Keeping up with Diverters and Counterfeiters

by K2 Intelligence Investigations · Compliance Solutions · Cyber Defense
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K2 Intelligence Investigations · Compliance Solutions · Cyber Defense

Investigators are going proactive with new tools that troll the Dark Web for bad actors.

How do manufacturers hear that they have compromised product in the marketplace? Up to now, there have only been a few ways. A consumer might lodge a complaint. An anomaly in sales to a particular distributor might arouse suspicions. A customs agent might spot a suspect-looking shipment. Mostly it’s pure chance.

The problem is these are all reactive. They’re all responding to an ongoing scheme, one that is hurting the company in real time. The bad guys always seem to be several steps ahead.

But that’s now changing. Professional investigators are learning to combine traditional detecting skills with sophisticated new technology to search for diverted and counterfeit product in a less reactive, more proactive way.

Searching the Dark Web

The COO of a major pharmaceutical company didn’t really believe his OTC brand was being counterfeited, but he wanted to be sure—so he initiated an investigation. He knew that a cyber-investigative team had recently developed a new search tool to troll the Dark Web for evidence of illicit product, which he thought might prove him right. It proved him wrong.

The team identified, almost immediately, three black market websites advertising a product that looked just like his company’s, but wasn’t.

This could have been a case of diversion—of legitimate product being marketed through illegal channels. But more likely it was outright counterfeiting—false product sold under the guise of a well-known brand. At best the product would be a weakened or an ineffective version of the original. At worst it would be toxic or even life-threatening. The impact on the company—financial, legal, and reputational—was potentially dire.

Going Proactive

But this was, strangely, good news. At least the company had found out about it. Now investigators could visit the illicit site. They could see how the product was being sold. They could buy the product to use as evidence. They could look to match the site to other links in an illegal supply chain. There was even a chance they could identify the suspects and, just maybe, shut them down.

The cyber-investigative team was onto something big. Using their tool, investigators no longer have to wait for evidence of counterfeiting or diversion. They can go out and find it. They can be proactive. The Dark Web—that vast illegal online marketplace—might be home to millions of shady operators, but now the good guys get a chance to identify, interact with, and buy from them, and ultimately disrupt their operations.

Criminals with Resources

Counterfeiting operations are often large, well-bankrolled criminal organizations. They work globally, using financial clout and cutting-edge technology to build sophisticated factories, set up elaborate distribution networks, and circumvent the laws of each country they operate in—many of which have lax enforcement to begin with.

Diversion operations, by contrast, are not necessarily criminal, but they often turn out that way. They frequently involve wholesalers buying a branded product in overseas markets and selling it in the United States, so as to take advantage of lower prices in those markets. This is certainly in violation of company policies and, often enough, the law. But what’s dangerous is that it blatantly disregards other significant differences in the product that vary from country to country. In a drug, this can mean different ingredients or dosages. In a diagnostic device, it can mean readings that are incorrect, and therefore useless. Ultimately, it erodes consumer trust for the brand in question.

Investigators with Resources

Identifying diversion and counterfeiting operations is no easy task, which is why the cyber investigators’ search tool is a possible game-changer. But it doesn’t exist in a vacuum. Even when used effectively, other tools and procedures come into play.

Professional investigators can take information they acquire with the search tool and run with it. They can arrange evidentiary purchases. They can determine if the product is genuine or counterfeit. They can walk back the supply chain to find out who is distributing what and from where. They can track down the country and, hopefully, the factory of origin.

But these things are not possible without boots on the ground all over the world. Skilled researchers are needed to comb public records in multiple languages. Informants need to be cultivated, suspects identified, persons of interest interrogated. Undercover operations and covert surveillance are often required. Contacts in law enforcement—state, federal, and international—are absolutely essential.

Work with Professionals

Even when actual arrests are impossible, there are actions that can be taken. Corrupt wholesalers can be eliminated, civil seizures can break the supply chain, public health alerts can help straighten out reputational issues. There’s a lot to be said for simply understanding what’s going on.

Will any of this put an end to illegal diversion and counterfeiting? Certainly not. Still, anything that gives the bad guys pause, that keeps them from acting with impunity, that raises their stakes and their risk level, is certainly a step forward.

Most businesses have neither the resources nor the experience needed to do this. Only by engaging a professional investigation team will you get the specialized skills, global contacts, and advanced technology required to do it right.


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