New App may Facilitate Duty Evasion while Linking Buyers with Sellers

​Despite serving as a valuable force multiplier for facilitating international trade and travel, new technology sometimes poses new challenges to Customs agencies. One new mobile app called ‘Grabr’ connects shoppers, who wish to purchase an international product more cheaply than it costs at home, with international travelers who can purchase the cheaper product, deliver it to the shopper on their trip abroad, and essentially take a cut of the savings for themselves.

On the surface this capability may seem like an efficiency-building market hack that links individuals from different countries to bridge imbalances in the consumer marketplace. However, a large portion of the cost-savings between buyer and seller are attributed to Customs duty evasion. Travelers delivering products; often small, high value items like electronics, do not report their value to Customs or claim them as being for personal use.

One Grabr seller notes that all 30 of the goods he sold during his trip to Brazil were kept in his extra luggage and that he kept expensive items in his carry-on. For some sellers, the amount of goods sold can end up covering the cost of their plane ticket. Currently, the cities with the largest rewards for Grabr sellers are Buenos Aires, Sao Paulo, Rio de Janeiro, and Moscow.

Additionally, Grabr users are often unaware of the risks posed when goods are not processed by Customs. In some instances, avoiding Customs processing can allow counterfeit goods or those posing safety hazards to flow more freely into markets. Counterfeit goods may also support criminal organizations that traffic these illicit goods. Without Customs processing and verification, it is much more difficult for a buyer to determine if the item received is legitimate and meets standards.

The company’s business model has had success with an estimated 500,000 registered users and an additional $8 million secured in funding earlier this year.  Grabr, a San Francisco-based company, denies that their business model promotes Customs duty evasion. However this Wall Street Journal article cites questionable instances that could be interpreted to the contrary.

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