Product substitution occurs when lower-quality, unauthorized, or counterfeit goods are delivered in place of those originally agreed upon. This form of fraud often results in financial loss, breaches of contract, and potential legal liability, especially when it involves regulated or safety-sensitive industries.
In some cases, substitution may occur unintentionally due to supply chain issues or weak internal controls. However, deliberate substitution is typically used to reduce costs while billing clients for higher-value items, or to conceal procurement fraud involving collusion between internal staff and suppliers.
How LMD Forensic Accounting Can Help
LMD Forensic Accounting applies a comprehensive approach to uncovering and documenting product substitution schemes. Our team examines both financial records and operational evidence to determine whether substitutions occurred and whether they were part of a broader pattern of fraud or misrepresentation.
Our services include:
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Reviewing contracts, invoices, and delivery records for discrepancies
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Identifying financial inconsistencies related to product pricing or specifications
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Working with technical experts when necessary to verify authenticity or quality
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Assessing procurement processes and identifying gaps in internal controls
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Preparing clear, well-documented reports to support legal or corrective action
We support clients in a wide range of industries, from manufacturing and construction to healthcare and public procurement, always ensuring discretion and clarity in our findings.
Product substitution
Examples of product substitution may include:
Product substitution schemes are often difficult to detect without technical knowledge or close oversight. They can affect both the procurement and delivery sides of a business. Common examples include:
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Delivering substandard or counterfeit materials under genuine purchase orders
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Replacing branded goods with generic equivalents while charging full price
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Substituting used or refurbished equipment for new without disclosure
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Switching agreed-upon quantities or specifications after contract approval
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Collusion between procurement staff and suppliers to split cost savings
Contact Us
If your organization suspects product substitution or has experienced irregularities in procurement, contact LMD Forensic Accounting to discuss how we can assist.