New Kiwi software has intercepted a batch of fake infant formula with ties to a Russian counterfeiting ring.
Trust Codes was developed to tackle the burgeoning market for counterfeit food and has now nabbed its first fraudsters, when the scam was just a few hours old.
The software uses QR codes to certify that a product is genuine. When a customer scans a code with their smart phone, the product's origin and authenticity is instantly verified.
If a fake product is put on the market with a counterfeit QR code, the company's software uses advanced algorithms to trawl the web and find sites linked to the phoney code. Each of its QR codes are cryptographically generated so are entirely unique.
A fake product is instantly identified to customers and the manufacturer is alerted within minutes.
Chief executive Paul Ryan said the software had earlier this year detected fraudulent activity around a batch of infant formula purporting to be from Australia that was destined for the Chinese market.
"We began noticing activity around Russia and Singapore that shouldn't have been there - the engine literally took three or four transactions to begin cautioning the code to let us know there was a problem and within minutes it was alerting us to say there was a fraud event," Ryan said.
"We were then able locate where the fraud was being perpetrated, in this case it gave the exact address."
It was being carried out by a Russian man living in Australia with links to a Russian counterfeiting ring, Ryan said.
None of the counterfeit product made it onto the market and the relevant Australian authorities had been notified.
Ryan said fake food products were increasingly flooding overseas markets, and products from New Zealand were particularly susceptible due to the premium prices they could fetch.
"It's a very profitable area for criminal gangs and in fact it's much easier than drugs because the profits can be greater and sentences in court are relatively trivial," he said.
"One of the reasons we started the business was New Zealand's at the epicentre of food products that tend to be counterfeited - there's an often repeated figure that there's more manuka honey sold in the UK than is actually produced in New Zealand, and of course all manuka honey is made here.
"It could be that it's made with products that you don't want to eat, or the products aren't filtered or are adulterated, or it's just sugar water. So you're paying high prices for a product which could in actual fact be harmful to you."
Trust Codes currently operates in New Zealand and Australia but is starting to branch into the United States, where food counterfeiting is rife.