It has become ever more important for bond principals to keep their Customs bonds up to date. In the last few years, Customs and Border Protection (CBP) has initiated a number of policies that can have a serious effect on your client’s ability to operate. One of the most consequential policies is their “bad address” policy. When CBP receives mail returned as undeliverable from an address listed on the bond, they will render the bond insufficient.
An insufficient bond means, that while the bond is still in effect, it cannot be used to secure any Customs transactions. In the case of a bad address, CBP makes no attempt to notify the principal or the surety company before a bond is rendered insufficient and turned off. CBP believes it is the duty of the importer to notify CBP of any address changes. Suddenly, your client, who relies on the steady flow of imports for business continuity, finds that their goods have been stopped at the border or held at the port and the entry will be rejected with a message from CBP of “bond insufficient.” The most common reaction is to assume the bond amount on the current bond is too low, and a request is made to increase the bond. In the meantime, the principal has a local Customs broker arrange for single transaction bonds, not realizing that these bonds can be provided by their current surety through our office, if need be. In many cases, because of Shea’s expertise with CBP, CBP is able to process requests to update a bad address within 24-48 hours.
Unfortunately, though, despite everyone’s best efforts, there are instances when bad addresses are not updated within 24 hours. CBP can take up to 5 business days to make changes to the bond, and it is not unheard of to find, in a few short days of being rendered insufficient, that the principal must make the difficult financial decision to either obtain single transaction bonds (which can easily outstrip the cost of the continuous bond) or delay entry of the merchandise into the U.S. It is therefore of the utmost importance that our office be notified immediately with respect to any change that affects an entity on the bond.
A bad address can also affect your client’s ability to promptly resolve penalties, liquidated damages or supplemental duty bills issued against their bond. For instance, when a liquidated damage is issued, CBP s sends notification to the principal’s address listed on the bond. If the address is out of date, your client may not receive the notice and will be unable to resolve the demand timely as the principal is given only (60) days to respond to the notice before CBP issues a demand on surety. Subsequently, should the liquidated damage become a demand on surety, the surety may also have difficulty in notifying the principal to resolve the claim before the surety is required to satisfy the claim.