De Minimis Customs Fraud: One Order, Several Duty-Free Parcels

De minimis customs fraud turned one customer’s order into several supposedly duty-free shipments. The customer made one purchase. The seller divided it to get an exemption the order did not qualify for. If you saw the fulfillment instructions behind that split, you may know the part U.S. Customs and Border Protection never saw.

The commercial exemption is now suspended, but the earlier transactions still matter. This form of customs fraud left duties that U.S. customers otherwise owed unpaid. That undercuts honest sellers and leaves taxpayers short. The question runs from the original order to the declaration at the border, and through the people who decided how to get it there.

What Is the De Minimis Value in US Customs?

The commercial de minimis value was $800 per person per day before the exemption was suspended. The ceiling measured the combined value of that person’s daily imports, rather than giving each parcel a fresh allowance.

What Is the $800 Rule?

The rule gave one person’s qualifying daily imports a single duty-free allowance. The de minimis exemption law measured it by the aggregate fair retail value in the country of shipment. Before the increase in 2016, the ceiling was $200.

The customs rule against splitting orders also addressed goods covered by a single order or contract and sent in separate lots to obtain the exemption. Making the parcels small enough did not make the order eligible. The connection between the parcels and the purchase is the heart of an order-splitting case.

When Did the De Minimis Exemption Change?

The commercial ceiling rose in 2016. Duty-free treatment was then suspended for all countries on August 29, 2025.

The Customs rule effective June 24, 2026 made the suspension indefinite for nonpostal merchandise and requires formal or informal entry. The statute’s repeal of the commercial exemption is scheduled to take effect July 1, 2027.

What Evidence Is Needed to Prove Fraud?

An order-splitting case needs the connection between the customer’s purchase, the parcels and the duty avoided. We connect the order records and customs declarations with you to establish how the shipping decision reached the entry.

The commercial record begins with what the customer bought and paid for. The fulfillment record shows how that purchase became shipments. Order confirmations, customer invoices, pick lists, parcel histories and carrier records give us different parts of that sequence. We look for the link between the original purchase and the values, recipient identities and import dates presented to Customs, then the instructions that explain who chose the split.

That work reaches across systems because the trade itself does. The seller’s commercial invoice, the carrier’s manifest and the customs entry serve different purposes. In the ordinary entry process, release establishes whether the goods can come in. The entry summary declares value, classification and duty.

The old low-value channel made that gap particularly large. Customs reported processing over 1.36 billion de minimis shipments in fiscal 2024, compared with 139 million in 2015. Qualifying shipments could previously be released on a manifest or bill of lading. Customs said those records often failed to identify the business causing the shipment, the final recipient or even the package’s contents.

Entry Type 86, the electronic process for qualifying low-value shipments, added information, but Customs still found undervaluation, misclassification and failures to meet other agencies’ requirements. Those data gaps also complicated screening for counterfeit and unsafe goods. For the employee looking at a complete order history, the commercial transaction may be far easier to see than it was from the parcel data at the border.

The Same Business Behind Different Recipients

Repeated contact details can connect shipments that appear to belong to different customers. A paper in the Customs Scientific Journal, published in 2019, describes a Korean Customs pilot that examined suspected splitting through express cargo and postal shipments. Analysts tested whether importers were using multiple addresses and contact numbers to keep small shipments within the de minimis exemption.

For example, among the suspicious cases, one importer had reported 123 different phone numbers and 127 different addresses.

‘Cross-Border Electronic Commerce’: Challenges for Customs Administrations and the Way Forward, Customs Scientific Journal, 2019

An order system may reveal one commercial operation behind apparently separate recipients. We use that connection to ask which purchases the parcels fulfilled and who directed their treatment.

The Retailers That Settled Order-Splitting Allegations

Pure Collection and Selective Marketplace settled allegations that they broke higher-value shipments into smaller ones to avoid duties their U.S. customers would otherwise owe. These customs fraud cases put the fulfillment decision at the center of the alleged scheme.

Pure Collection, a luxury knitwear retailer in Harrogate, England, and its chief executive agreed to pay a combined $908,100 in civil settlements announced by the Justice Department on February 13, 2018. The allegations concerned merchandise shipped from the United Kingdom to U.S. customers. The Justice Department alleged that Pure broke single shipments above the limit into multiple shipments of lesser value.

Selective Marketplace, the womenswear retailer behind the Wrap London and Poetry brands, agreed to pay $610,000 in a settlement announced on May 13, 2019. It shipped merchandise from the United Kingdom to U.S. customers. The Justice Department alleged that it broke single shipments above the earlier ceiling into lower-value shipments to avoid the duties.

Whistleblowers started both cases, and the government joined each. The Justice Department said the whistleblowers would receive shares of the settlement proceeds.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Who Directed the Split and the Declarations?

The seller, warehouse, logistics provider and broker can each hold part of the explanation. We trace the instructions through those businesses to the declaration, including who controlled the order information and who supplied the values used for entry.

The importer of record remains responsible for the customs declarations when a broker prepares them. A delivered-duty-paid contract can put the expense on the seller. To understand the conduct, we need the actual parties, the information they supplied and the instructions they followed.

For someone who worked in fulfillment, that may mean the instruction to divide an order. For someone who handled entry data, it may mean the invoice the business selected for Customs. We connect those decisions to the records of the shipments they affected. An audit warning, who received it and the response help explain what the business knew or deliberately avoided learning. The decision to keep using a questioned practice can matter as much as the original instruction.

When the Declared Value Leaves Out Part of the Purchase

Customs undervaluation fraud concerns what the declared price leaves out. Transaction value starts with the price paid or payable and can include separately supplied materials, qualifying royalties and proceeds that return to the seller. Fabric, components and molds can carry value that never appears on the assembler’s invoice.

We connect the payments and production records to the declared value, including charges or materials recorded outside the invoice sent to the broker.

An undervaluation allegation against Echelon Fitness Multimedia shows why that comparison matters. The whistleblower’s complaint described a purchase invoice and a lower-value customs invoice. It also alleged that Echelon bought tablets separately, sent them to its exercise-equipment assembler and left their cost out of the declared equipment value.

This scheme is difficult to detect since on their face, the amounts declared on the Entry Summary and commercial invoices match one another. But, the invoices were fraudulent.

United States ex rel. Greg Dahlstrom v. Echelon Fitness Multimedia, LLC, et al., whistleblower’s complaint

The comparison shows why we follow the purchase behind the paperwork. In one scheme the question is how the shipment was divided. In the other it is which part of the purchase price reached Customs.

Historical Split Shipments After De Minimis Suspension

We assess historical split shipments after de minimis suspension by connecting the earlier order, the ceiling in force at entry and the decision behind the declaration.

For later shipments, the inquiry turns to the required entry and the duties on the goods actually imported. False countries of origin, false product classifications and tariffs left unpaid remain questions for the entry and production records.

Sources

The Split You Were Told to Make

If you worked in an online seller’s fulfillment, warehouse, logistics or customs team and saw orders divided to stay under the limit, speak to one of our whistleblower experts about how that shipping rule worked. Our whistleblower experts connect your knowledge of the orders and instructions to the duties left unpaid and build your strongest customs whistleblower case with you. We bring in customs fraud whistleblower lawyers who understand parcel imports and stay beside you through the case.

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