In order to facilitate fair trade and dispute resolutions, the USDA has created the Perishable Agricultural Commodities Act (PACA) to regulate interstate and foreign commerce and to help buyers and sellers’ get what they pay for and get paid for what they sell, including when their customers go out of business, declare bankruptcy, or simply refuse to pay for the fruits and vegetables received.

PACA is critical to the produce industry because of the intense perishable nature of products; in addition, the industry also offers an easy environment for corrupt dealers, the opportunity for misbranding and misrepresentation, and has a history of parties who are slow payers, do not pay, and face bankruptcy. Common complaints/claims under PACA include failure to pay, failure to ship or deliver, ineffective/wrongful rejection, misunderstood contract terms, disagreement of inspection results, unauthorized deductions, and bankruptcy.

In order to ensure that all interested parties in the industry are protected, produce brokers, grower’s agents, shippers, wholesale dealers, retailers, processors, and commissioned merchants must all hold and maintain a PACA license.

Filing a complaint or claim involves various steps. Growers, unpaid sellers, associations on behalf of their members, attorneys on behalf of their clients, sales agents, grower’s agents working on behalf of a shipper, foreign traders, and buyers seeking damages may all file complaints under PACA.

There are three tiers under the complaint process:

PACA tiers

Tier 1 – Phone Call to “Good Delivery” Hotline

  • If a party has a load with a potential problem or an issue with payment, the first step is to call the “Good Delivery” hotline and discuss the nature of the issue with a PACA representative.
  • The hotline number is 1-800-495-7222. Option #2 must be selected for FREE assistance; hotline hours are 7AM – 7PM Mon-Fri (EST).
  • The hotline is staffed by fruit and vegetable experts, and there are Spanish and Korean speakers on staff.

Tier 2 – Informal Complaint

  • If a resolution is not reached via the assistance of the good delivery hotline, the next step is for a party to submit an Informal Complaint.
  • The party must submit transaction information and invoices in writing expressing their desire to file an Informal Complaint. This information can be faxed, mailed, or emailed.
  • There is a $100 US filing fee for all Informal Complaints.
  • Informal Complaints must be filed within 9 months of the due date or cause of action (i.e. payment due date, or delivery date).
  • A PACA Investigator then gathers and analyzes case facts and shares conclusion with parties and attempts to reach a settlement.
  • PACA also offers mediation services for commercial disputes. This is often a fast and effective way to resolve issues, and can be completed face-to-face or by teleconference; there is little extra cost for this service. It always ensures a mutually beneficial solution to a disagreement is reached, and it can do a great deal to save a business relationship.
  • If there is no settlement reached from these steps, the final option is to pursue a Formal Complaint

Tier 3 – Formal Complaint

  • Formal Complaints require the following:
    • Submission of original and notarized documents
    • Two copies of all paperwork submitted
    • A $500 US filing fee, which is recoverable if the respondent is found violating the PACA
    • Claim interest if stated on invoice
  • After PACA has received all documentation, a Formal Claim will be served to the Respondent.
  • The Respondent will be given 20 days to answer, and failing to answer may result in a Default Order.
  • Once an answer is submitted, the Formal Complaint is sent to Washington DC for decision, which can take from one to six months. The turnaround time can be up to four months.
  • A complaining party can anticipate a time frame of less than a year for a final outcome to be reached.
  • After the final outcome and decision is issued, an award is paid, or a PACA license suspended or sanctions imposed, all depending on the specific complaint.
  • Finally, upon the final outcome of the Formal Complaint, a PACA press release is issued.
  • If either the complaining party or the responding party is not in agreement with the outcome, they can elect to take the decision to Civil Court for judgment, and enforce PACA Trust. PACA monitors the firm and principals in the trust, and the industry lets PACA know of activities.

The PACA Complaint process is a lengthy endeavor whose key is open and honest communication between all parties, which will hopefully ensure that disputes can be resolved before arriving at the Formal Complaint tier. The PACA website offers a variety of resources, including office locations, online training, and PACA trust information. Visit www.ams.usda.gov/paca for more information.

The PACA Claim Notification Process was last modified: by