Clothing retailer Pure Collection has been fined $908,100 (£655,230) by the US government to settle a whistleblower lawsuit for customs evasion.
Andrew Patrick, the whistleblower who exposed the alleged fraud, worked for Pure Collection from 2010 to 2014.
Patrick alleged in his lawsuit that Pure Collection engaged in a practice known as ‘splitting’, in which the company trained its employees to divide individual US orders into multiple shipping packages so that the retail value of the merchandise in each package would not trigger customs duties.
He added: “By splitting packages, Pure Collection deprived the US of legitimate payments. This effectively decreased the true price of its merchandise for US residents, giving the company an unfair advantage over its competitors.”
Molly Knobler, a whistleblower attorney at law firm Phillips & Cohen, which brought the case said: “One of the company’s marketing pitches to US customers was a promise that they wouldn’t have to pay customs duties on the merchandise they bought from Pure Collection online.
“It was successful as a marketing strategy, but wrong as a company practice.”