Flavor of Fraud: Uncovering Culinary Cons

As all Certified Fraud Examiners (CFEs) are aware, fraud is any activity that relies on deception in order to achieve a gain. Fraudulent activity can happen in nearly every sector of every industry, even in the most unexpected or far-reaching places. Indeed, food fraud is not unheard of with discoveries of fake olive oil, honey-laundering, sea-cellar wine and shammy bubbles.

Food fraud is considered “any deliberate action of businesses or individuals to deceive others in regard to the integrity of food to gain undue advantage." This includes food adulteration, which is the intentional addition or modification of a food product with inferior, cheaper or non-authentic substances, often to increase volume or weight or to improve appearance, which can compromise the product’s quality, safety and nutritional value. 

Food fraud is dangerous for many reasons. It has the potential to cause harm to people and the economy through its deception. When ingredients are removed or added, it greatly changes the product that is being sold, which may harm individuals, as well as damage the reputations of companies and industries at large. According to scientists, the most common food fraud involves olive oil, milk, honey, saffron, orange juice, apple juice, grape wine, vanilla extract and fish. 

Source: ScienceDirect 

How Does Food Fraud Occur? 

But food fraud can be further examined as it is not as simple as a food product that is not what it claims to be. The types of fraud can be categorized, according to an article recently published by the International Atomic Energy Agency (IAEA).   

• Dilution occurs when a high value liquid ingredient is mixed with a lower value liquid to reduce the concentration and lower the costs of production.
• Substitution is when a high value ingredient or part of a product is replaced with another ingredient/part of lower value.
• Mislabeling is the false information that is placed on the packaging or the label.
• Unapproved enhancement happens when unknown/undeclared materials are added to a food product.
• Concealment occurs when poor quality food ingredients or products are intentionally hidden.
• Counterfeiting is when a brand name, design, recipe or unique techniques are copied.
• Grey market production/theft/diversion happens when unregistered products are sold.

Source: M.Platonova/IAEA

Scientists have used stable isotopes to detect the origin of food because the ratios are like nature’s "fingerprints" or signatures on food, which means the geographical or botanical provenance of food can be traced using these isotopic fingerprints. That is, this information can provide insight on whether the foods consist of the authentic ingredients advertised on the label or not.   Why Does Food Fraud Occur? 

Opportunity

• Inherent technical aspects of the products, such as the physical state of an ingredient or product (e.g. liquid versus powder); degree of processing (e.g. a herb as a whole plant is less vulnerable than dried leaves); whether there is an analytical testing method and the availability of the detection method; knowledge (e.g. diluting milk with water and replacing with melamine to increase the apparent protein content); complexity of composition (e.g. vanilla); non-food grade equivalent available; availability of technology. 
• Technical measures such as product testing upon receipt, supplier approval programs and functional performance of ingredients. 
• Access by authorized employees, visitors, contractors or unauthorized people to products during the supply chain, for example during manufacture or storage. 
• Number of times the product changes hand/or use of agents and brokers. 
• Transparency of the supply chain.
• Differences in availability and demand. 

Economic Factors

These can include customer pressure to reduce prices, availability versus demand, supply shortage due to political unrest, increase in prices, austerity measures impacting regulatory agencies and trade barriers etc. 

Lack of Control Measures

• Technical - Food safety legislation, historical lack of testing for the adulterant (e.g. starch in food), inability to test (e.g. no analytical test) etc.
• Managerial - Lack of regulatory enforcement, food security, stable government, social/business acceptance (‘fraud does not harm anyone’ attitude or ‘it will not happen to us’), specifications/contracts etc. 

Complexity of Supply Chain

Supply chain issues may include length, transparency, vertical integration, single ingredient source from approved supplier as opposed to open market etc. 

Insufficient Supplier Approval and Performance Programs

Examples of this are on-site audits that include a food fraud component, analytical testing and tracking of analytical results and complaints. 

History of Food Fraud

This may be recurring fraud in the same product over a period of time, a pattern of food fraud in growing/manufacturing country and number of legitimate reported incidents can point to increased food fraud vulnerabilities. 

What Can Be Done? 

Just like an organization can consider their fraud risk with a fraud risk assessment, food fraud vulnerability assessments are used to identify potential vulnerabilities in a supply chain that might make a business susceptible to food fraud by systematically evaluating each of the ingredients in isolation, its supply chain and the control measures in place to determine where the gaps may exist. Like any fraud examination, questions relevant to the situation must be asked: 

• Do my ingredients have a history of food fraud?  
• Where are my ingredients sourced from?  
• What degree of processing does my ingredients require?  
• How complex is my supply chain?  
• What controls do I have in place to ensure authenticity? 
• How robust are my supplier verification processes? 

The Vulnerability Assessment can help users understand the likelihood of food fraud affecting a food product or ingredient, the impacts of food fraud on consumers and the food brand and provide a framework to prioritize strategies to prevent food fraud occurring and mitigate the risks if fraud does occur.