With new and increased tariffs proposed by the current administration, there are likely to be more instances of customs fraud. These cases often involve undervaluation, false classifications, misrepresentation of country of origin, failure to state country of origin, or outright smuggling of goods so that importers can avoid tariffs (or pay reduced tariffs).
If you have information about customs fraud, you may be eligible for a significant monetary award under federal whistleblower laws. Reporting fraudulent import practices through the False Claims Act or other trade enforcement mechanisms can result in significant financial compensation for those who provide valuable information. As a whistleblower attorney and custom fraud lawyer with decades of experience, I can help you confidentially report violations and pursue a claim to ensure you receive the compensation and protection you deserve.
If you are aware of customs fraud being committed against the United States government, I invite you to reach out to me through the contact page or call my office at 206-324-8969 to schedule a free consultation with an experienced customs fraud lawyer.
What Is Customs Fraud and Why Is It a Growing Concern?
Customs fraud refers to any attempt to evade import duties, misclassify goods, or violate trade laws to gain an unfair advantage in international commerce. With tariffs increasing under recent trade policies, businesses may be more tempted to misrepresent shipments to avoid higher costs. These deceptive actions not only harm honest businesses but also deprive the government of revenue and disrupt fair trade.
Common types of customs fraud include:
- False classification of goods – Declaring products under incorrect categories to pay lower duties.
- Undervaluation of imports – Reporting lower purchase prices to reduce tariff obligations.
- Transshipment fraud – Routing products through third countries to disguise their true origin and bypass country-specific tariffs.
- Smuggling – Importing goods without proper disclosure or paying required duties.
Who Is Responsible For Paying Tariffs on Imports?
The importer of record is responsible for paying tariffs on incoming goods – not the country from which the goods are shipped This is typically the entity or individual that is legally responsible for ensuring the goods clear customs and comply with all applicable trade regulations. The importer of record may be:
- The Buyer (U.S. Company or Individual) – If a U.S. business purchases goods from a foreign supplier, the U.S. buyer is generally responsible for paying any applicable duties and tariffs.
- The Seller (Foreign Supplier) in Some Agreements – In some shipping arrangements (such as Delivered Duty Paid (DDP) terms), the foreign seller takes responsibility for paying all customs duties before the goods reach the buyer.
- A Customs Broker – Many importers hire a licensed customs broker to handle customs clearance and ensure proper payment of tariffs.
Ultimately, tariffs are a government-imposed cost that the importer must pay upon entry, and these costs can often be passed along to consumers through higher prices.
How Do Tariffs Affect Customs Fraud Investigations?
Tariffs create financial incentives for businesses to commit customs fraud. When tariffs increase, companies importing goods may attempt to manipulate classifications or values to reduce costs. Recent trade disputes under the Trump administration, such as the threatened imposition of higher tariffs on goods from China, Canada, and Mexico, may lead to a surge in customs fraud cases.
For example, if a company imports machinery from China, it may mislabel the goods as coming from a lower-tariff country, such as Vietnam or Mexico. This form of transshipment fraud is a violation of trade laws and can result in severe penalties.
As a customs fraud attorney with three decades of experience, I help whistleblowers report fraudulent customs practices and work with businesses to ensure compliance with trade regulations. Our team assists in navigating whistleblower protections under the False Claims Act and other federal laws.
What Are the Legal Protections for Whistleblowers in Customs Fraud Cases?
The U.S. government relies on whistleblowers to expose customs fraud, and several laws provide protection and financial incentives for individuals who report violations.
Key whistleblower protections include:
- The False Claims Act (FCA) – Allows individuals to file qui tam lawsuits on behalf of the government and receive a portion of recovered funds.
- Customs Laws – The Enforce and Protect Act (EAPA) strengthens enforcement of anti-dumping and countervailing duty laws and provides mechanisms for reporting fraud.
- Retaliation Protections – Whistleblowers are protected from employer retaliation under federal laws.
We work with whistleblowers to file claims (confidentially when possible) and pursue rightful compensation for their efforts in exposing fraud. We also tenaciously fight to protect brave whistleblowers from illegal retaliation.
What Are the Penalties for Customs Fraud?
Customs fraud carries severe civil and criminal penalties, including:
- Financial penalties – Companies found guilty of customs fraud may be required to pay up to three times the duties owed plus additional fines.
- Criminal charges – In cases of intentional fraud, individuals may face federal prosecution, including prison sentences.
- Loss of import privileges – Businesses caught engaging in fraudulent import practices may be banned from international trade.
What Should You Do if You Suspect Customs Fraud? Take Immediate Action to Protect Your Rights and Potential Compensation
If you have firsthand knowledge of customs fraud—such as misclassification of goods, false country-of-origin claims, or other deceptive import practices—it is crucial to act swiftly and consult with an experienced customs fraud attorney. Reporting violations under the False Claims Act can lead to significant financial rewards, but these opportunities are often only available to the first individual who comes forward with credible information.
If you are considering filing a claim or have already reported fraud and faced retaliation, reach out to our firm for a confidential consultation. Pursuing a qui tam lawsuit alongside the U.S. government involves complex legal procedures, and having a customs fraud attorney by your side can help you navigate the process while safeguarding your rights. Taking prompt action can not only hold fraudulent importers accountable but also ensure that you receive any whistleblower compensation you may be entitled to under the law.
How Does a Qui Tam Lawsuit for Customs and Import Duty Fraud Work?
A qui tam lawsuit allows individuals to take legal action against companies or individuals that have defrauded the U.S. government, including those engaging in customs fraud or import duty violations. These cases typically fall under the False Claims Act, which is designed to combat fraudulent practices that financially harm the federal government, such as misclassifying imports, undervaluing goods, or evading tariffs.
If someone has direct knowledge of customs fraud, they can confidentially report the violation to trigger a federal investigation. Many whistleblowers work with a customs fraud attorney to ensure their claims are properly documented and legally protected. The attorney helps gather evidence and file a sealed complaint in U.S. federal district court, keeping the case confidential while authorities review the allegations.
Once the complaint is filed, the government will decide whether to intervene in the case. During this review period, the company or individual accused of fraud will not be notified, preserving the integrity of the investigation. If the government decides to pursue the claim, it can result in significant financial penalties for the fraudulent party and potential whistleblower compensation for the individual who exposed the wrongdoing.
Schedule a Free Consultation with Customs Fraud Attorney Steve Teller Today!
If you have firsthand knowledge of customs fraud or have faced retaliation for reporting fraudulent import practices, Steve Teller is here to help. At Teller Law, we focus exclusively on protecting whistleblowers—not defending those accused of fraud. Whether you have information about companies misclassifying goods, undervaluing imports, or engaging in deceptive trade practices, we can guide you through the process of filing a claim under the False Claims Act and other federal whistleblower statutes.
Whistleblowing can be complex and high-stakes, but it can also result in significant financial rewards and play a critical role in ensuring fair trade. My team and I provide confidential legal representation to individuals looking to expose customs fraud and work to secure the strongest possible protections for whistleblowers. If you have already reported customs fraud and are experiencing retaliation—such as job termination, harassment, or blacklisting—as a dedicated customs fraud law firm, we will fight to hold the responsible parties accountable under federal whistleblower protection laws.
Taking the first step can be intimidating, but you don’t have to do it alone. Contact Teller Law today for a free consultation with an experienced customs fraud lawyer to discuss your rights, potential compensation, and the best legal strategy for your situation. Your courage in coming forward deserves strong legal advocacy, and we are ready to help you every step of the way.
For more information about customs fraud and our legal services, visit our import fraud and customs duty fraud page.