August 25, 2014 | Industry Insights

Customs Bonds: The Deficiency Is in the Details

Share This:

Customs Bonds: The Deficiency Is in the Details

In April 2014, U.S. Customs and Border Protection (CBP) re-instituted the procedure of rendering continuous bonds insufficient due to returned mail. A bond with an insufficiency status cannot be used to make entry or for Importer Security Filings. That, warns Roanoke Trade account executive Jason Palumbo, could lead to professional liability claims against the customs broker. Palumbo, writing in a web post for the National Customs Brokers & Forwarders Association of America, notes that continuous bond insufficiencies could cost an importer the unanticipated expense of single transaction bonds to make entry as well as ISF single transaction bonds to cover ISF.

“If the importer is unwilling or unable to procure the single transaction bond or ISF bond in a timely manner, the company could face demurrage charges and ISF penalties including cargo holds, inspections imposed by CBP and/or liquidated damages. ISF liquidated damages begin at $5,000 and have limited mitigation, so a simple mistake such as an omitted suite number resulting in returned mail could be a costly one,” Palumbo says.

You can attempt to have the bond’s sufficiency restored by submitting a rider to the CBP processing team to correct the address for a principal whose mail is returned undeliverable. While that’s some consolation, it can take seven or more business days from the time you notify CBP to get bond sufficiency restored. If the rider is rejected, the delays can mount. Keep in mind that a rider must be sent for all bonds in force for the same principal because CBP will reject a rider if it is sent to update one bond but not others for that principal.

The best option is scouring forms and databases for errors. Every line should be checked for even the slightest mistakes – out-of-date company names or missing pseudonyms can cause returned mail just the same as incorrect addresses, Palumbo notes. Since customs brokers with customs power of attorney can reasonably be expected to help bond principals monitor and update data with the CBP and to work with sureties to maintain accurate information on file at all times, brokers need to be exercising deep diligence at all times in form filings and database monitoring. The key is regular procedural communications with clients to remind them of their role in keeping data current.

Implementing a consistently applied, documented data-review process that seeks information from clients for continuous bonds can go a long way in helping cull outdated records and keep track of where data are needed. Documented processes can also help establish where the fault lies when an error is made and can be used to defend against professional liability complaints. Making routine updates a part of your professional relationship is a best practice with risk-management payoffs that clients, sureties and brokers can appreciate!

We invite you to learn more about us, our experienced talent in this highly specialized area, our creative solutions, and the value we will bring to you and your clients. Please contact us at 1-800-ROANOKE.

Share This:

Related


Is your Business Exposed to the Risks of Employee Distracted Driving?

The National Safety Council(NSC) recognizes April as Distracted Driving Awareness Month. They estimate that 4,000 deaths and 276,000 injuries occur yearly because of distracted driving crashes. Additionally, distracted driving is the cause of 10% of all fatal crashes. Many of these accidents and fatalities are attributed to drivers engaging in risky behavior such as cell […]

Commercial Business Insurance, Industry Insights

Unlocking Success: The Key Elements of Carrier Vetting and Managing Liability

By: Andrew Johnson, Account Executive, Roanoke Insurance Group Inc. The freight brokerage industry as we know it today began in the late 1970s and early 1980s, around the time of the Motor Carrier Act of 1980. Before the passage of this landmark legislation, regulations were too restrictive to make freight brokerage a viable business segment. […]

Industry Insights

2023 NCBFAA Scholarship & Application Announcement

Roanoke Insurance Group is delighted to once again sponsor a $5,000 scholarship to students intending to join the trade industry. The National Customs Broker and Forwarder Association of America (NCBFAA) offers this $5,000 scholarship award yearly and will be presented to the winner at the NCBFAA annual conference in April 2023. The topic for this […]

Industry Insights

Roanoke is the leading provider of insurance and surety solutions for transportation and logistics providers. In fact, we are recognized as the most reliable source for U.S. customs bonds.

Contact

If you have any questions or need help, feel free to contact with our team.

800-762-6653

US CORPORATE HEADQUARTERS

1501 E. Woodfield Road

Suite 400W

Schaumburg, IL 60173


CANADA CORPORATE HEADQUARTERS

390 Bay Street

Munich Re Centre, 22nd Floor

Toronto, ON M5H 2Y2

Solutions that Go the Distance.

© 2024 Roanoke Insurance Group Inc. A Munich Re company

Better Business Bureau logoCoverholder at Lloyd's logo