To support domestic manufacturers, the government imposes import duties and tariffs on foreign-made goods. However, the government does not have enough resources to properly examine the millions of containers that enter the country every day. Unscrupulous businesses take advantage of the lack of oversight to avoid paying their fair share—and ultimately depriving taxpayers of the money to which they are entitled.
Customs fraud most commonly falls into three categories:
- Misclassification of imported goods, in which a company claims it is importing one type of goods when it is really importing another.
- Misrepresenting country of origin, in which a company lies about where it is importing goods from.
- Trans-shipping and re-labeling, in which a company ships goods to the United States via other countries to conceal their true country of origin.
Detecting Government Contracting & Customs Fraud
Whistleblowers are essential in identifying, reporting, and stopping fraud involving government contracts and customs. When contractors engage in bid rigging or price fixing, misappropriate funds, or retain overpayments, whistleblowers can identify fraudulent behavior that may seem innocent to an outside observer. Whistleblowers can also identify defects in products that may go unnoticed to the untrained eye. When it comes to customs fraud, whistleblowers can help unravel the often complex schemes that companies use to disguise the nature of their goods or their country of origin. While many whistleblowers are employees (or former employees) of government contractors or importers, with inside information about fraud being committed, even non-employee “outsiders” often are able to use their specialized knowledge to identify and report fraud.
A whistleblower who files a successful complaint under the False Claims Act is entitled to between 15% and 30% of the amount the government recovers.