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Introduction to food fraud to the Southeast Michigan Environmental Health Association Fall Seminar 2009

Introduction to food fraud to the Southeast Michigan Environmental Health Association Fall Seminar 2009

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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

Transcript

  • 1. Food Fraud 101:The Crime of the 21st Century Sandra J. Enness, MA Anti-Counterfeiting and Product Protection Program (A-CAPPP) School of Criminal Justice Michigan State UniversitySouthwest Michigan Environmental Health Association Fall Seminar October 16, 2009 © 2009 Michigan State University Board of Trustees
  • 2. AGENDAAbout A-CAPPPDefining Food Fraud/CounterfeitingTop Counterfeited FoodsA Public Health Scenario from Fraudulent FoodEducational Opportunities © 2009 Michigan State University Board of Trustees
  • 3. About A-CAPPP• Based within the School of Criminal Justice at Michigan State University• 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.• Focusing upon consumer packaged products in a variety of industries and sectors including, but not limited to, – pharmaceuticals and healthcare; – food and beverage; – automobiles; – and consumer electronics. © 2009 Michigan State University Board of Trustees
  • 4. Defining Food Fraud and Counterfeiting © 2009 Michigan State University Board of Trustees
  • 5. Scale & Growth of Counterfeiting• FBI calls counterfeiting “crime of the 21st century”• Global counterfeit food threat is ~$49b (UK Food Standards Board) and ~10% of food in UK• The European Union estimated a 200% growth in counterfeit foodstuff in 2004-2005 = 5 million seized products• We just really do not know the depth of the problem(Source: Spink, J. (2007) Food Defense Education: Post 9/11) © 2009 Michigan State University Board of Trustees
  • 6. Why the Scale is Unknowable• Confidential or classified information (trade, legal, etc.)• Limited sharing of customs data between countries• Differences in seizure definitions• So tough to detect because the “bad guys” are – Improving quality of fakes/packaging – Improving ability to get products in supply chain• “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) © 2009 Michigan State University Board of Trustees
  • 7. Defining Counterfeiting Terms• Counterfeit – “to copy, with intent to deceive” and “make in imitation of the genuine so as to deceive”• Diversion – “a turning aside from a course, activity, or use”• Simulation – “an object that is not genuine”• Tamper – “1. to carry on underhand negotiations (as by bribery) <~with a witness>; 2. to interfere so as to weaken or change for worse <~with a document>”• Knockoff (n) – “a copy or imitation of someone or something popular”• Knockoff (v) – “to do quickly or carelessly” (Merriam-Webster’s Dictionary, 2006) © 2009 Michigan State University Board of Trustees
  • 8. Defining Counterfeiting Terms ACT DEFINITION EXPLOITED WEAKNESSAdulteration and Deliberate contamination or Product and PackageTampering change of ingredients or Authentication/Integrity components to cause specific Brand Integrity injuryUp-labeling and Deliberate misrepresentation of Packaging/PresentationMislabeling product of something it is not Consumer Knowledge/Protection Certification IntegrityProduct Substitution Substitution of similar (generally Packaging/Manufacturing Controlsor Repackaging inferior) product in another Consumer Knowledge/Protection brand’s packaging Brand IntegrityIngredient Substitution Unannounced introduction or Labeling/Packaging substitution of inferior product Consumer Knowledge/Perception Brand IntegrityExpiry Fraud Changing labels to obscure Labeling/Packaging proper expiration of sales or use Consumer Knowledge/Perception date(Source: Mace, R. (2008). Food Crime and Security: Corporate and RegulatoryResponse to Food Adulteration, Fraud, and Safety) © 2009 Michigan State University Board of Trustees
  • 9. Who Are These People?• Adulterator • Thief• Tamperer • Diversion – Smuggling• Over-runs – Parallel Trade – Licensee-Fraud – Origin Laundering – Re-Manufacturing – Unauthorized Refill • Simulations • Counterfeiter © 2009 Michigan State University Board of Trustees
  • 10. Chemistry of the Crime of Counterfeiting (Source: Felson, 1998) © 2009 Michigan State University Board of Trustees
  • 11. Why Products are Counterfeited• Profit $$$$$$• Easy to Copy• Cheap to Copy• Unsatisfied Market Demands• Difficulties in Detection and Proof v. Legit Product• Non-Deterrent Laws or Enforcement © 2009 Michigan State University Board of Trustees
  • 12. Reasons for Growth in Counterfeiting• Availability and Growth of Technology to Commit Act• Increased Globalization – Supply/Demand of Products• Low Legal Penalties• Influence and Prevalence of Organized Crime © 2009 Michigan State University Board of Trustees
  • 13. Illicit Trade and Licit Trade• Illicit trade is driven by high profits and low morals.• Illicit trade is a political phenomenon as illicit traders cannot prosper without help from governments or accomplices in key public offices.• Illicit trade is more about transactions than products – no one pays full retail.• Illicit trade cannot exist without licit trade – all illicit businesses are deeply intertwined with licit businesses.• Illicit trade involves everyone – someone is selling and someone is buying.• Governments cannot do it alone.(Source: Naim, M. (2005). Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy) © 2009 Michigan State University Board of Trustees
  • 14. Top Counterfeited and Adulterated Foods © 2009 Michigan State University Board of Trustees
  • 15. Top Counterfeit & Adulterated Products• Cigarettes • Toothpaste (Dollar Stores)• Aircraft parts • Lipitor (18 million doses recalled)• Clothing/footwear • Birth control pills/condoms• Auto brake pads • Shoe polish• Infant formula • Nuclear reactor replacement parts• Household extension chords • Cologne/perfumes• Illegal antibiotics in meat • Cough syrup (Diethylene Glycol) in Panama• Anti-Malarials • … an entire COMPANY – NEC (2004-2006) © 2009 Michigan State University Board of Trustees
  • 16. Top Counterfeit Food Products• Extra Virgin Olive Oil Often is thinned out with vegetable oil. The FDA says this is one of the most frequently counterfeited product. (Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there) © 2009 Michigan State University Board of Trustees
  • 17. Top Counterfeit Food Products• Fish Fish is one of the most frequently counterfeited products. The FDA says many sellers advertise wild salmon when they are actually selling farm-raised fish. (Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there) © 2009 Michigan State University Board of Trustees
  • 18. Top Counterfeit Food Products• Vanilla Extract Chemical version - which is supposed to be labeled as artificial flavoring - is often made with a toxic substance called coumarin. Coumarin is related to warfarin, a blood thinner, and can be dangerous. The U.S. has banned coumarin in foods since 1954, but some products from Mexico and Latin America still use it. (Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes out there) © 2009 Michigan State University Board of Trustees
  • 19. Top Counterfeit Food Products• More Fishy Business Selling tilapia instead of red snapper or grouper. Theres also been rumors of some selling skate wing as scallops. The FDA found no cases of this.(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes outthere) © 2009 Michigan State University Board of Trustees
  • 20. Top Counterfeit Food Products• Honey Counterfeiters have started to use beet sugar in the mix because it is harder to detect than cane sugar or corn syrup.(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes outthere) © 2009 Michigan State University Board of Trustees
  • 21. Top Counterfeit Food Products• Maple Syrup 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.(Source: Bissonette, Z. (2009). Food Fraud! Watch out for ‘wild salmon’ and a few other fakes outthere) © 2009 Michigan State University Board of Trustees
  • 22. Top Counterfeit Food ProductsAccording to 2007 Organisation for Economic Co-operation andDevelopment (OECD) report, some of the most faked food and drinkitems include: Kiwis Milk Powder Butter Baby Food Instant Coffee Alcohol Drinks Confectionary Hi-breed corn seedsThe OECD report found that alcohol products are the prime targetsfor counterfeiters in the drinks sector, both because of their brandvalue 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) © 2009 Michigan State University Board of Trustees
  • 23. © 2009 Michigan State University Board of Trustees
  • 24. © 2009 Michigan State University Board of Trustees
  • 25. Economics and Consumer KnowledgeSelling Conventional Products as Organic • Do consumers know the regulatory differences? • Is that farmer at the local farm market really USDA certified? • Does the consumer really care about certification? • Is it the perception of organic or natural that entices some consumers? © 2009 Michigan State University Board of Trustees
  • 26. Public Health Threat from Fraudulent Food © 2009 Michigan State University Board of Trustees
  • 27. Public Health Threats• Allergens – undeclared, unnoticed until a reaction occurs Farmed catfish sold with banned antibiotics used in production of fish• Pathogens – intentionally and unintentionally introduced Salmonella in peanut paste products Peanut Corporation of America (Jan 2009)• Poison or Harmful Chemicals Pet food and infant formula with melamine added• Reduced Nutritional Value © 2009 Michigan State University Board of Trustees
  • 28. The Food Continuum Economic Threat Public Health Threat Unintentional Intentional(Source: Spink, J. (2006). The Counterfeit Food and Beverage Threat, Association of Food andDrug Officials (AFDO), Annual Meeting) © 2009 Michigan State University Board of Trustees
  • 29. Food Fraud and Impact on Public HealthHealth Threat Scenario: Soda Pop AdulterationCounterfeiters substitute a liquid for the cornsyrup in the product.The liquid substitute is a sweet-tastingproduct that could easily besubstituted for more expensivesyrups used in drugs, food, andother products. © 2009 Michigan State University Board of Trustees
  • 30. Food Fraud and Impact on Public HealthHealth Threat Scenario: Soda Pop AdulterationThe counterfeit syrup passes through threetrading companies on three continents.Not one company tests the product.Certificates are falsified for purityand shipment, eliminating thename of the manufacturer andprevious owner. © 2009 Michigan State University Board of Trustees
  • 31. Food Fraud and Impact on Public HealthHealth Threat Scenario: Soda Pop AdulterationTraders buy the product without knowingwhere it came from/who made it.Could this really happen?What burdens would be placed onpublic health from such an event? © 2009 Michigan State University Board of Trustees
  • 32. Food Fraud and Impact on Public HealthCould this really happen????It did happen; however, the adulterated productwas cough syrup.Diethylene glycol was intentionally substituted forglycerin in cough syrup.The adulterated ingredient traveledfrom the Yangtze Delta, Beijing toBarcelona, Spain and finally toPanama.(Source: Bogdanich and Hooker. (2007). From China to Panama, a Trail of Poisoned Medicine. NYTimes) © 2009 Michigan State University Board of Trustees
  • 33. Food Fraud and Impact on Public Health46 barrels of “syrup” implicated in the matter.Panamanian health officials began a nationwidecampaign to confiscate the cough syrup.1155 bottles of 6774 authorities retrieved werecontaminated.Over 350 confirmed deaths as theresult of consuming cough syrup –possibly hundreds more but victimswere buried before cause was known.(Source: Bogdanich and Hooker. (2007). From China to Panama, a Trail of Poisoned Medicine. NYTimes) © 2009 Michigan State University Board of Trustees
  • 34. FDA Food Protection Plan• Prevention (proactive) - increasing corporate responsibility to prevent food incidents - identifying food vulnerabilities and assess risks• Intervention (reactive) - focus inspections and sampling based on risk - enhance risk-based surveillance - improve the detection of food system “signals” that indicate contamination• Response - improve immediate response - improve risk communication to the public, industry, and other stakeholders © 2009 Michigan State University Board of Trustees
  • 35. Anti-Counterfeit Measures• Track and Trace• RFID, Holograms• County of Origin Labeling• Authentication of product (registration for warranty activation or to play an online game)• Investigation of suspected counterfeit operations• Standard Operating Procedures across the Supply Chain © 2009 Michigan State University Board of Trustees
  • 36. The BIG Problem andThe BIG Question © 2009 Michigan State University Board of Trustees
  • 37. Big ProblemCounterfeiters attendAnti-Counterfeit Conferences © 2009 Michigan State University Board of Trustees
  • 38. Big Question How do we get consumers and suppliers to participate in the authentication process and NOTdesire illicit/illegitimate products at significant cost reductions – particularly in this struggling economy? © 2009 Michigan State University Board of Trustees
  • 39. Multidisciplinary Research Partners Political Science Pharmacy Social Anthropology Engineering IPR Law Consumer BehaviorPharmacology Retailing Nursing Info Technology Food Science Anti-Counterfeit Activities Medicine Public Health DO, DVM, MD Marketing Forensic Science International Trade © 2009 Michigan State University Board of Trustees
  • 40. 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 © 2009 Michigan State University Board of Trustees
  • 41. © 2009 Michigan State University Board of Trustees