The US Department of Justice (DOJ) has signaled a determined approach towards enforcing the False Claims Act (FCA), focusing primarily on customs-related violations. Deputy Assistant Attorney General Michael Granston expressed the DOJ’s intention to intensify scrutiny over “illegal foreign trade practices” against the backdrop of the recent tariff policies. With a rise in FCA cases concerning customs duties evasion, including instances of undervaluing imports, misclassification, and misrepresentation of a product’s country of origin, companies face significant legal and financial risks. Granston’s announcement highlights a growing trend that shows no signs of abating, necessitating immediate compliance reviews for businesses involved in importing goods into the United States. For more details on the DOJ’s commitment and its implications for businesses, you can read the full report on Bloomberg Law.
The legal framework underpinning the FCA entails serious financial liabilities for businesses found non-compliant. According to 31 USC Section 3729(a)(1)(A), an entity presenting a knowingly false claim for payment risks treble damages plus penalties. Additionally, whistleblower provisions incentivize private individuals to file qui tam lawsuits, entitling them to a substantial share of recovered funds — a method resulting in $2.4 billion of last year’s $2.9 billion total settlements. Several enforcement actions have been pursued against companies evading customs duties through undervaluation or incorrect classification of products as outlined in recent DOJ actions such as the Brookfield, Wisconsin FCA settlement and the Vitamin settlement.
Importers need to address the heightened enforcement risks by bolstering compliance measures. Key strategies include assessing existing trade compliance programs for undervaluation and misclassification risks, and reinforcing internal procedures to detect potential FCA liabilities early. Documentation submitted to US Customs and Border Protection should be carefully reviewed for any vulnerabilities to FCA actions. Additionally, companies already exposed to risk may benefit from voluntary self-disclosure to mitigate possible penalties or pursue a global resolution of FCA claims. Given the proactive stance of DOJ, timely and strategic compliance adjustments are crucial for companies operating within international trade domains.