Unless you have an identical twin, your DNA makes you unique from every other person in the world. So do your fingerprints. What if this concept of uniqueness could be applied to documents to secure them?
That's exactly what holography pioneer Steve McGrew and data-processing entrepreneur Doug Johnston did. The two Spokane, Wash.-based businessmen developed a technology based on the principle that the components of a dot produced by magnetic ink are unique. "The principle of operation is that it's impossible to lay down a magnetic particle twice in a row," McGrew says. "The components of a magnetic particle are unique--even more than DNA."
Earlier this year, the two men launched MagDot, technology that combats counterfeit documents and also helps track information about them. The system is ideal for securing products frequently sold by distributors, including event tickets, ID cards, security access cards, labels, visas, titles, legal documents, gift certificates, coupons and checks. "Fundamentally, it's a security-marking technology for flat documents and media which are either plastic cards or paper-based," Johnston says.
McGrew and Johnston run their own businesses. They met through a common friend and formed a company in Spokane, Vsc LLC, to manufacture the MagDot system. Here's how it works: Specialized readers scan and analyze small, printed matter. The system uses magnetic ink to produce a dot on a document. Each time ink is applied, tiny particles that make up the dots attach themselves to the document differently, making the dots unique. A reader scans attributes such as the dot's density and alignment of the particles comprising the dot, then assigns the dot a unique identification or serial number. The number is stored in a Microsoft® Access database on a remote computer or the reader itself. The attributes can't be duplicated using magnets, chemicals or heat, McGrew and Johnston say. A user slides the document through its reader, just like merchants swipe credit cards. The reader matches the dot against the database in a fraction of a second. If the document is counterfeit, a buzzer sounds or a red light flashes on the reader. (See "How MagDot Works" on p. 18.)
Event tickets are ideal applications for MagDot, Johnston says. The system, for which McGrew has applied for a U.S. patent, creates a mark on the tickets and stores their attributes. Sporting event- or concert-goers present the tickets, which readers scan to verify authenticity.
Putting the Technology to Work
Unlike other high-end security methods, MagDot doesn't involve holography, embedded identification chips or covert tagging. "The hardest part is the difficulty in understanding its uniqueness," Johnston says. "Most people think it's encoding, but the main thing is that it's very simple."
MagDot involves two types of readers. A basic model, which verifies only whether a document is authentic, sells for less than $1,000. An "intelligent" reader, which includes a computer chip to check authenticity and track documents, costs approximately $1,500.
Because MagDot is new in the market, McGrew and Johnston have charted a marketing plan to bolster sales. "We plan to market the product through the channel," Johnston says. "We don't have plans for direct sales. The fundamental working philosophy is that we want to take the product to the printers who are anxiously trying to differentiate themselves by adding value. They already have existing clients in the security market with specific needs."
Mark Lamb, vice president of global marketing for CFC International Inc., a Chicago Heights, Ill.-based manufacturer of coatings and holographic technologies, has worked with Vsc LLC for the last 18 months on testing and marketing MagDot to his company's clients, which include label printers and manufacturers of tickets, microprocessors, license products and collectibles. "For the last couple of years, the buzzword has been to come up with a way to machine-read authentication," Lamb says. His company tested more than 10 similar devices last year. Most of them had noticeably high false-alarm rates, he says. But MagDot passed muster and easily could adapt to a number of applications, Lamb says.
Lamb's firm isn't marketing MagDot as a stand-alone product, but rather as an added security measure clients could embed with holograms or other security features. "We'll probably put MagDot into the hologram or other products, without people even knowing that it exists as a security feature," he says. Lamb says feedback from CFC International's clients has been encouraging.
Secure Documents With a Unique Dot
A new, high-end security technology, which uses magnetic ink to thwart counterfeiting, hits the market.
BY PREETI VASISHTHA
A new, high-end document security technology called MagDot uses magnetic ink to thwart counterfeiting. It can be used as a stand-alone product or embedded with holograms and other security features. Courtesy of Vsc LLC, Spokane, Wash.
Data-processing entrepreneur Doug Johnston (left) and holography pioneer Steve McGrew recently formed a Spokane, Wash.-based company, Vsc LLC, to introduce MagDot. Courtesy of Vsc LLC, Spokane, Wash.
Battling Fraud on a Smaller Scale
Although high-end security features are gaining steam, distributors should keep in mind these tried- and- true tips for securing checks, gift certificates and other documents:
1. Layer documents with overt and covert security features. The more features documents have, the less likely thieves will target them. Overt features, which are easy to spot, include prismatic printing, holograms, step-and-repeat backgrounds, the padlock icon and bleedthrough numbering. Covert features include microprinting, special inks and fibers.
2. Target chief financial officers, controllers, auditors and accountants with document security suggestions. Top company executives often are more concerned about financial security than others down the ladder.
3. Add more security features to high-value items. A small-value coupon for a pet shop should have different security features than checks, visas and passports.
4. Talk to end users about document fraud. The more they understand the problem, the more likely they are to recognize the importance of security features.
5. Show clients how easy it is to manipulate unprotected documents. Then show how security features work. Some end users won't commit to security measures until they see some in action.
6. Ask clients to store documents properly. Documents with security features aren't effective if they aren't kept in secure places.
Though it's too early to tell how MagDot will fare in the market, Johnston and McGrew believe the technology's uniqueness, simplicity and low cost will work in their favor. They're also banking on increased awareness of counterfeiting in general. According to the FBI, the biggest fraud problem in the United States is large-scale check fraud and counterfeiting operations, many of which are controlled by international groups. In a recent case, the FBI targeted California-based Vietnamese groups that produced large volumes of fake credit cards, payroll checks, travelers' checks, bank drafts and software.
With today's technology, counterfeiting organizations easily can create authentic-looking documents. London-based International Chamber of Commerce's Counterfeit Intelligence Bureau (CIB) says the multibillion-dollar global counterfeiting industry is growing, tarnishing the reputations of legitimate manufacturers. "The range of products affected is virtually endless--designer clothing, music, software, food, watches, liquor, aircraft spare parts, pharmaceuticals, including the male potency drug Viagra®," CIB Director Peter Lowe said in a press release.
Beating the Odds
In the high-end document security market, MagDot faces stiff competition from holograms. But McGrew says that although holograms appear to be more secure, they can be duplicated. "Take a Visa® card," he says. "You have the same hologram on a number of cards. If someone succeeds in counterfeiting one hologram, he can counterfeit all of them." Most people can't identify a counterfeited hologram by looking at it, and hologram readers aren't commercially available, McGrew says.
Another benefit of MagDot is the cost. Magnetic ink is inexpensive compared to custom holograms or fluorescent inks. Distributors and manufacturers agree that custom holograms make pricey products that require a lot of manpower to produce.
Johnston points out that checks secured with MICR numbering often are duped. "It's so easy to counterfeit them," he says. "We had a 20-year-old in Spokane selling fake ID cards to underage students," who was caught recently.
Lamb says the MagDot system would improve if users could scan documents with hand-held devices rather than sliding them through readers. In November, Vsc will launch a reader that will scan simply by waving a scanner in front of dots, Johnston says. This will expand MagDot's market potential to scan large documents, he says.
Preeti Vasishtha is assistant editor of Print Solutions. Email her your comments at pvasishtha@DMIA.org.
Quick Fact
Check fraud and counterfeiting are among the fastest-growing problems affecting the nation's financial system, producing estimated annual losses of $10 billion.
Source: National Check Fraud Center
