British fashion retailer Pure Collection has been forced to pay nearly $1 million to the US government after it was discovered to be evading tax duties.
The case against Pure Collection was brought by Phillips & Cohen LLP after they were approached by whistleblower and former employee Andrew Patrick.
Patrick, who worked for the retailer between 2010 and 2014, alleged that between 2010 and 2017 the company used a method called “splitting”.
This tactic trained employees to divide US orders into numerous shipping packages small enough to avoid triggering customs duties.
“By splitting packages, Pure Collection deprived the US of legitimate payments,” Patrick said.
“This effectively decreased the true price of its merchandise for US residents, giving the company an unfair advantage over its competitors.”
Pure Collection and its chief executive Samantha Harrison agreed to pay $908,100 (£653,223) to settle the lawsuit, and Patrick has become the first resident to collect a reward for revealing customs evasion under the False Claims Act.
Phillips & Cohen attorney Molly Knobler 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.”