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Compliance Alert: The Risks of De Minimis Exemption Misuse and DDP Manipulation
Compliance Alert: The Risks of De Minimis Exemption Misuse and DDP Manipulation
May 14, 2025/
If your company uses international shipping to bring goods into the U.S., the de minimis exemption might seem like a shortcut to savings, but misusing it could land you in serious legal trouble. It’s a powerful tool when used properly, but if your trade practices exploit it incorrectly—or if you’re unaware of how your suppliers use it—you could face steep fines, reputational damage, and even criminal penalties.
Let’s break it down and look at how companies can stay compliant and protect themselves from the growing risks tied to de minimis and DDP (Delivered Duty Paid) misuse.
1. Understanding De Minimis and DDP: Definitions and Legal Boundaries
The de minimis exemption—under 19 CFR 10.151—allows low-value shipments, currently under $800, to enter the U.S. duty-free. For small e-commerce transactions, it’s a legitimate and useful way to minimize customs costs and speed up clearance. DDP, on the other hand, refers to an international shipping agreement where the seller assumes all responsibility for duties, taxes, and import compliance, delivering the goods to the buyer with everything handled.
So where do companies go wrong?
Some businesses wrongly believe they can split a larger order into multiple shipments under $800 to qualify for the de minimis exemption multiple times. But U.S. law is crystal clear—breaking up a single order into separate shipments to avoid duties is considered evasion. Another common misconception is assuming that all shipments under $800 are exempt, when in reality, goods subject to quotas, excise taxes, or trade remedies like anti-dumping duties don’t qualify at all.
A major oversight happens when companies ignore the role of the Importer of Record (IOR).
Glossary at a Glance
What is an Importer of Record?
The Importer of Record ensures imported goods comply with all customs and legal requirements. An importer of record (IOR) is responsible for moving a shipment through U.S. customs, following all regulations. They facilitate trouble-free customs clearance in international trade.
Even if a shipment qualifies for de minimis, the IOR must still file accurate declarations, ensure compliance, and maintain audit-ready records. Whether it's your company or a third-party logistics provider acting as IOR, liability ultimately traces back to whoever benefits from the shipment.
In DDP transactions, it’s especially important for U.S. buyers to verify that their supplier can legally act as the IOR and has proper registration with U.S. Customs. Without clear contracts and verified compliance procedures, you could find your company entangled in customs fraud—without even knowing it.
2. De Minimis Misuse: Examples, Red Flags, and Consequences
Let’s look at what misuse really looks like.
Imagine an overseas seller splits a $2,400 order into three $800 shipments, all sent to the same U.S. customer on the same day. On the surface, each shipment appears compliant. But when Customs sees the pattern, they flag it as structuring—intentionally designed to evade duties.
Customs and Border Protection (CBP) watches for indicators like multiple low-value shipments from the same sender to the same recipient, especially when tied to the same contract. Inconsistent declarations, vague product descriptions, or frequent use of just-under-threshold values are major red flags.
If CBP determines a company is abusing the de minimis exemption, the fallout can be severe. I’ve seen companies face seizures of goods, six-figure civil penalties, and even criminal charges. And it doesn’t stop there; CBP can revoke privileges, initiate future audits, and refer cases to prosecutors when evasion is willful.
That said, structuring shipments under $800 isn’t always illegal, but it must reflect real, distinct transactions. If you sell products that naturally ship in small quantities and don’t originate from a single order, that’s fine. The problem is when the structure is engineered to avoid duties.
3. DDP Manipulation and the Hidden Risks to U.S. Buyers
There’s another layer of risk many U.S. companies overlook—DDP manipulation.
Glossary at a Glance
What is Delivered Duty Paid? (DDP)
Delivered Duty Paid (DDP) is an Incoterms® rule where the seller bears all responsibilities for shipping, including risks and costs, until the goods are delivered and available for unloading at a specified destination, typically the buyer's location.
Under DDP, the foreign supplier is responsible for all customs compliance. But if that supplier underdeclares the value of a shipment to reduce duties, and your company benefits from the lower cost, you’re still at risk, even if you’re not the IOR.
Some buyers assume they’re off the hook because the supplier "handles everything." But that’s a dangerous assumption. If Customs discovers undervaluation or fraud, your company may face financial restitution, penalties, and public scrutiny. I’ve worked with companies blindsided by investigations because a supplier cut corners they weren’t even aware of.
To avoid this, U.S. buyers must take a proactive approach. Contracts should clearly require suppliers to use accurate transaction values, comply with U.S. import laws, and provide documentation proving duties were paid. Routine audits and compliance reviews can prevent small issues from becoming massive liabilities.
Even unintentional benefit from undervalued imports can trigger enforcement. That’s why every buyer should ask: “Are we confident in our supplier’s compliance practices?”
Reduce Risks, Stay Compliant
We find areas for import-export compliance improvement to prevent costly issues.
4. Building a Compliant Strategy: Best Practices and Internal Controls
Yes, compliance helps you avoid penalties, but it also protects your brand, your customers, and your supply chain.
Here are four best practices I recommend to companies using de minimis or DDP structures:
- Contract Clarity
Ensure supplier contracts include clauses requiring full compliance with U.S. import laws. Suppliers should be contractually obligated to certify the accuracy of shipment values and documentation. - Shipment Oversight
Implement regular reviews of shipment values and frequency. If you notice a high volume of just-under-$800 shipments going to the same recipient, that’s a red flag that needs to be investigated. - Documentation Integrity
Make sure commercial invoices, packing lists, and customs declarations match the actual transaction value and product content. Don’t allow vague descriptions or “catch-all” terms. - Team Training and Automation
Train procurement and logistics teams to recognize patterns that suggest misuse. Invest in automated systems that flag suspicious behavior—like repeated low-value shipments to the same address. And when something doesn’t add up, escalate it quickly.
When in doubt, involve your compliance or legal team early. Catching and correcting an issue internally is always better than discovering it through a Customs enforcement letter.
De Minimis Exemption Misuse: Think Twice, Stay Compliant
It may be tempting to view de minimis exemption strategies as a clever way to save money or streamline shipping. But make no mistake: misuse is evasion in the eyes of U.S. Customs, and the penalties are steep.
Whether structuring small shipments or relying on a DDP supplier overseas, compliance must be intentional and proactive. The risks of getting it wrong—seizures, fines, or worse—far outweigh the short-term savings.
A strong, compliance-first approach protects your shipments, your brand, your market access, and your future. If you're unsure where your vulnerabilities might be, reach out to the Star USA team. We can help you conduct a compliance audit and build a sustainable, legally sound trade strategy.
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