Individuals and companies that import goods into the United States are required to follow various customs laws and pay tariffs or duties on certain products. Attempting to avoid paying duties or tariffs may constitute customs fraud. Because such schemes can be difficult to detect without company or industry insiders, federal laws such as the False Claims Act incentivize whistleblowers to report violations of customs laws by offering significant financial rewards.
If you have knowledge of customs fraud, the best way to obtain a whistleblower reward is to consult Newman & Shapiro. Well-versed in the U.S. Customs Laws and the whistleblower provisions of the False Claims Act (FCA), we are dedicated to combating customs fraud.
Because failure to comply with customs rules can result in both criminal and civil penalties, a whistleblower may be awarded a significant portion of the money recovered.
Although reporting customs fraud poses a risk of career harm to relators employed in the import-export sector, if you file a qui tam lawsuit, provisions of the FCA protect you from employment retaliation.
If your employer has taken an adverse employment action against you for blowing the whistle on customs fraud, you may be able to file a civil lawsuit to recover damages. It is not necessary to work for an entity that may have engaged in customs fraud, however; anyone with knowledge of a fraudulent customs activity crime can be rewarded for acting as a whistleblower. When you consult Newman & Shapiro, we will determine whether you have actionable evidence of customs fraud, explain all your rights, and help you obtain a whistleblower reward.
What is Customs Fraud?
Customs fraud occurs when individuals or companies try to evade payments owed to the federal government for importing goods into the U.S. Generally, two major types of payments are required for imported goods — “antidumping” and “countervailing” duties (AD/CVD):
- Antidumping Duties — These duties are required to be paid by the importer and are designed to elevate prices of goods from foreign manufacturers. Dumping, the sale of goods into the U.S by foreign manufacturers at less than fair market value, is prohibited because it can lead to unfair pricing and dominance of U.S. markets.
- Countervailing duties — These duties are intended to offset foreign government subsidies, such as tax breaks, to manufacturers that export goods to the U.S., which enables them to sell the goods at lower prices than domestic manufacturers. Countervailing duties are aimed at leveling the playing field by duplicating the value of the subsidy.
While antidumping and countervailing duties are country-specific and imposed on goods produced in a number of regions, China is currently the subject of ongoing, enhanced scrutiny for dumping steel into the U.S. markets as well as for the subsidies China provides to manufacturers in the electronics and furniture industries which stifle competition. It remains to be seen whether current U.S. trade policy vis-a-vis China will mitigate that country’s dumping tendencies and anti-competitive subsidies.
Common Types of Customs Fraud
Customs fraud generally involves efforts to underreport the amount or value of imports and lessen the amount of duties that will be assessed through a variety of schemes, such as:
- Misrepresenting the country of origin — Tariffs and duties are based in part on the product’s country of origin. Claiming that a good was produced in a country with a lower tariff rate than the one the product actually hails from allows companies to avoid paying duties. Misrepresenting a product’s country of origin is typically an attempt to avoid anti-dumping and countervailing duties.
- Failure to identify country of origin — Similar to misidentification of the product’s country of origin, failing to label a product’s country of origin subjects those imports to a 10 percent tariff.
- Misclassification of goods — CBP relies on a standardized classification system known as the Harmonized Tariff Schedule to determine duty and tariff rates. Importers are required to provide the correct tariff classification so that accurate duties can be assessed. A company that intentionally misrepresents the nature or characteristics of a product can be held legally responsible in a FCA whistleblower lawsuit.
- Undervaluation of goods — Another factor involved in determining tariffs and duties is the value of the goods being imported. Companies that seek to boost their profits by intentionally undervaluing imports and underpaying their duty obligations may be guilty of customs fraud.
Because customs fraud involves underpaying or not paying duties and tariffs to the government, whistleblowers — or qui tam relators — can bring claims on behalf of the United States and be eligible for an award of 15 to 30 percent of any settlement or judgment obtained by the government.
Contact Our Customs Fraud Whistleblower Attorneys
Customs fraud is not a victimless crime because it deprives the government of revenue, harms domestic manufacturers and workers, undermines U.S. trade policy, and adversely impacts consumers. At Newman & Shapiro, we leverage our knowledge of the rules and procedures governing whistleblower claims to help our clients obtain just rewards for reporting customs fraud. When you consult us, we will work to protect your rights and help you obtain the reward you have earned. Please contact our office today so we can start work on your case.