The US Department of Justice is increasingly turning to the False Claims Act to pursue companies accused of evading customs duties, a trend that legal experts say is likely to accelerate as tariffs remain elevated and whistleblowers become more active. This shift in focus highlights the growing importance of customs enforcement in the US trade landscape.
The trend comes as federal authorities pursue a growing number of customs fraud and tariff evasion cases. Recent actions include the government's $549.5 million settlement involving aluminum extrusion imports, a customs fraud claim against bankrupt auto-parts supplier First Brands Group, and enforcement actions targeting alleged country-of-origin fraud and duty evasion schemes.
Customs fraud recoveries under the False Claims Act totaled more than $570 million during the first five months of 2026, surpassing all prior annual totals and exceeding the combined recoveries from many previous years. This significant increase in recoveries underscores the effectiveness of the False Claims Act in addressing customs fraud cases.
The report states that more than $918 million has been recovered through customs fraud cases brought under the False Claims Act. This substantial amount highlights the potential rewards for whistleblowers who come forward with evidence of customs fraud schemes.
Most customs fraud cases fall into three primary categories: misclassification of goods, misrepresentation of country of origin, and undervaluation of imports. Misclassification schemes involve importers assigning products to tariff codes with lower duty rates. Undervaluation cases often involve false invoices or other efforts to understate the value of imported goods.
Country-of-origin fraud can include transshipping products through third countries to disguise where they were manufactured. The sophistication of these schemes is increasing as enforcement intensifies, making it more challenging for companies to avoid detection.
The trend towards increased customs fraud enforcement is driven by the growing importance of trade and tariffs in the global economy. As high duty rates create strong incentives for evasion, industries such as aluminum, steel, furniture, textiles, and apparel are becoming increasingly targeted by authorities.
China remains at the center of many enforcement efforts due to its significant trade volume with the US. The country's complex supply chains and manufacturing networks make it a prime target for customs fraud schemes.
The growing number of customs fraud cases highlights the need for companies to implement effective compliance measures to avoid detection. Whistleblowers play a critical role in exposing these schemes, and their efforts are driving the trend towards increased enforcement priorities.
As tariffs remain elevated, enforcement priorities are shifting to address growing customs fraud cases.
