Tackling food fraud


Globally, trust in the food industry has been damaged. With the rise in food scandals in recent years, tackling food fraud has become an industry issue. There is a need to protect consumers by strengthening the food industry’s ability to detect and combat fraud within organisations and across supply chains.
 

Types of food fraud

Food fraud is simply defined as intentional deception using food for economic gain.

To sum up, food fraud can be committed in our marketplace in many forms such as:

  • Mislabelling
  • Dilution
  • Concealment
  • Counterfeiting
  • Substitution
  • Unapproved enhancements
  • Grey market production/ Theft/ Diversion


A risk-based framework for understanding your food fraud vulnerabilities

Opportunities & Motivations

Opportunities: The opportunity to commit fraud reflects the ease of adulteration and difficulty of detection. For a food ingredients, these are determined by composition, physical qualities, complexity of production processes, control of supply chains, as well a geographic origins.

Motivations: Economic and market factors, as well as cultural and behavioural factors, have a part to play in heightening motivations to commit fraud. High value food items for which subtle characteristics create large price differences can be enticing targets for fraudsters. Intense price competition creates incentives to replace high value ingredients with cheap substitutes.The motivation to commit economic crimes is often higher if the corruption culture in the operating environment is strong, or when a company or an individual is facing a financially desperate situation.
 

Control measures vs. Challenges

Control Measures: A food company’s primary fraud controls are its food safety management and quality control systems, as well as its managers and staff. External controls include food safety agencies, anti-fraud regulations and law enforcement. Vigilant suppliers also play a role in preventing food fraud.

  • Specific controls include:
  • Information systems
  • Fraud monitoring and verification systems
  • Whistle-blowing guidelines and protection
  • Ethical codes of conduct
  • Legal framework and enforcement
  • Social control chain network
  • Contractual requirements
  • Employee integrity screening

Despite control measures put in place, tackling food fraud gets more demanding as it faces these challenges: a lack of upstream supply chain visibility, presence of complex and constrained regulatory frameworks as well as poor supply chain risk management practices.

Food fraud vulnerability

In criminology, economically motivated crimes result from the combination of opportunities, motivations and inadequate control measures. In other words, food fraud generally occurs where the potential for and the temptation of fraud are high, and the risk of getting caught and sanctions are low.

How confident are you in the integrity of your food products?
 


PwC and SSAFE have collaborated to release a food fraud vulnerability assessment tool that companies can use free-of-charge to help identify vulnerabilities and reduce fraud threats. This tool helps inform you of vulnerabilities in your organisation so you can put in place measures to reduce the likelihood of criminals profiting from food fraud at your expense.

It is a freely available and anonymous tool that can be used by every company anywhere. The assessment will give you a profile of your company’s potential food fraud vulnerability, which can form the basis for the development of controls to reduce identified vulnerabilities.

Ready to get started? Assess your fraud vulnerabilities online here, or download the app from the App Store or Google Play (available soon) to begin a confidential and anonymous online assessment of your fraud vulnerabilities.

Read our guide to using the food fraud tool here.

If you want help deciding on where to apply the tool in your organization, complete the decision tree here.

For further information, please get in touch with PwC or SSAFE.
 

Contact us

Julia Leong

Partner, Southeast Asia Food Trust Leader, PwC Singapore

Tel: +65 9756 2123

Tan Hwee Ching

Senior Manager, Food Trust Specialist, PwC Singapore

Tel: +65 9627 8602

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