Ford to Pay $365 Million for Alleged Misclassification of Vehicles

Ford to Pay $365 Million for Alleged Misclassification of Vehicles

Ford Motor Company reached a $365 million settlement with the United States to resolve allegations that, from April 2009 to March 2013, Ford misclassified and understated the value of hundreds of thousands of its cargo vans in violation of the Tariff Act of 1930. The government alleged that Ford imported Transit Connect cargo vans from Turkey to the United States with sham rear seats and other features to make the vans appear to be passenger vehicles.

Vans classified as passenger vehicles have a duty rate of 2.5%, while vans classified as cargo vehicles have a duty rate of 25%. Ford allegedly submitted paperwork classifying its vehicles as “motor cars and other motor vehicles principally designed for the transport of persons” in order to pay a 2.5% duty rate. The government alleged that after US Customs and Border Protection (CBP) cleared the vehicles, Ford removed the rear seats in the vans to return the vans to their original two-seat cargo van state. Ford is also alleged to have misclassified the value of the vehicles to CBP to avoid paying import duties.

Read the DOJ’s press release here.