This is an op/ed by veteran N.C. attorney Gary Jackson
As the U.S. government raises tariffs on imported goods, a troubling consequence looms large: an increase in tariff fraud by importers intentionally deceiving U.S. Customs to evade paying the higher tariffs. North Carolina promises to be a major battleground in the fight against tariff fraud, with ports like Wilmington and Morehead City on the front lines.
This rise in fraudulent activities not only undermines government revenue but also threatens the integrity of domestic industries. Regardless of how you feel about the tariffs, the need for vigilance about tariff fraud has never been more critical, and whistleblowers can play a pivotal role in exposing these tariff scams.
Tariff fraud, often referred to as customs fraud, involves the deliberate misrepresentation of information regarding imported goods. Fraudsters misclassify goods, undervalue them, or falsify their country of origin to evade or reduce the tariffs owed. These actions have real-world consequences, leading to significant losses in government revenue that could otherwise fund essential public services. Moreover, they create an uneven playing field for honest businesses that comply with tariff regulations, ultimately harming domestic industries and leading to job losses.
How do we know that tariff fraud will increase? It’s already a significant problem now: Goldman Sachs estimated that in 2023, tariff evasion in the U.S. totaled $110 billion to $130 billion. As tariffs drive the cost of imported goods and services higher, the number of importers and the ways in which they cheat the system will inevitably also rise.
The economic implications of tariff fraud are profound. When importers cheat the system, they gain an unfair price advantage over tariff-compliant businesses. This not only stifles competition but can also lead to instability in the job market. For instance, industries that rely on tariff protection may find themselves unable to compete with fraudulently priced imports, leading to layoffs and economic downturns in local communities.
Security concerns also arise from tariff fraud. Tariff fraudsters are typically part of large operations that seek to commit fraud in many areas on a wide scale. These fraud operations are criminal enterprises and are often linked to broader illegal activities like smuggling and financing terrorism. This makes the fight against tariff fraud not just a financial issue but also a matter of national security.
Fortunately, there is a powerful tool available for those who have knowledge or suspect tariff fraud: the False Claims Act (FCA). The FCA allows whistleblowers to file a lawsuit about the tariff fraud on behalf of the government and, in doing so, help the government recover funds that have been illegally withheld from it.
The bravery of whistleblowers who observe fraudulent behavior and decide to take action cannot be overstated. By reporting these scams, you not only protect your fellow Carolinians but also contribute to the region’s economic health. Importantly, the FCA includes provisions to protect whistleblowers from retaliation, trying to ensure that those who come forward can do so without fear of losing their jobs or facing harassment.
Whether you are an employee at an importing company, a government worker noticing inconsistencies in customs claims, or an importer competitor, your observations could be invaluable. And whistleblowers can receive up to 30% of the recovery in successful cases, a life-changing reward for doing the right thing.
Regardless of your stance on tariffs, reporting fraudulent behavior is a patriotic duty that keeps money out of fraudsters’ hands. If you have witnessed or suspect tariff fraud, you can help hold scheming importers accountable – your vigilance and courage can make all the difference.
Gary Jackson is Attorney of Counsel at Carolina Whistleblower Attorneys, which is a joint venture between the Bill Nettles Law Firm and the Law Offices of James Scott Farrin. He has more than 40 years of experience.