Food fraud is a general term used to cover a number of misdemeanours in which food is falsely represented for financial gain. Frauds include mislabelling, substitution of ingredients, adulteration and counterfeiting. In some instances, there are serious consequences for public health.
Melamine adulteration of milk in China led to deaths of children and animals, counterfeit vodka has caused sometimes fatal illness, and the use of peanuts in place of almonds or other nuts has severe consequences for those with peanut allergies. In many cases the risks to public health are negligible, but the furore over the “horsemeat scandal” in Europe in 2013 arose from outrage that people had been sold goods under false pretences and a sense that food supply chains might be vulnerable.
Frauds range from those where there is an obvious premium – wines, spirits, caviar, speciality extra virgin olive oil, and foods carrying health claims such as Manuka honey or pomegranate juice. However, the US Pharmacopia database identifies the most adulterated foods according to testing done in laboratories and reported in academic papers, and these include tea, coffee, pepper, juices, milk and a number of other everyday items. Recent cases in Europe include garlic smuggling and the discovery of ground myrtle leaves in cumin. In an industry with incredibly narrow profit margins, but high volumes of sales, even a fraction of a penny saved on an item would generate a reasonable profit. And this is the key: food fraud is an economic crime.
“mislabelling, substitution and passing off contaminated foods were the most frequent cases in Europe in 2018”
One of the challenges in understanding the types of and extent of fraud is that there are no globally agreed definitions of the different types of fraud. Press reports do not give a transparent set of definitions that they use, so there is variability in the data. Nevertheless, such reports show the extent and variability of fraud reports across the year. From the monthly summaries of food fraud reports published by the European Commission, Italy, Spain and India reported the most cases of food fraud in 2018, although we know that for consumers in China food fraud is seen as a major concern. Fish, meat, dairy and alcohol are the foods most likely to be fraudulent, with mislabelling and substitution being most reported.
“Operation Opson carried out 50,000 checks and seized 13 million items worth €230 million in a four-month period”
Furthermore, a significant number of food frauds are linked to tax and duty evasion, and other financial crimes, including false accounting and terrorism funding, which deprive governments of revenue. We estimate that food fraud is part of a potential loss to fraud in the food and drink industry of around £11.2bn, based on an average fraud loss across industries of 5.6% of turnover (Gee, Jack and Button, 2014). The cost of food fraud in the USA has been estimated by the Grocery Manufacturing Association to be between $10bn and $15bn per annum, with the cost of any one incident to a company being between 2-15% of annual revenue (Johnson, 2014).
Although there is evidence of organised crime groups perpetrating food crimes for economic gain, it is likely that most fraudulent foods are low in value but high in volume, originating in companies in financial distress or with weak management controls. The UK is probably one of the less affected countries, but we know that counterfeit and fraudulent goods are uncovered and seized by enforcement officers from Trading Standards and Environmental Health. Operation Opson is a Europol-Interpol joint operation targeting fake and substandard food and beverages. In 2017, 61 countries including the UK and 20 other EU member states took part, carrying out 50,000 checks and seizing 13 million items worth €230 million in a four-month period (https://www.europol.europa.eu/activitiesservices/ europol-in-action/operations/operation-opson)
There have been four main responses in the UK to the issue of food fraud since the Elliott Report into the UK horsemeat scandal was published in 2014. Similar approaches are advocated in the USA and Europe.
The scandal accelerated developments in scientific diagnostic instruments and tests for food fraud, particularly in the search for more portable devices offering quick results. Newer tests coming to market include DNA tests, isotope testing and a variety of spectroscopy techniques. In their review of ambient mass spectrometry (AMS) techniques for food fraud detection, Black, Chevallier and Elliott (2016) illustrate how AMS can be used to detect not only a range of adulterants, such as melamine in milk, mycotoxins and pesticides in cereals and fruits and vegetables, but also speciation of meat and the geographic origin of spices and oils.
“the scandal accelerated developments in scientific diagnostic instruments and tests for food fraud, particularly in the search for more portable devices offering quick results”
However, the industry is fast moving and tests are costly: although data is amassed on individual items and batches, less is done to develop information in the form of trends and incident mapping. Additionally, the food industry faces the challenge that fraudsters are increasingly inventive: the ‘successful’ fraudster understands testing programmes and how to avoid detection. ‘New’ materials are used to adulterate products, which will not be picked up by established targeted testing. Much effort is being spent on establishing nontargeted analytical methods, using, for example, vibrational spectroscopic methods such as Fourier transform infrared (FT-IR). The aim of such testing is to detect ‘inauthentic’ products, i.e. anomalous samples compared to known standards. Basic challenges remain, however, such as establishing comprehensive databases of authentic product samples (McGrath, Haughey, Patterson et al, 2018).
There is a growing demand for complementary systems for food authenticity, which encompasses traceability systems including country of origin labelling. Solutions include certification and labelling systems, but also micro-wires, RFID and other technological solutions. In 2018, Walmart announced that with IBM, they are developing traceability solutions using Blockchain (Rossow, 2018). There are various claims that all foods will be protected by Blockchain technology. Currently, there have been successes in collating all documentation for single produce items such as mangoes into an easily searchable Blockchain ledger. There are unresolved issues around legal status (who signs off each block in the chain to ensure authenticity?) and around the cost of the computing power required to maintain the ledgers. There is also a need to develop AI that identifies anomalies in traceability systems, whatever the technology recording transactions throughout the chain.
The Food Standards Agency (FSA) in the UK is particularly concerned with the development of intelligence led systems to combat food fraud. These include network mapping, data mining and horizon scanning as tools to provide information on drought or disease, say, which may be indicators of problems in the supply chain that might provide the conditions for fraud; for example, adverse weather conditions in India, South and Central America have affected crop yields of cardamom, and prices have hit an eight-year high (Graham, 2019). Various consultancies offer ‘horizon scanning’ tools for this purpose.
“there continues to be a need for consumers and industry to report suspected food crime”
Following the Elliott Report, the National Food Crime Unit was set up within the Food Standards Agency. Initially the unit followed a mainly human intelligence led policing model, seeking information from industry and the public, testing and collating it, and making it available to investigative agencies. However, with additional funding approved in 2018, the NFCU is developing full investigatory capability, similar to those held by the Dutch and Danish units. There continues to be a need for consumers and industry to report suspected food crime; RASFF (Rapid Alert System for Food and Feed) and other selfreporting databases exist but also include food safety incidents, making them of limited use in tracking potentially fraudulent activity.
Fraud risk assessment
The main response in the industry has been to demand fraud risk assessment exercises. The British Retail Consortium which provides certification of supply chains in the industry built requirements for ‘vulnerability assessment’ and ‘control plans’ into their standards for all certifications from 1 July 2015 onwards. How to conduct a vulnerability assessment is not proscribed, but most models offered by consultants in the field follow the model of HACCP (Hazard Analysis and Critical Control Points) or checklist-based risk assessment questionnaires. The Global Food Standards Initiative (GFSI, 2014) separates the threats into four areas: food quality, food safety, food defence and food fraud. Food defence refers to protections against the deliberate and malicious contamination of food with intent to cause harm. Food fraud, in contrast, is always for financial gain and in the US is usually referred to as economically motivated adulteration (EMA). To counter threats in each area, GFSI recommend HACCP plans for food safety, TACCP (threat analysis) plans for food defence and VACCP (vulnerability analysis) plans for food fraud, that follow standard risk assessment methodologies. The UK has issued a standard – PAS 96 – giving guidance on constructing a TACCP plan.
An alternative counter-fraud approach
At the Centre for Counter Fraud studies at University of Portsmouth, we believe that the problem should be tackled differently. Threat and vulnerability analyses tend to be carried out by technical and quality staff in food and drink businesses, with the result that the weaknesses identified relate to the supply and processing of foods, and not to the realities of how fraud works.
Our contention – supported by various investigatory agencies that make use of forensic accounting, such as the Danish Food Flying Squad, the Welsh Food Fraud Co-ordination Unit and the Dutch Food Crime Unit – is that the clues to the fraud lie as much in the surrounding systems and the paperwork as in the product. In the trial of those convicted of the horsemeat conspiracy in the UK in 2013, the evidence included manipulated accounting documents in the charge of conspiracy to defraud (https://www.theguardian.com/ uk-news/2017/jul/31/two-men-jailed-in-uk-for-horsemeat-conspiracy). At the time of writing, a trial for a similar offence was taking place in Paris (https://www.bbc.co.uk/news/world-europe-46951855).
Recent cases have included falsified invoices, certifications, emails and telephone conversations as the item that identified and proved the fraud. Quite simply, all food transactions leave an accounting trail, both in the financial records, in distribution records and in the quality control programmes all food companies must have. Food fraud requires either falsification of such trails or the hope that the transaction will be difficult to find in the thousands that occur.
“more simply, food fraud needs to be thought of as primarily a fraud issue, not a food safety issue; although we acknowledge the potential risks involved”
More simply, food fraud needs to be thought of as primarily a fraud issue, not a food safety issue; although we acknowledge the potential risks involved. Having anti-fraud policies and procedures in place; monitoring and evaluating fraud; training staff at all levels and reporting losses up to board level; and having clear whistle blowing procedures all help to signal that a business is resilient and alert to the possibility of fraud (Gee and Daly, 2018).
Food fraud is an age old problem that has not gone away. The real problem is the unfair playing field it creates for suppliers unable to compete on price in legitimate markets, the consequences for employees of a low wage industry and the risks to public health, if only through poor nutrition arising from substituted or adulterated foods. Making businesses and consumers alert to the dangers is one step forward in reducing incidents.