Importers must declare an accurate customs value for goods entering the United States. That value helps determine duties, taxes, and fees owed at the border. If a shipment is priced on paper at a lower rate than its actual value, duties can be underpaid, and the legal risk can become serious. To spot trouble early, focus on what regulators flag when they think goods are undervalued at customs, especially when the paperwork does not match what the buyer and seller actually agreed to. The attorney at Mark A. Strauss Law in New York City often examines these matters from a whistleblower perspective, not just standard importer compliance.
1) False or Manipulated Commercial Invoices
A classic undervaluation method is presenting an invoice that doesn’t reflect the real price paid (or payable). In more blatant situations, an importer may use one invoice for customs and a different invoice for internal accounting. Sometimes, the invoice is legitimate, but it omits charges that should be included in the declared value. Watch for big discounts with no paper trail, prices that never budge even when the market does, and invoices that do not match what was actually paid.
2) Unreported Charges That Should Be Included in Value
Customs value can include more than the line-item price on a commercial invoice. Some transactions require adding certain costs to arrive at the proper declared value. To keep the declared number low, parties sometimes push value-driving costs into separate payments or side agreements. Examples can include production-related services, buyer-funded tooling, certain commissions, or other charges that are effectively part of what the buyer is paying to obtain the imported goods. When the true terms are scattered across different documents, undervaluation is easy to miss unless you match the payments to what was filed with customs.
3) Related-Party Pricing That Doesn’t Reflect Market Reality
Deals between related companies, such as a parent and a subsidiary, can be perfectly normal, but they can also make it easier to set prices too low to avoid paying duties. The key issue is whether the relationship influenced the price and whether the declared value reflects an arm’s-length outcome. Customs authorities may take a closer look at transfer pricing practices, internal policies, and whether the importer can consistently support the valuation method used. Related-party pricing often requires stronger documentation than a standard purchase between unrelated parties, since the pricing dynamics can be harder to validate.
4) Misdescription That Makes the Product Look Cheaper
Sometimes the undervaluation isn’t only about the number, it’s also about how the product is described. Importers may report a generic description instead of a premium one, omit features that increase the item’s worth, or list a lower grade or material than what is actually imported. These tactics can lower the apparent value and may be paired with classification strategies that reduce duty rates, creating layered exposure if the importer’s declarations are consistently misleading.
5) Splitting Transactions, Underreporting Quantities, or Hiding Value Drivers
Another common approach is breaking a transaction into pieces so no single declaration draws attention. That can include splitting one large purchase into multiple shipments, underreporting quantities, or declaring only part of what was actually imported. Undervaluation can also happen when value drivers are concealed—such as royalties, licensing fees, or buyer-provided “assists” (for example, molds, tooling, design files, or key components supplied to the manufacturer). When those elements materially contribute to production, omitting them can significantly distort the declared value.
Undervaluation schemes range from straightforward invoice manipulation to more complex strategies involving related-party pricing, hidden add-on costs, and product misdescription. The common theme is a gap between the declared customs value and the transaction’s true economic reality. When that gap appears patterned or intentional rather than accidental, the risk increases quickly. In that landscape, Mark A. Strauss Law tends to emphasize how undervaluation can intersect with customs fraud enforcement and reporting options, which can be especially useful when potential misconduct extends beyond a one-off mistake.
