Customs Duty Dodge

There are 5 replies in this Thread. The last Post () by Rice.

  • This article in the Wall Street Journal describes how consumers, including those in Argentina, evade custom duties:


    "Online companies that hook up travelers willing to deliver items to shoppers abroad are building a new industry, but their users often participate in an age-old tradition: customs evasion.

    "The companies aim to make it easier for people overseas to buy and receive U.S. goods like electronics by connecting them with visitors to their countries willing to haul the items in their bags."


    A PDF document file of 5 MB exceeds the max. limit. If you have a subscription you can see it here:


    https://www.wsj.com/articles/u…earchresults&page=1&pos=2

  • There is a popular service called Grabr, here.

    I have never used it. In the past there have been at least three, but they seem to have disappeared. I can see why.


    The FB Expat Hub group has a popular thread called 'The Mule thread' where people post about their availability and desired items.


    I confess I used Rice to smuggle in a keyboard. To my defense, I can say that the keyboard was due to be imported through legit channles, but it never happened (not even to this day, after a year...)

  • I have never had a problem with bringing inexpensive items in for friends, because we ourselves don’t reach the $300 customs limit for new goods brought in. I wouldn’t want to take a risk with muling for strangers, and in our earlier discussion* of Grabr, it it didn’t seem clear that the system protected the people paying upfront for items the recipients could well decide not to collect.


    *Earlier discussion:

    GRABR anyone tried them?

  • Domer’s full WSJ article (note partial investor list at the end)


    Travelers Profit by Skirting Customs When Using Delivery Apps

    Sites that connect shoppers abroad with travelers willing to deliver items to them are becoming a new industry. But users say they avoid customs fees.

    By Andrea Fuller


    Online companies that hook up travelers willing to deliver items to shoppers abroad are building a new industry, but their users often participate in an age-old tradition: customs evasion.

    The companies aim to make it easier for people overseas to buy and receive U.S. goods like electronics by connecting them with visitors to their countries willing to haul the items in their bags.

    San Francisco-based Grabr—which says it has more than 500,000 world-wide registered users—offers a web platform allowing shoppers to request international deliveries. The company, backed by big- name investors including Peter Thiel’s Founders Fund, is popular in markets such as Brazil and Argentina, where foreign goods purchased locally are expensive.

    Many goods are a vastly better deal for Grabr shoppers if their traveling partners don’t incur any duties on

    arrival.

    Related ReadingThe U.S.-China Trade Battle Spawns a New Era of Tariff Dodges (Oct. 8)

    Risk & Compliance Journal: Whistleblower Lawyers See a Growth Area: Customs Fraud (Jan. 28)

    The Wall Street Journal interviewed more than a dozen Grabr travelers, almost all of whom said they tried to bring expensive items through customs without paying duties.

    “I would take the items out of the boxes to make them look used,” said former deliverer Evelyn Slater-Shew, 27 years old, of Long Beach, Calif., on how she would avoid customs when transporting goods.

    Ms. Slater-Shew said she delivered items selected by Grabr staffers who appeared to know “what we were doing” and advised her to “make everything look used or old.”

    “This is something that we don’t endorse as a company,” said Daria Rebenok, Grabr’s chief executive. Ms. Rebenok and Artem Fedyaev, Grabr’s co-founders, said they were concerned by the examples provided by the Journal of travelers who dodged duties.Grabr’s co- founders say the company’s terms of service require users to comply with customs.

    Several attorneys said customs evasion, while common, can be a crime. Companies that knowingly facilitate such behavior could be committing organized customs fraud, said Matt Gold, a former deputy assistant U.S. trade representative.

    Grabr’s co-founders say they started the company to help people get items unavailable locally and to promote cross-cultural exchanges.

    Grabr works like this: A shopper posts on Grabr’s platform that they’d like to buy an item, such as a new smartphone. A traveler who plans on visiting the shopper’s country then agrees to transport the phone for a delivery fee negotiated with the shopper. The traveler then buys the phone, packs it, and gives it to the shopper, who pays them back via Grabr’s system. The company earns a commission on each transaction.

    Often, travelers are responsible for paying for their own trips, and hauling the goods helps offset the cost. In other cases, Grabr contracts with travelers, giving them


    free plane tickets in lieu of per-item rewards. Those travelers, such as Ms. Slater-Shew, transport suitcases full of goods assembled by Grabr staff.

    Grabr says that travelers bringing in items, not the shoppers, are responsible for paying customs. Grabr recommends travelers set their delivery fees high enough to cover expected duties.An analysis by the Journal of more than 95,000 transactions on Grabr’s site suggests many travelers don’t heed that advice.

    The Journal identified about 1,400 times shoppers in Argentina and Brazil ordered a single item costing at least double the duty-free limits of $300 and $500, respectively. (Argentina recently changed its rules, exempting one phone and laptop per traveler.) In about 97% of the transactions, their travel partners’ delivery fee—as reflected on the Grabr website—wouldn’t have been high enough to cover duties. Travelers to those countries should owe customs 50% of the portion of

    the value of items over the duty-free limit.

    Grabr’s co-founders said the amounts shown on its site may not always reflect the final delivery fee travelers receive; they didn’t provide an example.Shoppers might compensate travelers for customs charges in cash, Mr. Fedyaev said, and added that Grabr is improving its system to track those payments.

    Ms. Rebenok said that most items requested via Grabr are below the duty-free limit. It couldn’t be determined how often travelers top the limits by combining multiple cheaper items, another way to draw a duty.

    Last year, Ms. Rebenok agreed to bring Apple laptops to seven shoppers in Argentina, Grabr’s website shows. The site says that her highest delivery fee on any of the computers was $285, though duties should have cost hundreds of dollars more for each computer.

    Ms. Rebenok said some deliveries attributed to her on the site were made by other staff using her account. She said she always pays duties and doesn’t aim to profit from transactions, which she was doing for research and development testing purposes.

    Kevin Hartz, a former Founders Fund partner, said people may have a “knee-jerk reaction” that a new market like peer-to-peer delivery “would be a type of smuggling.” An early Airbnb investor, Mr. Hartz compared those concerns to ones voiced by early skeptics on the legality of home-sharing.


    “This is just a matter of sentiment change,” said Mr. Hartz, who directed his former firm’s $250,000 investment in Grabr. Grabr says it has received about $14 million from investors.

    When provided by the Journal with examples of Grabr travelers evading customs officials, Mr. Hartz said he doesn’t endorse customs evasion and Grabr should encourage compliance. A representative at the

    Founders Fund had no comment.The point of peer-to- peer delivery “is not to circumvent laws,” said James Currier, a managing partner at NFX, a firm invested in Grabr. Mr. Currier said this type of delivery is an unconventional business, but too many critics say “you shouldn’t push the edge of anything.”

    “If you want to make a cake, you’ve got to break some eggs. And Silicon Valley breaks eggs,” he said.

    Los Angeles-area rival Airmule–which its CEO Sean Yang says has about 30,000 registered travelers–has received $1.2 million in total funding, largely from a Chinese firm.

    People who flew packages assembled by Airmule staff to China also told the Journal that they walked through nothing-to-declare lines with costly items like electronics, Coach handbags and a Burberry coat, at the advice of company employees. Foreigners are allowed to import about $300 of duty-free goods into China via luggage.

    Mr. Yang said the company tracks the value of shipments and tells travelers when they need to declare items. In cases where travelers weren’t declaring luxury goods, he said the items may have been purchased at a discount, or some buyers might undervalue items on company forms. He said the company is working to prevent people from undervaluing items.

    Meanwhile in Buenos Aires, which Grabr calls among its biggest markets, Emiliano Gioia, 23, says he has purchased more than 15 items through Grabr. To his knowledge, none of his travelers paid duties. He paid a traveler about $170 to deliver a virtual-reality headset costing $800. A duty on that item could have cost about $250. He said that the item would have cost about $1,900 in Argentina.

    One traveler whose experiences Grabr promoted on its site said she hasn’t paid duties in traveling for the

    company for about two years. Gardenia Zuniga-Haro,


    28, of San Francisco, estimated she has transported thousands of dollars’ worth of items on Grabr-funded flights to South America.

    “I’m helping people,” Ms. Zuniga-Haro said. In Argentina, “the inflation is ridiculous.”

    Grabr’s co-founders said that the experiences of travelers making bulk deliveries in exchange for flights aren’t reflective of Grabr’s future business model, because that team is being phased out. Grabr is improving traveler education about customs, they said.

    One man in Brazil asked on Grabr’s Facebook page if a traveler could bring an item without a box “to skip the country’s fees.” Ms. Rebenok replied that the shopper “can ask to bring in a box–but delivery fee might be higher for that. If without the box–it will definitely be cheaper, so yes you can ask for that,” adding a smiley- face emoji.

    Ms. Rebenok said she made that suggestion because people may want “to save space in their suitcases.” The comment was deleted after the Journal asked about it.Grabr’s Investors

    Grabr has said the following are among its investors:

    • Foundation Capital, the firm that led Grabr’s Series A funding round

    • Founders Fund, a firm co-founded by Peter Thiel, which invested in Grabr via its early-stage investment vehicle

    • NFX, another venture-capital firm

    • Geoff Donaker, former chief operating officer of Yelp • Konstantin Nikolaev, a Russian railroad billionaire

    • Javier Olivan, a vice president at Facebook

    • Alexey Repik, a Russian pharmaceutical magnate

    • Charlie Songhurst, former head of corporate strategy at Microsoft

    • Matt Wyndowe, a former Uber and Facebook employee, now an adviser at Kleiner Perkins

    Note: Messrs. Olivan, Nikolaev, and Wyndowe and a Founders Fund spokeswoman declined to comment.


    Messrs. Donaker and Songhurst and a spokesman for Mr. Repik’s company didn’t return request for comment. Charles Moldow, a general partner at Foundation Capital, said that his firm advises Grabr and sees the potential in Grabr’s business model, but Grabr’s management is ultimately responsible for legal compliance.Write to Andrea Fuller at andrea.fuller@wsj.com

  • Thanks for providing the full transcript Rice

    I can see how many of the delivery people can avoid paying the duty, especially in EZE as it's not as tight as many would have you believe.

    Would I try it? Certainly, but probably by buying a smaller item that wouldn't be so obvious on the first go anyway.

    It's also interesting to note that China also has a $300 limit which is odd, since China makes practically all the world's electronics anyway, so qhy not buy them in China?