Action News Jax investigated a whistleblower’s tip about surge protectors sold in Jacksonville.
Action News Jax told U.S. Customs and Border Protection about concerns the maker could be using stickers to try to avoid paying tariffs on products made in China. As a result, Customs launched an investigation.
“We appreciate you bringing this product to us because it now is resulting in an investigation into that company to try to determine why those stickers placed on that product to show a different country of origin,” said Donald Yando, the CBP director of field operations Atlanta.
A tipster first shared a cellphone video of stickers on surge protectors that said “Made in Philippines” over blacked out printing that said “Made in China.”
An Action News Jax producer went to two stores in Jacksonville and found stickers that said “Made in Philippines” covering up the “Made in China” printed on the packaging for surge protectors made by the U.S. company Cyber Power.
Yando said that could be a big problem.
“Because that sticker can be peeled back, and you can still see that other country of origin, it is not acceptable,” Yando said.
Action News Jax bought several surge protectors at two Home Depot stores in Jacksonville. Our sister TV stations in Boston, Pittsburgh, Charlotte, Memphis, Atlanta and Orlando also purchased them.
We took the surge protectors to the interview with Yando and showed him the stickers. When asked if he would be comfortable buying these products, Yando said, “Uh, no I would not.”
“Why is this important for consumers? Why is it important for their safety?” our reporter asked. “So, it’s extremely important for the consumer to know what they’re buying,” Yando replied.
Customs is working closely with the Consumer Product Safety Commission.
“Some unscrupulous companies will counterfeit that Underwriters Laboratories label and the electronic product could be made with substandard components that could cause a fire,” said Yando.
CPSC said it has not opened an investigation but “will monitor this product for any indication of a potential safety hazard.”
Customs is investigating whether Cyber Power is evading tariffs.
“At face value it does to me. It does look like an attempt at duty evasion,” said Yando.
“A tariff is a tax,” said UNF assistant professor Dr. Russell Triplett. "The Trump administration has levied a 25 percent for products made in china. “Companies can either pay the cost or pass it on to the consumer,."
In response to our questions Cyber Power emailed this statement:
"We take compliance with all applicable laws seriously, including laws related to country of origin labeling and disclosure, and our practice is to appropriately and permanently label our products and packaging accurately and clearly. More broadly, it is our intent to use caution and to comply with all US customs requirements when importing products manufactured in other countries.
We began shifting the manufacturing of some products from China to the Philippines in the fourth quarter of 2018. At that time, we still had a supply of packaging that showed the country of origin as China. Rather than discard the printed packaging, we decided to save costs and be environmentally responsible by re-labeling the existing package with the new country of origin information. To do so, we used a two-step process by first crossing out the existing 'Made in China' printing and then re-labeling the package with the 'Made in Philippines' label.
In the case of the one package that did not have a label shown in the image you provided, we can only speculate that the label must have been removed somehow. At no time did we mean to confuse or deceive our customers, partners, or the public.”
But Cyber Power did not explain why some of the actual products said “Made in China” or why some products had “Made in Taiwan” stickers.
Customs has requested more information from Cyber Power and the factories where the surge protectors are made and could send investigators to visit them. Companies caught evading tariffs could face criminal or civil prosecution.
“So, we’ve seen prison, prison time for company officials, a five-year prison sentence we’ve seen. We’ve seen monetary penalties,” said Yando.
University of Pittsburgh business professor Josephine Olson said the bottom line is “cheating is always a bad way to get around the rules.”
Customs said its investigation into whether this is tariff evasion could take anywhere from a month to about six months. Action News Jax will keep following it and report the outcome.
Atlanta-based Home Depot sent us a statement: “We require all our vendors to follow applicable laws and regulations.”
© 2020 Cox Media Group