So as it turns out regulation is good for us, and free market forces don't solve all problems.
Yes it is, at least when Conservative party leaders talk about it. You might have a different definition but it isn't the one that will be enacted in reality.
For that matter how do you suppose product labeling regulations could be enforced? It would require tests and objective standards. And what happens with an entirely new substance that doesn't have a known safety profile or valid test criteria?
tl;dr: Everyone likes regulations when they're buying safe and accurately labeled products. Everyone hates regulations when they're asked to prove their own claims. The circle cannot be squared.
The large number of ethusiasts for "tort reform" suggest that the idea of making companies immune to the consequence of malfeasance would suggest otherwise.
As mentioned in the article, the retailers of this product are already being sued based on the findings.
Which brand of olive oil isn't the fake one, again?
The simplest one is that if you find out that you were the victim of small scale fraud. You should be able to sell your claim to a third person. This third person can then gather many small claim and do the lawsuit for profit. Your claim might only be worth 10$ in this case (since this is just wrong labeling and not anything worse) but its still free money.
This system would also give consumer groups for example a better financial situation. Currently, fines usually go to the government if some group detects that some law was abused. In the system im talking about a consumer group could ask for the data of all the people, should the find something they inform everybody of this and ask them to sell their claims. Then they sue the producer and make a profit. Such system could essentially be automated. Selling a claim should not be harder then making online bank payments (in Switzerland we have E-Bills, pops up, 1-click, done). If you trust the consumer group you could just automate it completely (in Switzerland you can actually give access to your bank accounts companies you trust).
This is also not some new idea, there are historical systems that worked exactly like this. Those system were found to perform quite well.
In a better legal system it should be easy, for all defrauded people to somehow make money.
Libertarian and other people have actually studied these issues quite in depth and there are many good proposals. A simply version is that if you are victim of fraud but you don't want to take action, you can sell your claim to somebody else. In this case we have many small claims, one actor can buy them up and then make a collective action lawsuit without everybody else having to care.
This would be a far superior system to regulation. I have made arguments to that effect here: https://news.ycombinator.com/item?id=13017446