A Word of Warning for Importers

It is quite clear that some importers prefer to purchase goods from overseas suppliers on a Delivery Duty Paid (DDP) basis.  Their reasoning is that it is a less complex transaction especially when an importer is not well schooled in import regulations.  Their reasoning for taking this course of action is not off the mark, but it also does not get them off the hook when fraud is involved.  To put this into perspective, one must understand the full meaning of the Incoterm DDP, which is as follows:

Under the Delivered Duty Paid (DDP) Incoterm rules, the seller assumes all responsibilities and costs for delivering the goods to the named place of destination. The seller must pay both export and import formalities, fees, duties and taxes. … The seller is responsible for all costs and risk until the goods are unloaded.

While this type of transaction seems logical for many importers, we have been advised by one of the nation’s top Customs and International Trade Law firms, Grunfeld, Desiderio, Liebowitz, Silverman & Klestadt,  (GDLSL, LLC), that The Department of Justice has announced a False Claims Act settlement with a company who purchased apparel on a delivered duty paid basis (commonly referred to as DDP or LDP). The purchaser, Byer California, admitted to either permitting or turning a blind eye to the fact that the importer from which it purchased the goods was undervaluing the imported garments.

This case highlights the fact that DDP purchasers, or any importers for that matter, are not insulated from liability for customs violations just because they are not the importers of record. DDP purchasers are well advised to implement due diligence programs to ensure that their vendors are accurately declaring their goods to Customs.

So while DDP transactions appear on the surface to be “easier” to transact, importers can and will be held responsible for not performing their necessary due diligence in every import transaction.

This is perhaps another good reason to make sure you are working with professionals who understand international logistics.  Work with the international shipping experts, contact us today.