The Government Is About to Send Out Billions in Tariff Refunds. The Fraudsters are Ready.
A mid-sized importer gets an email from its customs broker: CBP has opened the tariff refund portal, and the company is eligible for a substantial payment. The message references real shipments and includes a link to “confirm banking details to ensure timely payment.”
The controller clicks through and updates the account information. Weeks later, the refund arrives—just not to them.
This is not a hypothetical failure mode. It is the most likely one.
The federal government is standing up a tariff refund program covering an estimated 53 million shipments, with total payments of $166 billion. If that combination—new program, large sums, fast timelines, confusing rules, digital disbursement—sounds familiar, it should. The last time the government ran a program at this scale, we called it pandemic relief. The Paycheck Protection Program disbursed $800 billion in under two years. Fraud actors of all types had a field day. Unemployment programs lost more than $100 billion to fraud. Most of the money was never recovered.
Having spent those years working the problem from the inside, it looks a lot like the patterns that broke those programs are already visible in this tariff refund program.
The Payment is the Attack Surface
The most immediate vulnerability is not fabricated claims—it is interception. Modern fraud inserts itself into legitimate flows.
Compromise an importer’s login credentials.
Spoof a broker’s email.
Induce a controller to update ACH details through a convincing phishing page.
The underlying claim can be completely valid and CBP will process it as designed. The money simply goes to the wrong place.
This is how business email compromise attacks work, and the tariff refund program is structured to attract them. Importers enroll banking details through CAPE—CBP’s new Consolidated Administration and Processing of Entries system—which went live this morning. Brokers act as intermediaries for hundreds of clients at once. A single compromised broker firm becomes a force multiplier—one breach, hundreds of redirected refunds. Smaller brokers with weaker security controls and broad client rosters are the highest-value targets.
The first wave of fraud will arrive in a phishing email.
The Program’s Complexity is a Feature, Not a Bug, for Fraud
Beyond interception, the program’s eligibility structure creates a second attack surface. Some shipments qualify; others don’t. Some duties are finalized; others remain provisional. Within a single entry, certain goods may be refundable while others are not. That complexity and granularity, while appropriate for trade policy, is disastrous for fraud prevention.
When reviewers can’t easily distinguish eligible from ineligible duties without reconstructing entry-level records, over-claiming becomes difficult to detect. Ineligible line items get folded into otherwise valid claims. The same entry gets submitted through affiliated entities or amended submissions. And importantly, none of this requires a fictitious claimant. It simply requires a real participant willing to stretch the rules, or an intermediary willing to do it on their behalf. With 53 million underlying transactions, even a modest rate of inflation or duplication translates into significant losses.
During the pandemic, we called this version of the scheme “real business, fake amount.” This is the tariff-refund equivalent.
A third layer compounds both risks: A parasitic ecosystem
will form around legitimate confusion.
Businesses that can’t navigate the complex new portal are easy targets for fake recovery consultants, advance-fee services, and phishing pages that closely mirror official CBP communications. We saw these opportunistic intermediaries in the pandemic-era Employee Retention Tax Credit program and they bilked the program for billions in exorbitant fees for ineligible businesses.
The boundary between help and exploitation is invisible from the outside, especially for smaller firms without in-house trade counsel.
The Design Flaws are Now Familiar in Government Programs
What ties these risks together is architecture. Government payment systems are built to determine who qualifies; they aren’t built to ensure that the right entity receives payment, to evaluate claims relationally rather than in isolation, or to pause disbursement when suspicious patterns emerge. Controls are documentation-based and retrospective, which are the kinds of controls that are designed for audits, not real-time fraud prevention.
This architecture has cost taxpayers hundreds of billions of dollars. There is no reason to expect a different outcome here unless different choices are made now, at the design stage, not during the inevitable post-mortem.
Four changes would matter most.
1. CBP needs the explicit authority to pause disbursement when fraud signals appear—and that authority must be established before it is needed, not after. The IRS imposed a moratorium on new Employee Retention Credit claims in September 2023 because fraud had overwhelmed its ability to distinguish legitimate from fraudulent filings. It was the right call, made about two years too late. CBP almost certainly cannot pause payments today without explicit policy direction—likely from the White House or a congressional mandate. That authorization should be sought immediately, before losses accumulate and the political cost of delay becomes the excuse for inaction.
2. CBP should require multi-factor authentication for all CAPE access—for importers and brokers alike—and issue explicit public guidance on what legitimate CBP communications will and will not ask. A convincing email directing a controller to confirm banking details through a portal link is the simplest attack this program will face, and it requires no sophistication whatsoever. MFA does not eliminate credential compromise, but it raises the cost meaningfully—particularly for broker accounts, where a single breach can redirect refunds across hundreds of clients. And CBP should issue explicit public guidance on what legitimate CBP communications will and will not ask. For example, CBP should publicly announce that it will never direct importers to update payment details through an emailed link. The IRS issues guidance like this routinely. CBP should do it now, before the first phishing wave lands.
3. Claims should be analyzed against each other, not just on their individual merits. Shared accounts, repeat preparers, and unusual concentrations of activity—fifty claims routing to the same small bank, identical dollar amounts across unrelated companies—are detectable before payment, not only after. Treasury’s Do Not Pay system already cross-references federal payments against fraud indicators in real time for some programs. Whether CAPE was built with that integration from day one has not been confirmed publicly. OMB has the authority—and under the Payment Integrity Information Act, arguably the obligation—to require it and to verify publicly that it has been done. Data analytics to detect patterns must be baked in from the start.
4. Any modification to banking information should be treated as a high-risk event requiring independent verification—not a confirmation through the same channel that may already be compromised. Banks are already required to validate ACH change requests through a separate authentication channel. CBP should be held to the same standard its regulated financial institutions already meet.
None of this requires slowing the program to a halt. These are standard risk management practices in many parts of the private sector. What makes the government different is how rarely they are embedded into federal payment systems from the start.
We Know What Comes Next if Action Isn’t Taken
The portal opened this morning. The window to build these controls into the design—rather than reconstruct them after losses mount—is measured in days, not years.
The pandemic showed what happens when a large-scale, fast-moving payment program trusts its documentation. Investigators spent years counting losses that could have been avoided. Recoveries were a minuscule fraction of what was stolen. By the time enforcement caught up, the money was long gone.
We have been here before. We know how it ends. The only open question is whether the people in a position to act will do so before the money moves—or after.
Photo by Paul Teysen on Unsplash. Article first posted on GovIntegrity.