Food Fraud 101: The Crime of the 21 st  Century Sandra J. Enness, MA   Anti-Counterfeiting and Product Protection Program ...
<ul><li>About A-CAPPP </li></ul><ul><li>Defining Food Fraud/Counterfeiting </li></ul><ul><li>Top Counterfeited Foods </li>...
About A-CAPPP <ul><li>Based within the School of Criminal Justice at Michigan State University </li></ul><ul><li>Exploring...
Defining Food Fraud and Counterfeiting
<ul><li>FBI calls Food Fraud “crime of the 21 st  century </li></ul><ul><li>Global counterfeit food threat is ~$49b (UK Fo...
<ul><li>Confidential or classified information (trade, legal, etc.) </li></ul><ul><li>Limited sharing of customs data betw...
Defining Counterfeiting Terms (Source: Mace, R. (2008). Food Crime and Security:  Corporate and Regulatory Response to Foo...
Who Are These People? <ul><li>Adulterator </li></ul><ul><li>Tamperer </li></ul><ul><li>Over-runs </li></ul><ul><ul><li>Lic...
Chemistry of the Crime of Counterfeiting (Source: Felson, 1998)
Why Products are Counterfeited <ul><ul><li>Profit $$ $$ $$ </li></ul></ul><ul><ul><li>Easy to Copy </li></ul></ul><ul><ul>...
Illicit Trade and Licit Trade <ul><ul><li>Illicit trade is driven by high profits and low morals. </li></ul></ul><ul><ul><...
Top Counterfeited and Adulterated Foods
Top Counterfeit & Adulterated Products <ul><li>Cigarettes </li></ul><ul><li>Aircraft parts </li></ul><ul><li>Clothing/foot...
Top Counterfeit Food Products <ul><li>Extra Virgin Olive Oil  </li></ul><ul><li>Often is thinned out  with vegetable oil. ...
Top Counterfeit Food Products <ul><li>Fish  </li></ul><ul><li>Fish is one of the  most frequently  counterfeited  products...
Top Counterfeit Food Products <ul><li>Vanilla Extract </li></ul><ul><li>Chemical version - which is supposed to be  labele...
Top Counterfeit Food Products <ul><li>More Fishy Business </li></ul><ul><li>Selling tilapia instead of red snapper or  gro...
Top Counterfeit Food Products <ul><li>Honey </li></ul><ul><li>Counterfeiters have  started to use  beet sugar in the mix  ...
Top Counterfeit Food Products <ul><li>Maple Syrup  </li></ul><ul><li>Vermont has increased its  testing procedures to make...
Top Counterfeit Food Products According to 2007 Organisation for Economic Co-operation and Development (OECD) report, some...
 
 
Motivations of Counterfeiters: Russia <ul><li>The “second economy” or “underground businesses and factories” date back to ...
Public Health Threat from Fraudulent Food
Public Health Threats <ul><li>Allergens – undeclared, unnoticed until a reaction occurs Farmed catfish sold with banned an...
The Food Continuum Economic Threat Public Health Threat Unintentional Intentional (Source: Spink, J. (2006). The Counterfe...
Food Fraud and Impact on Public Health Health Threat Scenario:  Soda Pop Adulteration Counterfeiters substitute a liquid f...
Food Fraud and Impact on Public Health Health Threat Scenario:  Soda Pop Adulteration The counterfeit syrup passes through...
Food Fraud and Impact on Public Health Health Threat Scenario:  Soda Pop Adulteration Traders buy the product without know...
Food Fraud and Impact on Public Health Could this really happen???? It did happen; however, the adulterated product was co...
Food Fraud and Impact on Public Health 46 barrels of “syrup” implicated in the matter. Panamanian health officials began a...
FDA Food Protection Plan <ul><li>Prevention (proactive) - increasing corporate responsibility to prevent food      inciden...
Anti-Counterfeit Measures <ul><li>Track and Trace </li></ul><ul><li>RFID, Holograms </li></ul><ul><li>County of Origin Lab...
The  BIG  Problem and The  BIG  Question
Big Problem Counterfeiters  attend  Anti-Counterfeit Conferences
Big Question  How do we get consumers and suppliers to participate in the authentication process and NOT desire illicit/il...
Multidisciplinary Research Partners Anti-Counterfeit Activities Political Science Social Anthropology IPR Law Consumer Beh...
For additional educational opportunities in this subject area, visit A-CAPPP online www.a-cappp.msu.edu Graduate Degree Cr...
 
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Sw Mi Enviro Health Assoc Fall Conf 101609

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Food Fraud 101 - an introduction to understanding how fraudulent food can enter into the legitimate food supply.

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  • Adulterator – entity has a legitimate right to produce a product but some component of the finished product is fraudulent. melamine in pet food (a human decision to defraud) Tamperer – could be where the product is used and returned, changing the expiration dates on products, uplabeling an inferior product to look like a name brand Over-Runs – this is a manufacturing problem… after the legit line is run, more is ran and goes out the back door Thief – steals product and passes it off as legitimate in the supply Diversion – this is selling a product outside of its intended market. Not explicitly illegal but usually it is violating a contractual distribution agreement. Simulations – this is where the logo or product design is created to be “like” but not “exactly like” the branded product. Counterfeiter – this is where all aspects of the product and package are fraudulent. These people are not crack dealers and stereotypical low-life. They are your neighbors, your family, people who are really a lot like me and you.
  • Like Hiedler’s Balance Theory in Persuasion, have to have positive “feelings” moving through all three “partners” for the crime to occur. Less than 1% of product entering the US undergoes inspection so the opportunity certainly exists.
  • NEC is an electronics company with brand links to a network of more than 50 electronics factories in China. The products were pirated and even developed their own range of consumer electronic products (from home entertainment systems to MP3 players) with full coordination of manufacturing and distribution of products, collecting all the proceeds. The real NEC even received complaints about products – which were found to be generally good in quality – on products that they did not make or warranty. The counterfeiters required factories doing business with them to pay royalties for “licensed” products and issued official-looking warranty and service documents (Lague 2006)
  • The prevention, intervention, and response will turn our thinking from where will the next melamine event take place to what will be the next melamine event – the next time could be worse
  • The prevention, intervention, and response will turn our thinking from where will the next melamine event take place to what will be the next melamine event – the next time could be worse
  • Public Health threats from food fraud is through Negligence not intent. If there is intent to harm, then the event is a Food Defense event. Fraud is usually economically motivated to offer an inferior product at top costs to the victim/consumer. Melamine in the pet food and baby formula can be argued both ways. There was an intent for economic gain, not an intent on pets and infants dying. Shipping known contaminated peanut butter paste like PCA did was intentional in many people’s opinions though it was certainly economically motivated. The line is fine between intentional an unintentional.
  • The prevention, intervention, and response will turn our thinking from where will the next melamine event take place to what will be the next melamine event – the next time could be worse
  • The prevention, intervention, and response will turn our thinking from where will the next melamine event take place to what will be the next melamine event – the next time could be worse
  • Sw Mi Enviro Health Assoc Fall Conf 101609

    1. 1. Food Fraud 101: The Crime of the 21 st Century Sandra J. Enness, MA Anti-Counterfeiting and Product Protection Program (A-CAPPP) School of Criminal Justice Michigan State University Southwest Michigan Environmental Health Association Fall Seminar October 16, 2009
    2. 2. <ul><li>About A-CAPPP </li></ul><ul><li>Defining Food Fraud/Counterfeiting </li></ul><ul><li>Top Counterfeited Foods </li></ul><ul><li>A Public Health Scenario from Fraudulent Food </li></ul><ul><li>Educational Opportunities </li></ul>AGENDA
    3. 3. About A-CAPPP <ul><li>Based within the School of Criminal Justice at Michigan State University </li></ul><ul><li>Exploring the complex global issues of anti-counterfeiting and product protection of all products, across all industries, in all markets to work effectively to detect, deter, and respond to the crime. </li></ul><ul><li>Focusing upon consumer packaged products in a variety of industries and sectors including, but not limited to, </li></ul><ul><ul><li>pharmaceuticals and healthcare; </li></ul></ul><ul><ul><li>food and beverage; </li></ul></ul><ul><ul><li>automobiles; </li></ul></ul><ul><ul><li>and consumer electronics. </li></ul></ul>
    4. 4. Defining Food Fraud and Counterfeiting
    5. 5. <ul><li>FBI calls Food Fraud “crime of the 21 st century </li></ul><ul><li>Global counterfeit food threat is ~$49b (UK Food Standards Board) and ~10% of food in UK </li></ul><ul><li>The European Union estimated a 200% growth in counterfeit foodstuff in 2004-2005 = 5 million seized products </li></ul><ul><li>We just really do not know the depth of the problem </li></ul><ul><li>(Source: Spink, J. (2007) Food Defense Education: Post 9/11) </li></ul>Scale & Growth of Counterfeiting
    6. 6. <ul><li>Confidential or classified information (trade, legal, etc.) </li></ul><ul><li>Limited sharing of customs data between countries </li></ul><ul><li>Differences in seizure definitions </li></ul><ul><li>So tough to detect because the “bad guys” are </li></ul><ul><ul><li>Improving quality of fakes/packaging </li></ul></ul><ul><ul><li>Improving ability to get products in supply chain </li></ul></ul><ul><li>“ Given the clandestine nature of the business, such estimates can be no more than educated guesses.” (The Economist, Imitating Property is Theft , May 15, 2003) </li></ul>Why the Scale is Unknowable
    7. 7. Defining Counterfeiting Terms (Source: Mace, R. (2008). Food Crime and Security: Corporate and Regulatory Response to Food Adulteration, Fraud, and Safety) ACT DEFINITION EXPLOITED WEAKNESS Adulteration and Tampering Deliberate contamination or change of ingredients or components to cause specific injury Product and Package Authentication/Integrity Brand Integrity Up-labeling and Mislabeling Deliberate misrepresentation of product of something it is not Packaging/Presentation Consumer Knowledge/Protection Certification Integrity Product Substitution or Repackaging Substitution of similar (generally inferior) product in another brand’s packaging Packaging/Manufacturing Controls Consumer Knowledge/Protection Brand Integrity Ingredient Substitution Unannounced introduction or substitution of inferior product Labeling/Packaging Consumer Knowledge/Perception Brand Integrity Expiry Fraud Changing labels to obscure proper expiration of sales or use date Labeling/Packaging Consumer Knowledge/Perception
    8. 8. Who Are These People? <ul><li>Adulterator </li></ul><ul><li>Tamperer </li></ul><ul><li>Over-runs </li></ul><ul><ul><li>Licensee-Fraud </li></ul></ul><ul><ul><li>Re-Manufacturing </li></ul></ul><ul><ul><li>Unauthorized Refill </li></ul></ul><ul><li>Thief </li></ul><ul><li>Diversion </li></ul><ul><ul><li>Smuggling </li></ul></ul><ul><ul><li>Parallel Trade </li></ul></ul><ul><ul><li>Origin Laundering </li></ul></ul><ul><li>Simulations </li></ul><ul><li>Counterfeiter </li></ul>
    9. 9. Chemistry of the Crime of Counterfeiting (Source: Felson, 1998)
    10. 10. Why Products are Counterfeited <ul><ul><li>Profit $$ $$ $$ </li></ul></ul><ul><ul><li>Easy to Copy </li></ul></ul><ul><ul><li>Cheap to Copy </li></ul></ul><ul><ul><li>Unsatisfied Market Demands </li></ul></ul><ul><ul><li>Difficulties in Detection and Proof v. Legit Product </li></ul></ul><ul><ul><li>Non-Deterrent Laws or Enforcement </li></ul></ul>
    11. 11. Illicit Trade and Licit Trade <ul><ul><li>Illicit trade is driven by high profits and low morals. </li></ul></ul><ul><ul><li>Illicit trade is a political phenomenon as illicit traders cannot prosper without help from governments or accomplices in key public offices. </li></ul></ul><ul><ul><li>Illicit trade is more about transactions than products – no one pays full retail. </li></ul></ul><ul><ul><li>Illicit trade cannot exist without licit trade – all illicit businesses are deeply intertwined with licit businesses. </li></ul></ul><ul><ul><li>Illicit trade involves everyone – someone is selling and someone is buying. </li></ul></ul><ul><ul><li>Governments cannot do it alone. </li></ul></ul><ul><ul><li>(Source: Naim, M. (2005). Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy) </li></ul></ul>
    12. 12. Top Counterfeited and Adulterated Foods
    13. 13. Top Counterfeit & Adulterated Products <ul><li>Cigarettes </li></ul><ul><li>Aircraft parts </li></ul><ul><li>Clothing/footwear </li></ul><ul><li>Auto brake pads </li></ul><ul><li>Infant formula </li></ul><ul><li>Household extension chords </li></ul><ul><li>Illegal antibiotics in meat </li></ul><ul><li>Anti-Malarials </li></ul><ul><li>Toothpaste (Dollar Stores) </li></ul><ul><li>Lipitor (18 million doses recalled) </li></ul><ul><li>Birth control pills/condoms </li></ul><ul><li>Shoe polish </li></ul><ul><li>Nuclear reactor replacement parts </li></ul><ul><li>Cologne/perfumes </li></ul><ul><li>Cough syrup (Diethylene Glycol) in Panama </li></ul><ul><li>… an entire COMPANY – NEC (2004-2006) </li></ul>
    14. 14. Top Counterfeit Food Products <ul><li>Extra Virgin Olive Oil </li></ul><ul><li>Often is thinned out with vegetable oil. </li></ul><ul><li>The FDA says this is one of the most frequently counterfeited product. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    15. 15. Top Counterfeit Food Products <ul><li>Fish </li></ul><ul><li>Fish is one of the most frequently counterfeited products. </li></ul><ul><li>The FDA says many sellers advertise wild salmon when they are actually selling farm-raised fish. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    16. 16. Top Counterfeit Food Products <ul><li>Vanilla Extract </li></ul><ul><li>Chemical version - which is supposed to be labeled as artificial flavoring - is often made with a toxic substance called coumarin. </li></ul><ul><li>Coumarin is related to warfarin, a blood thinner, and can be dangerous. </li></ul><ul><li>The U.S. has banned coumarin in foods since 1954, but some products from Mexico and Latin America still use it. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    17. 17. Top Counterfeit Food Products <ul><li>More Fishy Business </li></ul><ul><li>Selling tilapia instead of red snapper or grouper. </li></ul><ul><li>There's also been rumors of some selling skate wing as scallops. </li></ul><ul><li>The FDA found no cases of this. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    18. 18. Top Counterfeit Food Products <ul><li>Honey </li></ul><ul><li>Counterfeiters have started to use beet sugar in the mix because it is harder to detect than cane sugar or corn syrup. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    19. 19. Top Counterfeit Food Products <ul><li>Maple Syrup </li></ul><ul><li>Vermont has increased its testing procedures to make sure that no companies are trying to cheat the purity of their maple syrup by adding water to dilute the product. </li></ul>(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there)
    20. 20. Top Counterfeit Food Products According to 2007 Organisation for Economic Co-operation and Development (OECD) report, some of the most faked food and drink items include: The OECD report found that alcohol products are the prime targets for counterfeiters in the drinks sector, both because of their brand value and the high tax and excise component of the final price. (Source: Organisation for Economic Co-operation and Development. (2007). The Economic Impact of Counterfeiting and Piracy . June 4) Kiwis Milk Powder Butter Baby Food Instant Coffee Alcohol Drinks Confectionary Hi-breed corn seeds
    21. 23. Motivations of Counterfeiters: Russia <ul><li>The “second economy” or “underground businesses and factories” date back to the 1920s and played and essential and trusted role to the consumers. </li></ul><ul><li>Vertical integration was developed, which lead to logistical efficiencies and to security since fewer unknown people were involved. </li></ul><ul><li>The CIA report mentions the break-up of a 1989 series of underground workshops that were manufacturing “massive amounts of high quality clothing”. </li></ul><ul><li>Result: Infrastructure, capacity, capabilities, experience, integration, longevity, logistics, efficiencies, and citizen trust. </li></ul><ul><li>(Source: Organized Crime in the USSR: It’s growth and impact. US CIA, 1991. FOIA released 2000) </li></ul>
    22. 24. Public Health Threat from Fraudulent Food
    23. 25. Public Health Threats <ul><li>Allergens – undeclared, unnoticed until a reaction occurs Farmed catfish sold with banned antibiotics used in production of fish </li></ul><ul><li>Pathogens – intentionally and unintentionally introduced Salmonella in peanut paste products Peanut Corporation of America (Jan 2009) </li></ul><ul><li>Poison or Harmful Chemicals Pet food and infant formula with melamine added </li></ul><ul><li>Reduced Nutritional Value </li></ul>
    24. 26. The Food Continuum Economic Threat Public Health Threat Unintentional Intentional (Source: Spink, J. (2006). The Counterfeit Food and Beverage Threat, Association of Food and Drug Officials (AFDO), Annual Meeting)
    25. 27. Food Fraud and Impact on Public Health Health Threat Scenario: Soda Pop Adulteration Counterfeiters substitute a liquid for the corn syrup in the product. The liquid substitute is a sweet-tasting product that could easily be substituted for more expensive syrups used in drugs, food, and other products.
    26. 28. Food Fraud and Impact on Public Health Health Threat Scenario: Soda Pop Adulteration The counterfeit syrup passes through three trading companies on three continents. Not one company tests the product. Certificates are falsified for purity and shipment, eliminating the name of the manufacturer and previous owner.
    27. 29. Food Fraud and Impact on Public Health Health Threat Scenario: Soda Pop Adulteration Traders buy the product without knowing where it came from/who made it. Could this really happen? What burdens would be placed on public health from such an event?
    28. 30. Food Fraud and Impact on Public Health Could this really happen???? It did happen; however, the adulterated product was cough syrup. Diethylene glycol was intentionally substituted for glycerin in cough syrup. The adulterated ingredient traveled from the Yangtze Delta, Beijing to Barcelona, Spain and finally to Panama. ( Source: Bogdanich and Hooker. (2007). From China to Panama, a Trail of Poisoned Medicine. NYTimes)
    29. 31. Food Fraud and Impact on Public Health 46 barrels of “syrup” implicated in the matter. Panamanian health officials began a nationwide campaign to confiscate the cough syrup. 1155 bottles of 6774 authorities retrieved were contaminated. Over 350 confirmed deaths as the result of consuming cough syrup – possibly hundreds more but victims were buried before cause was known. ( Source: Bogdanich and Hooker. (2007). From China to Panama, a Trail of Poisoned Medicine. NYTimes)
    30. 32. FDA Food Protection Plan <ul><li>Prevention (proactive) - increasing corporate responsibility to prevent food incidents - identifying food vulnerabilities and assess risks </li></ul><ul><li>Intervention (reactive) - focus inspections and sampling based on risk - enhance risk-based surveillance - improve the detection of food system “signals” that indicate contamination </li></ul><ul><li>Response - improve immediate response - improve risk communication to the public, industry, and other stakeholders </li></ul>
    31. 33. Anti-Counterfeit Measures <ul><li>Track and Trace </li></ul><ul><li>RFID, Holograms </li></ul><ul><li>County of Origin Labeling </li></ul><ul><li>Authentication of product (registration for warranty activation or to play an online game) </li></ul><ul><li>Investigation of suspected counterfeit operations </li></ul><ul><li>Standard Operating Procedures across the Supply Chain </li></ul>
    32. 34. The BIG Problem and The BIG Question
    33. 35. Big Problem Counterfeiters attend Anti-Counterfeit Conferences
    34. 36. Big Question How do we get consumers and suppliers to participate in the authentication process and NOT desire illicit/illegitimate products at significant cost reductions – particularly in this struggling economy?
    35. 37. Multidisciplinary Research Partners Anti-Counterfeit Activities Political Science Social Anthropology IPR Law Consumer Behavior Retailing Info Technology Public Health Forensic Science International Trade Marketing Medicine DO, DVM, MD Food Science Nursing Pharmacology Engineering Pharmacy
    36. 38. For additional educational opportunities in this subject area, visit A-CAPPP online www.a-cappp.msu.edu Graduate Degree Credits Certificate Credits Lifelong Education Credits Non-Credit Courses/Seminars/Webinars

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