Importer Identity Theft Under DDP Terms: The Buyer Paid the Seller, Then Customs Sent the Bill

Importer of record identity theft can put a buyer’s name on customs entries it never authorized, even after it paid the seller a delivered-duty-paid price. The seller has the money. U.S. Customs and Border Protection has an entry naming the buyer as importer of record. In the Katana Racing dispute, the buyer said suppliers used its importer number without permission, while the government sought unpaid duties from the buyer. Katana said its purchase price included the duty. The government still sent Katana the bill.

Who Is the Importer of Record for a DDP Shipment?

The importer of record is the party identified to Customs as responsible for the entry. A DDP contract puts import clearance and duty costs on the seller, but the filing can name the buyer.

The importer declares the goods’ value, classification and duty rate and must exercise reasonable care over that information. A customs broker can prepare and submit the entry as its agent. A freight forwarder books and documents the shipment. The seller’s promise to deliver, the broker’s filing and the importer’s responsibility each have their own paper trail.

Under the customs regulation on duties, duty is a personal debt owed by the importer to the United States. Paying a broker to cover duty leaves that obligation in place if the broker never pays Customs.

The Customs Power of Attorney Behind the Duty Demand

A customs power of attorney can connect identity theft to a duty demand by carrying the buyer’s identifying information into someone else’s filing chain. The authority the buyer intended to give, the instructions passed along and the entries actually filed are the connections that matter.

Katana said it agreed to a power of attorney after suppliers represented that they needed it to move tires from the customs area at the Port of Long Beach to its Southern California facility. According to the court’s account of Katana’s position, sellers or people taking advantage of them used the importer number in that document to name Katana on entries without its permission.

Unauthorized use of a buyer’s importer number on a DDP shipment can therefore begin with paperwork the buyer actually signed. What the buyer was told the document would accomplish is part of the evidence, alongside who received it and what they did with it.

Katana Racing’s Disputed Tire-Duty Bill

The government sought $5,742,484 in unpaid duties and fees from Katana over 386 entries of Chinese passenger-vehicle and light-truck tires. Katana said it had already paid its vendors negotiated DDP prices.

The tires faced additional safeguard duties of 35%, 30% and 25% at successive stages. Katana said those duties had prompted it to cut back Chinese purchases, until producers persuaded it to keep buying on DDP terms. The duty-inclusive price was the reason to continue the business.

Customs contacted Katana to audit 61 tire entries bearing its name. Katana said it could not find those entries in its records. Its files showed vendor invoices and payments on DDP terms, with no separate duty payments, broker correspondence or brokerage bills for the disputed tires.

Katana said an Importer Trade Activity report from Customs, known as ITRAC, identified dozens of brokers it did not know. Its representatives obtained entry summaries from those brokers. Katana compared the entries with its vendor invoices and supplied auditors with invoices and payment records.

Did the DDP Seller Pay the Customs Duties?

The government alleged that a Chinese vendor paid duties on a $21,220 invoice even though Katana paid $136,350 for the same tires. Its complaint, reproduced in the court’s opinion, said the broker supplied the lower invoice at entry and Katana supplied the higher one during the audit.

The buyer’s accounts payable file and the broker’s entry file told different stories about the same tires, the government alleged. Connecting those files is how an insider can show which price reached Customs, which price the buyer paid and who supplied each version.

Does Customs Value Include Freight?

U.S. customs transaction value excludes international freight and insurance. A DDP total can bundle costs that need to be separated to understand the duty calculation.

In Katana, the court described auditors’ difficulty accounting for international transportation expenses included in the DDP prices because the buyer lacked bills of lading and shipping contracts. The declared value and actual payment have to be connected to the goods and the costs the price covered.

What Evidence Is Needed for Qui Tam?

We assess a customs qui tam case with you by connecting the unpaid duty to the people who directed the entries and knew what was being declared. Contracts, supplier messages, powers of attorney and broker correspondence can connect the buyer’s purchases to the disputed entries. Payment records connect those entries to the money.

A buyer may hold the duty-inclusive invoice and the instructions limiting what the supplier could do. A customs broker whistleblower may know who supplied the importer number, who sent the lower invoice and what the broker was told about it. At the seller or forwarder, someone may know who selected the filing agent and passed along the customer’s identity. The strongest account follows the same shipment across those desks.

Matching the Shipment Behind the Company Name

A 2020 Center for Economic Studies study of U.S. and Colombian customs records found that matching buyers and sellers was easier than matching their individual shipments:

That is, while buyers and sellers can be paired up fairly accurately, only 25-30 percent of the individual transactions in the customs records of the two countries can be matched using fuzzy algorithms at reasonable tolerance levels.

Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia, U.S. Census Bureau, Center for Economic Studies, 2020

The paper recommends standardized invoice or transport-document numbers to connect individual shipments. For a disputed importer identity, that points to the value of an identifier that follows the goods from the commercial invoice to the transport and entry records. A company name alone can miss the connection.

What a Second Invoice Can Reveal

Homestar North America illustrates why an insider’s view of the payment can matter. A whistleblower’s complaint alleged that the furniture importer used a lower invoice for Customs and a higher one reflecting the actual payment to its Chinese manufacturer. The complaint explained that inspecting the cargo would not reveal a lie about its value.

Homestar agreed to a $798,334 settlement announced in December 2023 over alleged undervaluation of Chinese furniture. The parallel is the split between the invoice used for duty and the payment inside the business. In a DDP identity dispute, an insider can also connect that split to the person who supplied the buyer’s number.

False Claims Act Customs Fraud and Unpaid Duties

A False Claims Act customs fraud case can address duties knowingly avoided or left unpaid. That includes failure to correct a customs entry after learning it left duties unpaid.

The same inquiry follows the business behind the entry in shell importer duty evasion, where an importer can leave the bill behind while commercial activity continues through other participants. We connect the unpaid duties fixed at customs liquidation to the people who controlled the filing and the money.

The competitor paying the duty carries a cost the evader avoided. Taxpayers lose that duty revenue. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Changed for Importer Identity in 2026

Customs began enhanced enforcement of accurate, complete and current Form 5106 importer information on September 18, 2026. Its August notice on importer data says the physical address and contact information must belong to the importer. A broker’s, forwarder’s or registered agent’s address cannot substitute for the importer’s physical address.

Brokers must verify the information and obtain powers of attorney directly from the importer. The notice also identifies possible False Claims Act liability for material false importer data.

For someone inside a DDP supply chain, the connection is concrete: who controlled the importer information, who dealt directly with the buyer, and who authorized its use. Those communications belong beside the entry and payment trail.

Sources

The Name on the Entry, the People Behind It

If you know who put a customer’s importer number on unauthorized entries, or discovered those entries at the buyer, speak to our whistleblower experts about whose number was used. Our whistleblower experts work through the authorizations, invoices and payments with you to build your strongest customs whistleblower case and bring in customs fraud whistleblower lawyers who understand broker authority and DDP transactions. Every decision after that, you make with us beside you.

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