands can mitigate these risks by adopting secure serialisation systems and providing education and training to stakeholders on best practices for ensuring product authenticity and safety. If you want to learn more about what makes Digital IDs secure and valuable for businesses, read our latest white paper “Connected Products: why authentication is a hygiene factor” or contact us to arrange a consultation or a demo.
