Why AI food fraud is becoming a growing risk for restaurants

A new type of AI fraud could cost restaurant businesses dearly, as fraudsters increasingly use generative AI tools to fabricate complaints, manipulate evidence, and pressure operators into issuing refunds and compensation.

Known simply as “AI food fraud”, the issue was highlighted in a recent report by Food Alert, which shows how fake images of rotten or contaminated food are being used alongside AI-written complaint emails to create convincing but entirely fabricated claims.

The result is a growing challenge for hospitality businesses already operating under tight margins and higher customer service expectations, and the lack of legislation in the UK risks even more exposure to this kind of fraud.

What is AI food fraud?

AI food fraud is a new type of scam to deceive food businesses, delivery platforms and consumers through the use of generative AI tools that create fake evidence and communications to fraudulently obtain refunds, free meals, or other compensation.

According to a report by Food Alert, fraudsters are deceiving food businesses by creating AI-generated images of spoiled or undercooked food and using Large Language Models (LLMs) such as ChatGPT to write complaint emails, explicitly threatening to report the business to health inspectors or blast them on social media unless an immediate refund or compensation is issued.

“A bigger trend for us is the use of AI to intimidate our food business clients and us in relation to food complaints.” Annabel Kyle, Technical Director at Food Alert, comments.

“For example, if a guest disagrees with the outcome of their complaint, we will often receive an email that is clearly written with AI, quoting legislation and stating they will be reporting the matter to enforcement authorities, government agencies, legal representatives, and so on.”

With AI image volume reaching nearly 80 million images per day, and with 71% of social media content estimated to be AI-generated, this paints a concerning picture for small hospitality businesses, as it increases the likelihood of fake complaints and adds pressure on operators to respond quickly to potentially fraudulent refund requests.

The financial and reputational risk for restaurants

The impact of AI food fraud on hospitality businesses can be detrimental, as it can damage both reputation and customer trust. It can also cut into profit margins through fake refund claims and the cost of follow-up inspections or investigations.

After all, 84% of councils across England, Wales and Northern Ireland charge businesses for a food hygiene re-rating, with the average fee costing £219.95. And with 40% of consumers avoiding venues with a hygiene rating of three or less, even a small hit to a restaurant’s reputation can quickly turn into real financial pressure and lost footfall.

Fake reviews left by scammers, especially with AI-generated images of contaminated food, can also hurt business reputations. It is estimated that £23bn of UK consumer spending is influenced by online reviews every year, so these kinds of reviews can hinder repeat visits and deter new customers who can’t tell the difference between a real image and AI-generated content.

Kyle also adds that, as the UK’s legislation doesn’t cover AI-generated food complaint fraud, businesses are left exposed to a growing risk of false claims.

“In the UK, there is currently nothing that governs the generation of images outside the intentional generation of sexually explicit images. This also means other people might see and hear this type of fraud and the lack of legislation around it, and carry it out for themselves.”

How businesses can fight back against AI food fraud

While businesses can’t fully stop AI food fraud, they can make it harder to pull off and less likely to succeed.

One of the most effective steps is to change how refunds are issued. Specifically, instead of relying on photos alone, businesses should require additional proof like order numbers, timestamps, delivery confirmations, or even short video evidence in some cases.

It also helps to standardise how complaints are reviewed. This can be done by training staff on how to recognise common red flags, such as overly dramatic language, repeated refund patterns from the same accounts, or mismatches between order history and complaint timing.

Kyle also advises businesses operating on third-party apps like Just Eat and Deliveroo to “work closely with them to understand their specific fraud reporting and dispute processes”, so that fraudulent refunds can be challenged more effectively.

“It’s vital to take every report seriously so you don’t miss real risks within your operations,” Kyle adds. “You don’t want to leave your business exposed to ‘enforcement action’ or financial loss simply because you were unsure if a complaint was real or not.”

Discover the ales and ails of hospitality

Planet of the Grapes founder Matt Harris has over 25 years of experience in hospitality. Read his bi-monthly column for Startups now.

Read Whining and Dining