By Jeffrey A. Newman
Here is one question that comes up in in most custom frauds cases under the False Claims Act: What is the legal responsibility of a company importing products from China, or any other non favored nation? U.S. law (19 U.S.C. § 1484, the “Customs Modernization Act”) places the primary compliance burden on the importer of record, not on the customs broker or the foreign supplier. Importers must use reasonable care to ensure that all entry information is correct, including: classification (HTS code), customs value, country of origin, and admissibility (e.g., safety, sanctions, forced-labor bans). You may hire experts, but you cannot delegate away legal responsibility; CBP will still hold the importer of record liable for errors or fraud. “Reasonable care” is a flexible standard that requires concrete, documented due diligence, especially for higher‑risk countries and products from China
So what is reasonable care? The importer must establishing procedures to determine correct HTS classification and valuation, verifying and documenting country of origin, keeping 5 years of import records, and consulting CBP rulings or trade counsel in doubtful cases. Failure to investigate obvious red flags (for example, implausibly low values, questionable “Made in Mexico” relabeling of Chinese goods, or suppliers in high‑risk Chinese regions) can be treated as negligence or worse.
19 U.S.C. § 1592 prohibits entering or attempting to enter goods into the U.S. by means of material false statements, omissions, or forged/incorrect documents, and this applies directly to misdeclared Chinese products. There is an excellent article written by Jennifer Diaz of Diaz TRade LAw and published by Bloomberg Law. Here is a copy: https://customsandinternationaltradelaw.com/wp-content/uploads/2022/05/importer_reasonable_care_standard1.pdf It is entitiled What is an Importer’s Reasonable Care Standard? I recommend this article as it shows just how much importers are required to do based on the reasonable care standard.
If you are an importer with information about a competitor that is complicit in importing goods from China or other nations by falsifying the country of origin, you may be able to bring forward a whistleblower case under The False Claims Act.
Jeffrey Newman is a whistleblower lawyer whose national firm in Boston represents whistleblowers of violations of export controls, tariff evasions, money laundering, healthcare fraud and other kinds of WB cases. The firm represents individuals both in the United States and other countries. Mr. Newman and his firm staff also represent many physicians across the country who become whistleblowers in healthcare fraud cases. Whistleblower laws in the U.S. allow individuals anywhere with information about export control violations or tariff fraud to reveal the information under The False Claims act or through the Securities and Exchange Commission’s Whistleblower Program. The Firm’s website is at www.JeffNewmanLaw.com and attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 978-880-4758. FOR OTHER ARTICLES LIKE THIS ONE IN ADDITION TO WHISTLEBLOWER INFO PLEASE SEE MY BLOGS AT https://jeffnewmanlaw.com/utm_source=GMB&utm_medium=organic&utm_campaign=Marblehead
