The cashmere brand agreed to pay $900,000 (£647,500) to the US government after whistleblower Andrew Patrick accused the company of “fraudulently and systematically” avoiding to pay US customs duties on its goods shipped from the UK to US customers.
Patrick, a UK citizen, worked at Pure Collection between 2010 and 2014 and brought information about the company’s practices to the law firm Constantine Cannon. As a result, Patrick will be awarded 18% of the total settlement.
The lawsuit accused the company of attempting to attract more US-based customers by engaging in a practice commonly known as "splitting”.
Patrick said he was trained to systematically split customers' large orders to avoid paying US customs fees, saving the company millions of dollars.
The retailer neither admitted nor denied liability.
Mary Inman, a partner in Constantine Cannon's London office, said Patrick was the first British whistleblower to expose a UK company for evading US import duties and only the second to receive a financial reward under the whistleblower provisions of the False Claims Act.
"As global business expands, European whistleblowers like Patrick play an increasingly vital role in alerting the US government to fraud schemes that cross international borders," she added.
Till Vere-Hodge, also from Constantine Cannon, added, "Pure arrogantly decided it didn't need to play by the same rules as other retailers, and placed its own interests in profits and access to the US market above the laws of the US government.
“The government's successful resolution of Patrick's case sends a clear message that this behaviour will not be tolerated."
Patrick brought his allegations to the attention of US Customs and Border Protection in 2014, and later filed a whistleblower submission with the US Internal Revenue Service in 2015. The two attempts were unsuccessful, but he later asked the law firms Constantine Cannon and Phillips & Cohen to represent him in a third attempt.