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Claims Corner: Regulatory Defense

November 2, 2022 Avalon

To avoid costly mistakes, handling data entry for imports and exports requires meticulous attention to detail. Logistics providers usually have a checks and balances system to ensure compliance and prevent data entry errors. Even a minor oversight can become a steep government penalty which could impact customer relationships and cost you additional expenses.

Having a Regulatory Defense contract* can help when a mistake leads to an expensive government fine against you. The contract provides access to and pays for legal advice in mitigating fines and penalties assessed against brokers and forwarders by various government agencies. It is important to note that a Regulatory Defense contract is not insurance.

Claim Example: Documentation Error

 A Freight Forwarder filed the Electronic Export Information (EEI) in AES on behalf of their exporter. Upon entering the EEI into their software, the software automatically populated the Chicago port code since they had previously booked cargo from there. However, the correct port of export for the goods was Miami. The port code was not updated before submission to CBP. Therefore, CBP assessed a penalty of $10,000 against the Freight Forwarder for the documentation error. Since the Freight Forwarder had a Regulatory Defense contract, they forwarded the penalty to Avalon for handling. The assigned attorney filed a petition, and CBP mitigated the claim to $750. Without the Regulatory Defense contract, the forwarder would bear the brunt of paying for the cost of retaining legal counsel, which could add up quickly.

Unfortunately, errors like these happen, and a Regulatory Defense contract can help your business. Do not hesitate to contact us if you have any questions or need more information.


*This is not an insurance product. In the case of any conflict between this material and the terms of the contract, the terms of the contract shall prevail.

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The Quest Newsletter is designed to provide critical information in the transportation industry. Avalon Risk Management is not responsible for the accuracy or reliability of information contained in articles. The reader/user assumes all risk in the use of such information.