Food fraud may cost the United Kingdom hundreds of millions to billions of dollars each year, even when consumers never realize they have been deceived.
A new study estimates the annual economic cost at £400 million to £2 billion, or roughly $540 million to $2.7 billion at current exchange rates. Published in the Journal of Economic Criminology, the research attempts to capture not just individual cases of fraud but the broader financial damage caused when falsely labeled or substituted foods take sales away from legitimate products.
Food fraud happens when food or information about it is deliberately misrepresented for financial gain. That can include substituting a cheaper ingredient for a more expensive one, falsely claiming where a food came from or using fraudulent documents to disguise a product’s identity.
Researchers found that about three-quarters of the estimated economic cost came from fraudulent products replacing legitimate ones in the marketplace.
One example cited by researchers involved salmon from Norway allegedly being marketed as Scottish smoked salmon. Other forms of food fraud can be much harder for consumers to detect, particularly when a substitute looks or tastes similar to the product listed on the label.
The financial estimate is not a tally of every fraudulent food sale in the U.K.
Food fraud is difficult to measure because successful schemes may never be discovered. Instead, researchers developed a method designed to estimate the wider cost of entire fraud operations, including their effects on legitimate businesses. The resulting range is wide, reflecting the uncertainty involved in estimating a crime that is often hidden.
“Food fraud is often perceived as a niche issue, but our findings show it has a substantial economic impact on the UK,” said David Shepherd, Ph.D., of the University of Portsmouth. “It is not just about consumers paying for something that is not what it claims to be. It undermines honest businesses, distorts markets and, in the most serious cases, puts people's health at risk.”
Those health risks vary considerably depending on the type of fraud.
In many cases, the primary harm may be financial. A shopper might pay a premium for a product based on its origin, ingredients or quality when the food does not actually match those claims.
In more serious cases, however, substitution or adulteration can introduce undeclared ingredients or dangerous substances. Counterfeit alcoholic drinks, for example, have sometimes contained industrial chemicals that pose serious health risks.
That does not mean fraudulent food is widespread throughout the U.K. food supply.
In fact, the researchers said food fraud appears to be relatively uncommon compared with many other forms of fraud. They pointed to layers of oversight involving food manufacturers, retailers, regulators and certification programs that make it more difficult for fraudulent products to enter legitimate supply chains.
“One of the most encouraging findings from this research is that the UK's food industry has developed systems that make fraud significantly more difficult than in many other sectors,” said study co-author Lisa Jack, Ph.D., a professor at the University of Portsmouth.
Still, the authors argue that continued enforcement matters.
Based on cases included in their analysis, researchers estimated that money spent investigating and prosecuting food fraud could generate economic returns of more than 400%, largely by preventing losses elsewhere in the food system. That estimate is intended primarily to help policymakers decide how to direct enforcement resources.
The findings apply specifically to the U.K. and should not be used to estimate the cost of food fraud in the United States. Food regulations, supply chains, enforcement systems and markets differ between countries.
But the underlying issue crosses borders. Food labels ask consumers to trust that the product inside the package is what it claims to be, whether that claim involves ingredients, origin, species or quality.
The new research suggests that when that trust is deliberately exploited, the costs can extend well beyond the individual shopper who paid for the wrong product.
The study was funded by the U.K. Food Standards Agency, the government agency responsible for food safety and food standards in England, Wales and Northern Ireland.