<h2>Alcohol and tobacco products are brought into Finland as non-commercial imports and online purchases</h2>
<p>Passengers arriving in Finland from abroad may conceal commercial imports among non-commercial imports in an effort to evade excise duties. Private individuals are entitled to bring into Finland alcohol from another EU Member State duty-free within the value limits provided. Most passengers bring in alcohol for their personal consumption and transport it personally in line with regulations. When products are brought in for commercial or business use, the imports are subject to taxation regardless of quantities. Alcohol is brought into Finland from countries where taxes on alcohol are lower (e.g. Estonia, Latvia, Germany). This is a phenomenon known in European countries with substantially higher alcohol prices compared to their neighbouring areas. Imported alcohol may be distributed for sale in, for example, bars and restaurants.</p>
<p>Alcohol is also ordered in Finland from foreign online shops. If an online alcohol retailer located in another EU Member State organises the transport of its products to Finland, this is considered a form of distance sales, so the primary tax liability rests with the company selling the alcohol. The buyer is jointly responsible for the excise duty with the distance seller if the seller has not complied with its obligations. Online alcohol retailers rarely fulfil their tax liability in Finland appropriately. Meanwhile, if the buyer orders alcohol from an online retailer located in an EU country and arranges the shipping independently, this is considered distance buying, in which case the buyer is responsible for the taxes.</p>
<p>In recent years, the professional and large-scale smuggling of illegally manufactured cigarettes has been particularly prominent in the illegal trade in tobacco products, which exploits cross-border commercial goods transport. In addition to cigarettes, other tobacco and nicotine products also involve smuggling and illegal trade in Finland, which takes various forms and is influenced, among other factors, by changes in the regulation of these products.</p>
<h3>Passenger imports in decline, online sales on the rise</h3>
<p>Non-commercial import of alcohol has been gradually increasing after a decline during the coronavirus pandemic, but it has not reached pre-pandemic levels. Online trade in alcohol has been growing similarly to other e-commerce. Online shops for alcohol which actively sell alcoholic beverages to Finland have been established in countries such as Estonia and other Baltic countries.</p>
<p>The aim of the import of alcohol and tobacco products against regulations is to avoid import and excise duties, and this conduct often meets the criteria of tax fraud. Importing goods against regulations may also meet the criteria of smuggling.</p>
<h3>The illegal import of alcohol and tobacco erodes the tax base</h3>
<p>The smuggling of alcohol and tobacco products decreases tax revenue. Smuggled goods end up in the black market, and they are sold online, for instance, also to minors. In practice, anyone can purchase the alcohol and cigarettes sold online. In addition, illegally manufactured products pose an increased health risk, as they are not subject to legal market surveillance and therefore do not meet the requirements set for product ingredients and other characteristics.</p>
<p>Customs and the Tax Administration are engaging in active collaboration in the area of tax supervision. The excise duties are levied by the Tax Administration. The Police and Customs investigate suspected offences related to the sales of alcohol, tobacco and snus.</p>
<h2>Value-added tax avoided in EU trade for vehicles and other consumer products</h2>
<p>VAT fraud related to the trade in vehicles and other products sold to consumers in the EU is exploiting the weaknesses of the VAT system of intra-EU trade. These typically involve procurement fraud, in which the value-added tax paid on the purchase of a commodity is left unpaid. Those committing fraud can sell the products to retailers or consumers at a lower price or higher profit than the competitors operating correctly. Fraud is often committed with high-volume hit products.</p>
<p>This is a Europe-wide phenomenon and fraud is committed by the members of domestic and foreign organised crime groups. The operations often also involve other crimes, such as financial, order and purchase fraud, counterfeiting of goods and identity abuse.</p>
<p>Procurement fraud typically involves so-called buffer companies or other arrangements that deliberately obscure the supply chain in order to complicate supervision by the authorities. The simplest model is based on quick activities by fraudsters in companies operating for a short period of time. The most common types of fraud in vehicle trade are the non-payment of taxes related to EU purchases, marginal tax fraud, counterfeit invoices and fraud related to the use of buffer companies.</p>
<h3>VAT fraud causes significant damage</h3>
<p>This phenomenon distorts competition and reduces tax revenue. In addition, the phenomenon involves applying for unjustified VAT refunds, i.e. unjustified payment of already collected tax revenue to fraudsters. There is no precise estimate of the amount of damage caused by VAT fraud in the trade in consumer products, but according to the Finnish Tax Administration, VAT fraud in intra-community trade causes a total tax gap of approximately EUR 100-150 million each year.</p>
<p>Fraud in value-added taxation meets the definition of a tax offence. The Tax Administration supervises misconduct in value-added tax. Finnish Customs is responsible for controlling imports. These public authorities cooperate with the Police in investigating offences related to value-added tax.</p>
<p><a href="https://www.vero.fi/en/grey-economy-crime/how-to-act/prevent-vat-fraud/">Read more about how to act right</a></p>
<h2>Crime in the food chain is business-related crime</h2>
<p>Negligence or abuses in various steps of the food chain can be used to achieve unlawful financial gain. Cases of negligence or abuse in primary production may be related to animal welfare, the marking and registration of animals or the treatment and disposal of animal by-products. Food-producing animals may be slaughtered without a meat inspection, and uninspected meat can be sold for food use despite being prohibited.</p>
<p>The actual country of origin of packaged food may differ from that indicated on the labelling, or the composition of the product may be altered, for example by using cheaper or unsuitable raw materials. For example, uninspected meat or seasoning containing Salmonella bacteria may not be sold to consumers.</p>
<p>Most food business operators operate properly, but fraudsters can provide misleading information on the composition, characteristics or production method of a product. For example, the high production costs of meat and fish in Finland may tempt actors to falsify the origin of imported products as Finnish. This kind of misleading may increase the sales of a product while also endangering consumer health.</p>
<p>Food legislation requires that all food and their ingredients be traceable. In the context of fraudulent activity, traceability may be intentionally obscured. Concealing the origin of foodstuffs may benefit the operator, for example, where food business operations involve the use of premises unsuitable for the manufacture of food and outside the control of the authorities. Operating in inappropriate premises may worsen the hygiene of food, resulting in health risks and criminal financial gain.</p>
<h3>Global phenomena influence crime in the food chain</h3>
<p>Weather conditions, war and social media phenomena can influence the availability or demand for food and their raw materials. When demand exceeds supply, replacement raw materials are used, some of which may be counterfeits. As an example, olive oil production fell in Europe in 2023 due to drought. The availability of oranges also fell which increased the risk of counterfeit orange juices.</p>
<h3>Crimes in the food chain include various criminal offence categories</h3>
<p>The common feature of crime in the food chain is usually the pursuit of unlawful financial gain. The abuse may involve offences related to marketing, forgery, fraud, or health, as well as endangering health or creating a public danger. Crime related to animal production can involve causing a risk of spreading an animal disease, registration offence or animal welfare offence. Such acts may also meet the criminal characteristics of degrading the environment.</p>
<p>When an abuse or negligence is related to crossing the borders of countries, this may be a regulatory crime, smuggling, illegal dealing with imported goods or a customs clearance offence. Such cases may also pose a risk of animal diseases spreading, which may at worst lead to infections in both humans and animals.</p>
<p>Crimes in the food chain may involve negligence to pay taxes or to meet other statutory payment obligations as well as labour exploitation.</p>
<h3>The authorities are monitoring and inspecting crimes in the food chain</h3>
<p>The supervisory authorities of the food chain are the Finnish Food Authority, municipal supervisory authorities, Customs, the Finnish Defence Forces and regional traffic and economic development centres. In cases of suspected offences, these authorities will make a request for investigation to the police or Customs.</p>
<p>In addition to consumer sales, crime is also conducted in business transactions, which distorts competition to the benefit of fraudulent companies. In this case, companies may also be the victims of crime. Food chain companies and industry associations have developed their own anti-fraud measures with the help of national and international cooperation. This cooperation also supports the supervisory work of authorities.</p>
<h3>Crimes in the food chain are an international phenomenon</h3>
<p>In the United Kingdom, it has been estimated that food-related crime accounts for 0.07% to 0.33% of the turnover of the food sector, amounting to approximately £0.4 to 2 billion a year. The turnover of the food and beverage manufacturing sector in Finland in 2022 was approximately EUR 13 billion. Using the same calculation method, the contribution of the food industry in Finland would be approximately EUR 9–43 million per year.</p>
<p>Trade in food and agricultural inputs such as animals, fertilisers, feed and seeds and plant protection products is international and therefore crime in this sector often crosses national borders. The Finnish authorities participate in international cooperation in the fight against fraud, including in the Agri-Food Fraud Network led by the European Commission, and in the OPSON cooperation between Europol and Interpol.</p>
<h2>Hidden subscription traps in distance sales</h2>
<p>Online merchants, telemarketers, email marketers, and similar operators may create a subscription trap by providing misleading information about the content of an order. For example, the first instalment of the order is marketed merely as a product sample with no obligation for further orders, or as an entry in a supposed lottery. In this way the consumer is deceived into committing to a subscription that does not correspond to the original marketing of the product or service. The undue payments related to subscription traps are typically collected by invoice or as direct debits from the consumer’s credit card.</p>
<p>Subscription traps can meet the criteria for fraud and marketing offences. This phenomenon undermines consumers’ trust, especially in online shopping, but also in telemarketing. Subscription traps cause financial damage, for example, in cases that lead to monthly payments being charged from a credit card. They often also involve collection operations, which result in many paying the undue fee out of fear of threatened consequences (e.g. loss of credit information, court case).</p>
<h3>Subscription traps are set by both Finnish and foreign operators</h3>
<p>Subscription traps for distance sales are often set by foreign companies, but there are also Finnish operators involved. While consumers are usually selected as the target, companies should also be vigilant. Subscription traps have been observed in lines of business sectors whose products are sold online. These include natural remedies and beauty care products (product sample type subscription traps) and dating services. Under the right circumstances, anyone can fall for a well-designed subscription trap.</p>
<p>This phenomenon is growing, as with any trade on the Internet. <a href="https://commission.europa.eu/system/files/2020-01/survey_on_scams_and_fraud_experienced_by_consumers_-_final_report.pdf" target="_blank" rel="noopener">According to a study commissioned by the European Commission</a>, eight per cent of EU consumers had fallen for a subscription trap in the previous two years. Consumers typically realise they are in a subscription trap only when they try to cancel the subscription.</p>
<p>Subscription traps are prevented through information, supervision and guidance The Consumer Ombudsman seeks to prevent consumers from falling into subscription traps by providing information. In addition, illegal practices by companies offering subscription traps are countered through supervision or by making the operations financially unprofitable. Interventions are made in the activities of collection agencies and payment service providers when the claims are unjustified. Consumers have been guided on a case-by-case basis regarding the unjustified collection of claims, and general guidelines have also been provided. Negotiations with collection agencies and payment service providers have also yielded results. Meanwhile, negotiations with the subscription trap companies themselves have been unproductive. The Consumer Ombudsman’s means are rather ineffective unless the (cross-border) subscription trap company voluntarily makes improvements to its activities after the negotiations. However, negotiations with Finnish telesales companies have been more successful.</p>
<p>Active awareness-raising efforts have increased consumer knowledge of the phenomenon and thus helped prevent new cases of subscription traps. In addition, consumers have been able to contact the Consumer Advisory Services of the Finnish Competition and Consumer Authority and the European Consumer Centre for advice in their own cases. Although these parties have not been able to mediate actual cases of fraud, consumers have, for instance, been advised not to pay undue bills. When the company has noticed that consumers are not paying claims based on a subscription trap, the collection and marketing of such claims has ceased.</p>
<p><a href="https://www.vero.fi/en/grey-economy-crime/how-to-act/Identify-consumer-fraud/">Read more about how to act right</a></p>
