I was talking to a new client the other day. They are based in the United States and had discovered their competitors’ products contain undeclared ingredients.
What should they do, they asked.
There is no simple answer, especially not in the US where there is a patchwork of overlapping government agencies and rules to navigate.
Here’s the process I follow with this type of enquiry:
- Establish whether food fraud has occurred or not
- Categorise the fraud into one of two types
- Determine which regulations and agency(s) are relevant to the fraud
- Review the evidence – what made you think this was fraud in the first place?
- Decide whether more evidence is needed before pursuing the matter
- Choose who to tell, and in which order
- Choose how to progress after initial responses
- Inform interested parties
- Follow up if needed
- Execute further action if required
Example: hazelnut oil
We’ll use the example of a company that sells pure hazelnut oil and has discovered that their competitors’ products, labelled “100% pure hazelnut oil” actually contain significant quantities of sunflower oil.
1. Establish whether food fraud has occurred or not
Is this food fraud? Yes, because consumers or customers are being misled by the labels, the mislabelling provides an economic benefit to the seller and the mislabelling is illegal.
2. Categorise the fraud into one of two types
At this step, I ask myself “Has the food itself been affected in some way – for example by adding or subtracting an ingredient – or not?”, and categorise accordingly.
In this example, the food contains an ingredient that isn’t expected or declared. Therefore the food has been affected. On the other hand, if the fraud was a false organic claim on the pack I would categorise that as not affected.
Why is this important? Because it can highlight any urgent food safety issues and helps me to decide how/where to report and what evidence will be needed.
3. Determine which regulations and agency(s) are relevant to the fraud
For the hazelnut oil example, the two main agencies are the Federal Trade Commission (FTC) and the US Food and Drug Administration (FDA): the FTC because the oil is ‘misbranded’ according to the Food, Drugs & Cosmetics Act (misbranding means the label is false or misleading); and the FDA because they are responsible for ingredient lists, traceability and quality defects in foods.
4. Review the evidence
In this example, we knew that the fraud-affected products contained sunflower oil because of testing my client had performed. Before we decide on a course of action we need to know more about this testing:
- Who did the testing? Is the testing laboratory independent? Is it accredited for this scope?
- What method was used? Has the method been validated or approved? What is the accuracy and precision?
- How were the samples chosen?
- Does the laboratory impose conditions on the use of results and reports?
- Would the results stand up in court if needed?
- Have duplicate or repeat test(s) been done? Alternative methods tried?
For the hazelnut oil, we concluded we can be confident that the results show evidence of fraud, however, an internal laboratory was used, and this means the results are not independent and would not stand up in court, or to media scrutiny.
5. Decide whether more evidence is needed before pursuing the matter
In this case, the test results are not independent, so further testing would be needed if the matter were to be pursued in a court of law, or presented to media outlets.
6. Choose who to tell, and in which order
Who you choose to tell about a fraud depends very much on your relationship with the suppliers of the fraud-affected foods.
For example, if you are a customer – that is if you purchase the fraud-affected products – you should talk to the supplier on the telephone to explain what you found and find out what they have to say. It’s entirely possible that the company is a victim of their supplier and are unaware of any problem.
If you are a competitor it is best practice to let the company know what you found. Again, they could be victims of their suppliers. Give them the laboratory report (if an external lab) and tell them to direct any questions to the lab – if the lab is okay with this. Let them know you intend to take the matter further.
You can report the fraud to enforcement agencies immediately after you have told the company, or wait to see how they respond.
If there is a credible food safety risk you must report the issue to the relevant authorities so that they can take action to protect consumers.
The hazelnut oil company is in the United States, so we decided to report the issue to the organizations below, after informing the owners of the affected brands.
- the Fair Trade Commission (here: https://www.ftc.gov/about-ftc/contact) and
- the FDA complaints reporting system (here: https://www.fda.gov/food/resources-you-food/get-assistance-fda-human-food-program-hfp#Report)
- the company’s industry/trade association
- The state department of health, because the sunflower oil may present a food safety risk (a company that is willing to lie about ingredients could also be cutting corners with hygiene or sourcing).
7. Choose how to progress after initial responses
We decided that if the brand owners did not take action to correct the frauds and prevent them from occurring in future – for example by changing the claims on product labels, or by altering formulations – that we would commence a civil lawsuit against the brand owners.
A lawsuit would require us to obtain further evidence, including independent tests performed by an accredited laboratory.
8. Inform interested parties
We contacted the brand owners first, then the authorities, keeping accurate records of conversations and correspondence.
9. Follow up
We expect to have to follow up with the companies and the enforcement agencies, and have set timeframes for this.
10. Further actions
We hope to avoid taking legal action against the perpetrators in the civil courts, and would like to see the matter pursued by the FTC and the FDA in a timely manner.
We will repeat the tests in the internal laboratory in a few months’ time to see if there have been any changes to the formulation of the products.
Want help with a situation like this?
If can brief senior management, help formulate a plan of action, work with your laboratory and take charge of all the communications.