May 2012

Counterfeit Technology Verification

How do you know the product you are buying and selling is genuine?

By: Ed Thomas, Verification Systems Technology

If your company unknowingly sells a counterfeit, modified, or stolen hardware device, it could not only destroy your relationship with your client or authorizing vendor, but put you in the unenviable position of having to defend yourself in a criminal indictment or civil lawsuit.

The Situation

There are several contributing factors responsible for creating the enormous problem that currently can only be described as an epidemic. 

  • By moving manufacturing to an overseas site, vendors have chosen a high risk profile for lower labor rates.
  • The large OEM’s will not share any counterfeit detection methods because of the fear they will be assisting counterfeiters. 
  • The foreign governments do nothing to discourage the individuals and organizations responsible for manufacturing the counterfeit and modified hardware. 
  • The quality of many of the counterfeit products makes it difficult for resellers, end users, andU.S.customs to identify the undesirable hardware by visual inspection alone. 

An Epidemic Problem

This epidemic has a significant financial impact in each industry within the supply channel.  The OEM’s lose sales revenue as a result of counterfeit equipment.  They are also spending more money than ever before on brand protection. The independent suppliers suffer from an effective smear campaign by the OEM’s that use strong arm tactics with corporate and government end users to change the bid process with the goal of eliminating competition with independent suppliers. 

The end users lose in several areas.  At best, counterfeit or modified products often have slower performance and a shorter Mean Time Between Failures (MTBF).  At worst, they can be controlled by other imbedded programs known as Trojan Horses that can control the counterfeit or modified hardware by sharing all of the confidential information going through their network with criminal organizations or unfriendly governments.  Imagine the national security implications for mission critical end users like the military, banks, or nuclear power plants.  It has never been more important to identify the counterfeit and modified products before they get installed into the end user’s network.

New Company Offers Electronic Verification

There has never been a “Neutral” online assurance service that is available to everyone and can assist in electronically verifying that the product that you receive or sell is authentic, free of modifications, and not stolen.  Until now…   

Verification Systems Technology (VST) is a small company inBoulder,Coloradothat is now providing just that service: known as the online VST – Assurance™ Service.

VST’s business model tailors verification methods to help clients find the best ways to assure they are only sourcing genuine products.  This helps to make sure they don’t get caught paying for undesirable products.  VST also works with destruction houses and industry associations to facilitate change in the purchasing culture while, when warranted, provide evidence of misbehavior and criminal counterfeit trends to the authorities.  The VST – Assurance service is an Internet-based tool available to help anyone in the supply channel sort the “good from the bad.”  VST – Assurance is focused on protecting your company’s reputation by completing your verification process by providing the ability to electronically identify counterfeit, modified, or stolen products before you pay for them.

Verification is about establishing confidence and trust that the products you buy or sell were made by the manufacturer (or their contract manufacturer) and are not stolen, modified, or counterfeit.  This assures you get the performance, quality, longevity and security you expect out of your purchased products.

Why Create a Verification Process?

• Protect your company’s good reputation.

• Sort the “Good from the bad.”

• Maximize purchasing opportunities while reducing financial risk.

• Increase the value of your inventory.

• Declare a zero tolerance for counterfeit, modified, or stolen products.

• Increase sales.

• Reduce unexpected customer events.

 

Changing your company’s purchasing procedures.

If you identify undesirable products but don’t change your purchase orders, you could still be legally obligated to pay for them.  You may either have to destroy the product at your cost as well as pay your supplier for it, or return it to your supplier only to contaminate the supply channel somewhere else.  You should always consult with your legal counsel concerning the advisability of adding this type of language to your company’s Purchase Orders to specify that your company (i) does not officially accept certain products until they have passed verification testing (ii) and that products failing the testing will be held in quarantine until they can be sent to destruction (iii) and that the supplier agrees by fulfilling the purchase order that they will pay for destruction of the products that fail incoming inspection testing.  When the purchase order is placed, you will still need to inform each of your suppliers in writing that you are a verified products supplier, have an established incoming verification test program, and forward failed products to a destruction house at the supplier’s expense.

How does verification work? 

The initial procedure in verifying a product is a physical inspection to see if the device is even worthy of electronic testing.  The physical inspection should focus on visually identifying any signs of poor manufacturing, shoddy physical characteristics, fuzzy looking manufacturer logos, incorrect labeling, cheap housings and more.

If the product passes the physical inspection then insert the device into an approved VST online testing setup, run a test, and 10-15 seconds later you receive either a Verification Report with a VST seal or a Failure Report.  The reports should remain with the product until installation or destruction.  After the verified product is installed, the reports should be attached and kept with the invoice. 

All of the products that fail the test should be put into an established quarantine area totally separate from all other products (never with your product inventory).  Remember you did not accept this product. 

VST verification tools use multiple industry standards, VST proprietary, and manufacturer specific tests to analyze and verify a device’s authenticity, while scanning for unauthorized electronic modifications.  It can also be used to verify the existing hardware in any network.

After the products are tested, all of the relevant technical information is stored in a secure global database that also scans across all previous tests identifying duplicated devices and industry threat trends. Thousands of devices have been tested and analyzed by VST’s tools confirming the accuracy and effectiveness in detecting and identifying counterfeit and modified IT hardware. 

What products can VST test?

The products that are currently the most highly counterfeited are the networking SFP/GBIC’s.  These line items can be tested with the online system.   All Cisco compatible 100/1000 Base SFP’s from HP, 3Com, Juniper, Cisco, Avaya, Finisar, Avago, Methode, Opnext, and Sumitomo.  Various routers and switches are currently available for mail-in testing and will be available soon on the online system along with products like disk drives and the new 10 GBit GBICs.

GLC-SX-MM      SFP-GE-L

GLC-LH-SM      SFP-GE-S

GLC-T              SFP-GE-T

Benefits to establishing a Product Verification Process

1. Identify and sort between verified, counterfeit, or undesirable products before they enter your company’s “Assured Products” inventory.

2. Understand and grade your suppliers based on their percentage of failed products versus those that pass verification.

3. Enable you to pass on any costs associated with verification and improve your company’s reputation in the process.

4. Create a defendable position, should a legal challenge occur with regard to counterfeit or stolen products.

5.  Establish your company as a leader in counterfeit prevention and give your clients confidence that products they source from you will be genuine.

6.  Help law enforcement investigate the individuals and organizations responsible for bringing the counterfeit products to the United States.

7.  Contribute to cleaning up this industry and create a fair competitive market for all.

Join Powersource Online and Verification Systems Technology in the fight against counterfeit products and check out the VST – Assurance Service tools at: http://www.verificationsystemstechnology.com/

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