The warning follows the release of a new report today (2 November) from the Chartered Institute of Environmental Health (CIEH) to help food businesses establish good counter fraud practices.
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Food fraud is a serious problem across the UK, according to the report’s co-author Eoghan Daly of the CIEH.
“Fraud not only has the potential to impact on an individual business’s profits and reputation, but it also reflects on the food industry as a whole and, more importantly, risks consumers’ trust and health,” said Daly.
“Food businesses need to quickly change their approach and adopt good practice in counter fraud as a key element of day-to-day business, before profits are hit and they lose customers.”
Good practice guide
The good practice guide was developed by the CIEH along with the University of Portsmouth’s Centre for Counter Fraud Studies, the Food Standards Agency’s National Food Crime Unit, Food Standards Scotland’s Food Crime and Incidents Unit, and the Intellectual Property Office.
Fraud is an issue for every business in every sector, the guide explains, and leads to financial costs as well as undermining consumer confidence.
“In the food and drink industry, fraud can take many forms, such as the inclusion of contaminated substances in products and misleading claims being made,” the guide said.
Fellow co-author Jim Gee, visiting professor and chair of the Centre for Counter Fraud Studies at the University of Portsmouth, highlighted food fraud could cost businesses 5% of expenditure, based on 17 years of research.
“There are, however, examples of where businesses have cut this cost by up to 40% within 12 months, significantly improving profitability,” he said.
Yet, the ultimate victim of food fraud is the consumer, according to the head of the Scottish Food Crime and Incidents Unit, Ron McNaughton.
“Those who penetrate fraud do not recognise borders,” he said. “Ultimately, it is the public that pay the price.”
Daly added: “Fraudsters work hard to hide their activities, making the worst, and costliest, scams subtle and difficult to detect.
“This means the number of potential frauds is practically unlimited and once one type of fraud is successful, other vulnerabilities may be exploited.”
The guide, which can be found here, highlights five key practices pubs and other food businesses should implement:
- Calculate the financial cost of fraud, based on reliable estimates, including detected and undetected instances
- Ensure counter fraud tactics are centrally managed, with sufficient authority to secure necessary changes
- Conduct proactive and regular counter fraud exercises early rather than waiting for problems to be reported
- Develop an anti-fraud culture, which ensures robust deterrents action are taken when issues are identified
- Make use of the skills and experience of accredited counter fraud professionals and engage with government organisations, such as the Food Standard Agency’s National Food Crime Unit, to ensure the overall fight against fraud is strengthened