CBP: Brokers Not Responsible for Contraband, but Must Have Proper Names, Addresses, Descriptions

A "back to basics" webinar on de minimis presented by CBP, which was watched by more than 1,900 in the trade community, didn't elaborate on the suspensions of customs brokers from Type 86, though CBP official Felicia Pullam said the agency has heard "a lot of concern in the trade community about this enforcement."

Rather, Pullam said, it was designed to tell professionals what they can do to be compliant, whether they are doing clearance from the manifest under Section 321, or participating in the Type 86 pilot, to get electronic clearance of their low-value shipments.

Pullam, executive director of CBP's Office of Trade Relations, also told the audience that while there's a lot of talk in Washington about changing the de minimis law -- and "CBP wholeheartedly applauds this dialogue" -- the officials were not there to talk about reforming the way de minimis works. She did say that CBP is providing technical assistance to congressional offices writing or considering introducing legislation.

Christine Hogue, e-commerce and small business branch chief at CBP, said that the agency won't hold brokers responsible for contraband inside a box when the exporter lied to the broker about what was inside. But what is a problem, she said, is when the description conflicts with the Harmonized Tariff Schedule number the broker put on the Type 86 entry, such as: it was declared as shoes but the HTS code is for a condiment dispenser.

Other problems CBP sees in the de minimis space, she said, are fictitious names for the ultimate consignee -- such as Marvel superheroes or Disney characters -- invalid addresses, and invalid names for the nominal consignee. Hogue said the nominal consignee -- which can be a freight forwarder or carrier (it doesn't have to be the vendor or manufacturer) -- has to have a first and last name, an address, and the contract for power of attorney can't be signed after the parties started doing business.

Brian Sale, branch chief for Cargo and Conveyance Security, Manifest Security Division, elaborated on these points. He said there had been more than 800 small packages that were headed to Disney characters this year, and more than 30,000 with other fictional character names such as Captain America or Wonder Woman.

Sale said that since CBP put out a CSMS message on April 1 about unacceptably vague cargo descriptions, the agency has seen "very, very significant improvement." In mid-April, he said, CBP was notifying importers with 39,984 messages a week that their cargo descriptions were unacceptable. In the most recent data, there were just 3,346 descriptors that were flagged.

Sale said "general cargo," FAK (standing for freight of all kinds) and STC (meaning said to contain) are not OK. Freight of all kinds was the descriptor for boxes containing illegal drugs, CBP's leader said in April (see 2404190019), and "daily necessities" has also been a cover for drug smuggling, a CBP official has said (see 2402270082).

CBP has a list of other descriptors it says are unacceptable, such as "foodstuffs" or "clothing," and it is working on programming ACE to reject bills of lading that have vague descriptors it has identified. However, the agency knows once that happens, "We will start seeing other vague cargo descriptions." So, the list will change. Each time it does, CBP will send out a CSMS message.

Chris Mabelitini, director of CBP's intellectual property and e-commerce division, said that ACE update is expected in August.

Sale said that, in addition to a message that the import cannot enter, there could be penalties or liquidated damages.

An attendee of the webinar wrote: "I am dealing daily with vague description, and always push it back."

Sale said that in addition to the character names for consignees, there were 2,495 instances of someone writing "unknown" for consignee, and another 17,606 packages on which the broker wrote “blank” on that line.

"Any broker worth their salt would say this is unacceptable," he said. Importers under de minimis don't have to write the ultimate consignee on the package, but if they send the goods to a de-consolidator, it's quite possible a package won't receive the duty-free benefit, if that company already has received more than $800 worth of goods.

CBP currently has no way to tell if a particular person has received more than $800 worth of goods in a day, but is also working on adding that functionality to ACE.

Brokers had questions about how the $800-per-person-per-day threshold is calculated -- could a company send many packages to different employees at the same location and each package still qualify for de minimis that day? CBP said yes, that is allowed.

However, what is not allowed -- and what CBP is still seeing -- is a single order for $8,000, but the service provider is trying to spread out the deliveries over a number of days to come in under the threshold.

"This is not allowed. We refer to it as structuring," Hogue said.

For Type 86 entries, brokers need to have power of attorney for the exporter. CBP said you cannot just put a first name for that, or a string of letters and numbers. For this kind of entry, you don't have to list the vendor or manufacturer -- the exporter could be a carrier or freight forwarder. But the exporter has to sign the power of attorney document before the parties start doing business -- CBP is seeing post-dated contracts.

For de minimis entries that go through traditional manifest release, you do need the vendor or foreign manufacturer, however.

Boxes coming in under de minimis are also labeled with invalid addresses -- street names that don't exist, or building numbers that don't exist -- CBP found 292,583 cases of bad addresses just in the first quarter. "It’s very likely there’s someone in that supply chain that’s diverting them, and grabbing them and taking them where they really want to go," Sale said.

CBP is working on automating address searches as well, and programming ACE to tell importers that the address is invalid.

The agency told brokers they should evaluate whether the value and the weight match. Hogue said they should ask themselves: "Does it make sense that that 500 pound item is worth 10 dollars?"

She showed the attendees a slide of helicopter rotors, a door, and so on, and said the full helicopter, disassembled, was exported from Colombia to the Fort Lauderdale port of entry, and each carton was labeled as under the $800 de minimis threshold.

She said someone also tried to claim an Airstream trailer was worth less than $800. But, she said, if you add this capability to your software, and it kicks back an entry because the weight seems too high for the value, you need to have a process of how to respond.

Hogue said in FY 2023, more than 1.05 billion packages were entered under de minimis, and that CBP expects to hit 1 billion in volume so far this year this month; it is projecting at least 1.3 billion packages by the end of the fiscal year at the end of September.

"These are staggering numbers," she said.

The presenters reminded brokers that while goods subject to partner government agency oversight can enter through the Type 86 pilot, goods that should enter with fees to PGAs cannot. Mabelitini said CBP will have more details soon about which HTS codes cannot enter through Type 86 because of these fees.

Attendees on the webinar were unsure about what de minimis will look like after CBP completes its rulemaking.

Hogue said that there still will be Section 321 clearance from the manifest after Type 86 sunsets, but if importers want the faster electronic clearance, there will be required data elements for those shipments. She also reminded those attending that it will be a long time before that transition. The proposed rule is still in the Office of Management and Budget stage of internal review; then it has to be published, and there will be a comment period. The government will have to answer the comments, and those answers will have to go through a review. Then the final rule will be published, with the start date of the change.

An attendee asked how they could alert CBP if they believe the de minimis laws are being broken. Hogue said it can be sent to ecommerce@cbp.dhs.gov, or they can file it at https://www.cbp.gov/trade/e-allegations.