Ford to pay $365 mn in US tariff fraud case

March 12, 2024 09:07 AM

American auto giant Ford has agreed to pay $365 million to settle a civil suit linked to the alleged disguising of imported cargo vans as lower-tariff passenger vehicles, US authorities said Monday.

Ford, which denies wrongdoing, is accused of using the scheme from 2009 to 2013 to avoid paying higher duties on Transit Connect utility vehicles imported from Turkey by declaring them as passenger vehicles, the Justice Department said in a statement.

Ford installed "sham rear seats and other temporary features to make the vans appear to be passenger vehicles," the Justice Department alleged.

In fact, the "temporary rear seats were never intended to be, and never were, used to carry passengers," according to the statement. Once through customs, Ford allegedly stripped the fake seating out, returning the vehicle to its "original identity as a two-seat cargo van."

The alleged scam allowed Ford to pay import duties of only 2.5 percent, as opposed to the 25 percent tariff imposed on cargo vehicles. The Justice Department said that nearly 163,000 Transit Connects were imported from Turkey during the period.

Ford fought the case in courts for years, arguing that the rear seats were genuine.

The settlement states that Ford does not admit liability but that the two sides reached an agreement "to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation."

The $365 million payment includes nearly $184 million for restitution of unpaid customs duties and the rest is penalties, the settlement said.