The de minimis exemption, an obscure trade law provision that has simultaneously fueled and eroded businesses across the globe, officially came to an end on Friday following an executive order by President Donald Trump.

For nearly a decade, shipments valued under $800 were allowed to enter the country virtually duty free and with less oversight. Now, those shipments from the likes of Tapestry, Lululemon and just about any other retailer with an online presence will be tariffed and processed in the same way that larger packages are handled.

In May, Trump ended the exemption for goods coming from China and Hong Kong, and on July 30 he expanded the rollback to all countries, calling it a “catastrophic loophole” that’s been used to evade tariffs and get “unsafe or below-market” products into the U.S.

The de minimis exemption had previously been slated to end in July 2027 as part of sweeping legislation passed by Congress, but Trump’s executive order eliminated the provision much sooner, giving businesses, customs officials and postal services less time to prepare.

“The ending of that under-$800-per-person-per-day rule, from a global perspective, is about to probably cause a bit of pandemonium,” said Lynlee Brown, a partner in the global trade division at accounting firm EY. “There’s a financial implication, there’s an operational implication, and then there’s pure compliance, right? Like, these have all been informal entries. No one’s really looked at them.”

Already, the sudden change has snarled supply chains from France to Singapore and led post offices across the world to temporarily suspend shipments to the U.S. so they can ensure their systems are updated and able to comply with the new regulations.

It’s forced businesses both large and small to rethink not just their supply chains, but their overall business models, because of the impact the change could have on their bottom lines — setting off a panic in board rooms across the country, logistics experts said.

“Obviously it’s a big change for operating models for companies, not just the Sheins and the Temus, but for companies that have historically had e-com and brick-and-mortar stores,” Brown said.

The change also means consumers, already are under pressure from persistent inflation and high interest rates, could now see even higher prices on a wide range of goods, from Colombian bathing suits to specialty ramen subscription boxes shipped straight from Japan.

The end of de minimis could cost U.S. consumers at least $10.9 billion, or $136 per family, according to a 2025 paper by Pablo Fajgelbaum and Amit Khandelwal for the National Bureau of Economic Research. The research found low-income and minority consumers would feeling the biggest impact as they rely more on the cheaper, imported purchases.

Popularized by Chinese e-tailers Shein and Temu, use of the de minimis exemption has exploded in the last decade, ballooning from 134 million shipments in 2015 to over 1.36 billion in 2024. Prior to the recent change to limit its use, U.S. Customs and Border Protection said it was processing over 4 million de minimis shipments into the country each day.

A 2023 House report found more than 60% of de minimis shipments in 2021 came from China, but because the packages require less information than larger containers, very little information is known about their origins and the types of goods they contain. That opacity is one of the key reasons why both former President Joe Biden and Trump sought to curtail or end the exemption.

Both administrations have said the exemption was overused and abused and that it’s made it difficult for CBP officials to target and block illegal or unsafe shipments coming into the U.S. because the packages aren’t subject to the same level of scrutiny as larger containers.

“We didn’t have any compliance information … on those shipments, and then that is where the danger of drugs and whatnot being in those shipments” comes in, said Irina Vaysfeld, a principal in KPMG’s trade and customs practice.

The Biden administration particularly focused on how the exemption allowed goods made with forced labor to make it into the country in violation of the Uyghur Forced Labor Protection Act. Meanwhile, Trump has said the exemption has been used to ship fentanyl and other synthetic opioids into the U.S. In a fact sheet published on July 30, the White House said 90% of all cargo seizures in fiscal 2024, including 98% of narcotics seizures and 97% of intellectual property rights seizures, originated as de minimis shipments.

Across the globe, it’s common for countries to allow low-value shipments to be imported duty-free as a means to streamline and facilitate global trade, but typically, it’s for packages valued around $200, not $800, said EY’s Brown.

Until 2016, the U.S.’s threshold for low-value shipments was also $200, but it was changed to $800 when Congress passed the Trade Facilitation and Trade Enforcement Act, which sought to benefit businesses, U.S. consumers and the overall U.S. economy, according to the Congressional Research Service. It said higher thresholds provide a “significant economic benefit” to both business and shoppers and thus, the overall economy.

While well-intentioned, the law came with unintended consequences, said Brown.

The “rise in value, from $200 to $800, just made it kind of like a free for all to say, OK, everything come in,” she said.

Eventually companies designed supply chains around the exemption: They set up bonded warehouses, where duties can be deferred prior to export, in places like Canada and Mexico and then imported goods in bulk to those regions before sending them across the border one by one, duty free, as customer orders rolled in, said Brown.

“Companies have really laid out their supply chain in a very specific way [around de minimis] and that’s really the crux of the issue,” said KPMG’s Vaysfeld. “The way that the supply chain has been laid out now may need to change.”

Until the rise of Shein and Temu, the de minimis exemption was rarely discussed in retail circles. Soon, the e-commerce behemoths began facing widespread criticism for their use of what many called a loophole.

In 2023, the House Select Committee on the Chinese Communist Party released a report on Shein and Temu and said the two companies were “likely responsible for more than 30 percent of all packages shipped to the United States daily under the de minimis provision, and likely nearly half of all de minimis shipments to the U.S. from China.”

The revelation sparked widespread consternation among retail executives, lobbyists and government officials who said the companies’ use of the exemption was unfair competition.

However, behind closed doors, companies large and small began mimicking the same model after realizing how it could reduce the steep costs that come along with selling goods online.

Direct-to-consumer companies that only have online presences have relied on it more heavily, so much so that their businesses may not work without it, said Vaysfeld.

“Some of the companies we’ve spoken to, they’ve modeled out, if the tariffs continue for one year, for two years, how does that impact their profitability, and they know how long they can last,” said Vaysfeld. “These aren’t the huge companies, right? These are the smaller companies … Depending on what country they’re sourcing from or where they’re manufacturing, it could really impact their profitability that they can’t stay in business for the long term.”

While smaller, digital companies are more exposed, “pretty much most companies that you can think of” had been using the exemption in some form before it ended, said Vaysfeld.

Take Coach and Kate Spade’s parent company Tapestry: About 13% to 14% of the company’s sales were previously covered under de minimis and will now be subject to a 30% tariff, according to an estimate by equity research firm Barclays.

On the company’s earnings call earlier this month, Chief Financial Officer Scott Roe said tariffs will hit its profits by a total of $160 million this year, including the impact of the end of de minimis. That amounts to about 2.3% of margin headwind, he said.

Shares of the company fell nearly 16% the day that Tapestry reported the profit hit.

In a statement, Roe said Tapestry used de minimis to help support its strong online business, adding it is a practice that “many companies with sophisticated supply chains have been doing for years.”

To help offset its termination, he said Tapestry is looking for ways to reduce costs and is leaning on its manufacturing footprint across many different countries.

Canadian retailer Lululemon is another company that uses de minimis, according to Wells Fargo. Last week, the bank cut its price target on the company’s stock from $225 to $205, citing the end of de minimis. In the note, Wells Fargo analyst Ike Boruchow said the equity research firm sees a potential 90 cent to $1.10 headwind to Lululemon’s earnings per share from the de minimis elimination.

Lululemon declined to comment, citing the company’s quiet period ahead of its reporting earnings.

The National Retail Federation, the industry’s largest trade organization, has not taken a position in favor of or against the exemption. It has members who both supported and opposed the policy, said Jonathan Gold, vice president of supply chain and customs policy at NRF.

Retailers of all sizes, including independent sellers with digital storefronts, have used the approach as “a convenient way to get products to the consumer” for less, Gold said.

“Their costs are going to go up and those costs could be passed on to the consumer at the end of the day,” Gold said.

The most acute impact of the end of de minimis is expected to be felt on online marketplaces where millions of small businesses sell goods like Etsy, eBay and Shopify and used de minimis to defray costs when sending online orders from other parts of the globe to the U.S.

American shoppers have gotten used to buying artwork, coffee mugs, T-shirts and other items from merchants outside the country without paying duties. With that tariff exemption gone, consumers could face higher costs and a more limited selection of items to choose from.

Etsy, eBay and some other retailers sought to defend the loophole prior to its removal, submitting public comments on proposed de minimis regulation by the CBP. An eBay public policy executive said the company was concerned that restrictions to de minimis “would impose significant burdens on American consumers and importers.”

Etsy’s head of public policy, Jeffrey Zubricki, said the artisan marketplace supports “smart U.S. de minimis reform,” but that it was wary of changes that could “disproportionately affect small American sellers.”

“These exemptions are a powerful tool that help small creators, artisans and makers participate in and navigate cross-border trade,” Zubricki wrote in a March letter to CBP.

An Etsy spokesperson declined to comment on the policy change. Etsy CFO Lanny Baker said at a Bernstein conference in May that transactions between U.S. buyers and European sellers comprise about 25% of the company’s gross merchandise sales.

EBay didn’t immediately provide a comment in response to a request from CNBC. The company warned in its latest earnings report that the end of de minimis outside of China could impact its guidance, though CEO Jamie Iannone told CNBC in July that he believes eBay is generally “well suited” to navigate the shifting trade environment.

Some eBay and Etsy sellers based in the UK, Canada and other countries are temporarily closing off their businesses to the U.S. as they work out a plan to navigate the higher tariffs. Blair Nadeau, who owns a Canadian bridal accessories company, was forced to take that step this week.

“This is devastating on so many levels and millions of small businesses worldwide are now having their careers, passions and livelihoods threatened,” Nadeau wrote in an Instagram post on Tuesday. “Just this past hour I have had to turn away two U.S. customers and it broke my heart.”

Nadeau sells her bespoke wedding veils, jewelry and hair adornments through her own website and on Etsy, where 70% of her customer base is in the U.S. The de minimis provision had been a “lifeline” for many Canadian businesses to get their products in the hands of American consumers, Nadeau said in an interview.

“This is really hitting me,” Nadeau said. “It’s like all of a sudden 70% of your salary has been removed overnight.”

In the absence of de minimis, online merchants are faced with either paying import charges upfront and potentially passing those costs on to shoppers through price hikes, or shipping products “delivery duty unpaid,” in which case it’s the customer’s responsibility to pay any duties upon arrival.

Alexandra Birchmore, an artist based in the Cotswolds region of England, said she expects to raise the price of her oil paintings on Etsy by 10% as a result of paying the duties upfront.

“At the moment every small business forum I am on is in chaos about this,” Birchmore said. “It looks to me to be a disaster where no one benefits.”

The disruption could end up being a boon for the likes of Amazon and Walmart. U.S. consumers may turn to major retailers if they face steeper prices elsewhere, as well as potential shipping delays due to backlogs or other issues at the border.

Amazon, in particular, has already proven resilient after the U.S. axed the de minimis provision for shipments from China and Hong Kong in May. The company’s sales increased 13% in the three-month period that ended June 30, compared with 10% growth in the prior quarter. Amazon’s unit sales grew 12%, an acceleration from the first quarter.

Both Amazon and Walmart have fulfillment operations in the U.S. that allow overseas businesses to ship items in bulk and store them in the companies’ warehouses before they’re dispatched to shoppers. Shein and Temu largely eschewed the model in the past in favor of the de minimis exception, but they’ve since moved to open more warehouses in the U.S. in the wake of rising tariffs.

Since the exemption ended on Chinese imports in May, the impact on Shein and Temu has been swift. Temu was forced to change its business model in the U.S. and stop shipping products to American consumers from Chinese factories.

The end of de minimis, as well as Trump’s new tariffs on Chinese imports, also forced Temu to raise prices, reign in its aggressive online advertising push and adjust which goods were available to American shoppers.

The Financial Times reported on Tuesday that Temu has resumed shipping goods to the U.S. from Chinese factories and will also increase its advertising spend following what it called a “truce” between Washington and Beijing.

Temu didn’t return a request for comment.

Meanwhile, Shein has been forced to raise prices and daily active users on both platforms in the U.S. have fallen since the de minimis loophole was closed, CNBC previously reported. Temu’s U.S. daily active users plunged 52% in May versus March, while Shein’s were down 25%, according to data shared with CNBC by market intelligence firm Sensor Tower.

Google has eliminated more than one-third of its managers overseeing small teams, an executive told employees last week, as the company continues its focus on efficiencies across the organization.

“Right now, we have 35% fewer managers, with fewer direct reports” than at this time a year ago, said Brian Welle, vice president of people analytics and performance, according to audio of an all-hands meeting reviewed by CNBC. “So a lot of fast progress there.”

At the meeting, employees asked Welle and other executives about job security, “internal barriers” and Google’s culture after several recent rounds of layoffs, buyouts and reorganizations.

Welle said the idea is to reduce bureaucracy and run the company more efficiently.

“When we look across our entire leadership population, that’s mangers, directors and VPs, we want them to be a smaller percentage of our overall workforce over time,” he said.

The 35% reduction refers to the number of managers who oversee fewer than three people, according to a person familiar with the matter. Many of those managers stayed with the company as individual contributors, said the person, who asked not to be named because the details are private.

Google CEO Sundar Pichai weighed in at the meeting, reiterating the need for the company “to be more efficient as we scale up so we don’t solve everything with headcount.”

Google eliminated about 6% of its workforce in 2023, and has implemented cuts in various divisions since then. Alphabet finance chief Anat Ashkenazi, who joined the company last year, said in October that she would push cost cuts “a little further.” Google has offered buyouts to employees since January, and the company has slowed hiring, asking employees to do more with less.

Regarding the buyouts, executives at the town hall said that a total of 10 product areas have presented “Voluntary Exit Program” offers. They’ve applied to U.S.-based employees in search, marketing, hardware and people operations teams this year.

Fiona Cicconi, Google’s chief people officer, said at last week’s meeting that between 3% and 5% of employees on those teams have accepted the buyouts.

“This has been actually quite successful,” she said, adding “I think we can continue it.”

Pichai said the company executed the voluntary buyouts after listening to employees, who said they preferred that route to blanket layoffs.

“It’s a lot of work that’s gone into implementing the VEP program, and I’m glad we’ve done it,” Pichai said. “It gives people agency, and I’m glad to see it’s worked out well.”

Cicconi said one of the main reasons employees are taking the buyouts is because they want to take time off from work.

“It’s actually quite interesting to see who’s taking a VEP, and it’s people sort of wanting a career break, sometimes to take care of family members,” she said.

CNBC previously reported that the layoffs hurt morale as the company was downsizing while at the same time issuing blowout earnings and seeing its stock price jump. Alphabet’s shares are up 10% this year after climbing 36% in 2024 and 58% the year prior.

At another point in the town hall, employees asked if Google would consider a policy similar to Meta’s “recharge,” a month-long sabbatical that employees earn after five years at the company.

“We have a lot of leaves, not least our vacation, which is there for exactly that — resting and recharging,” said Alexandra Maddison, Google’s senior director of benefits.

She said the company is not going to offer paid sabbatical.

“We’re very confident that our current offering is competitive,” Maddison said.

Meta didn’t immediately respond to a request for comment.

Other executives jumped in to compare the two companies’ benefits.

“I don’t think they have a VEP at Meta by the way,” Cicconi said.

Pichai then asked, to some laughs from the audience, “Should we incorporate all policies of Meta while we’re at it? Or should we only pick and choose the few policies we like?”

“Maybe I should try running the company with all of Meta’s policies,” he continued. “No, probably not.”

Flowers, succulents and Formula One race cars helped fuel a 12% revenue bump for Lego during the first half of the year.

The company reported a record 34.6 billion Danish kroner, or $5.4 billion, in revenue as part of its biannual earnings report on Wednesday. Operating profit rose 10% year over year to 9 billion Danish kroner, or $1.4 billion, the company said.

“It’s the best first half ever,” Lego CEO Niels Christiansen told CNBC. “It’s a record on revenue, a record on operating profit, it’s a record on net profit. … So, we are very happy.”

The brick maker launched 314 new sets during the first six months of the year, another record high. Lego has steadily added new product to its portfolio, branching out into home decor with wall art sets. It has also added new license partners and released sets tied to animated children’s program “Bluey” and fan-favorite anime “One Piece.”

Up next is a multiyear partnership with Pokemon, due to hit shelves in 2026.

“You can always find something that you really like, the pop culture you’re into or the passion point you have,” Christiansen said. “That works really well.”

In expanding its catalog of product, Lego has also grown its consumer base. Gateways into the brand such as its line of botanicals — plants, flower bouquets and succulents — and its ongoing partnership with Epic Games — which brings Lego to the digital space and elements from the popular video game Fortnite into the physical world — have encouraged newcomers into the brick-building space, Christiansen said.

“Then they figure out what it is and what it does for them, how it kind of allows them to express themselves, but also de-stress and focus on stuff in a different way,” he said. “So botanicals sets turn out to be good at recruiting new consumers into the brand, and then as soon as they build their botanical set, they may move on to building something else.”

Lego opened 24 new stores globally during the first six months of the year. The company has been opening more physical retail locations in areas that, unlike the U.K. and the U.S., did not grow up with the iconic colored bricks. This includes countries such as China and India.

Having brick-and-mortar places where kids and adults can get their hands on Legos and see the available sets has previously helped bolster sales.

THE SANTA ROSA PLATEAU ECOLOGICAL RESERVE, Calif. — The scientist traipses to a pond wearing rubber boots but he doesn’t enter the water. Instead, Brad Hollingsworth squats next to its swampy edge and retrieves a recording device the size of a deck of cards. He then opens it up and removes a tiny memory card containing 18 hours of sound.

Back at his office at the San Diego Natural History Museum, the herpetologist — an expert in reptiles and amphibians — uses artificial intelligence to analyze the data on the card. Within three minutes, he knows a host of animals visit the pond — where native red-legged frogs were reintroduced after largely disappearing in Southern California. There were owl hoots, woodpecker pecks, coyote howls and tree frog ribbits. But no croaking from the invasive bullfrog, which has decimated the native red-legged frog population over the past century.

It was another good day in his efforts to increase the population of the red-legged frog and restore an ecosystem spanning the U.S.-Mexico border. The efforts come as the Trump administration builds more walls along the border, raising concerns about the impact on wildlife.

At 2 to 5 inches long, red-legged frogs are the largest native frogs in the West and once were found in abundance up and down the California coast and into Baja California in Mexico.

The species is widely believed to be the star of Mark Twain’s 1865 short story, “The Celebrated Jumping Frog of Calaveras County,” and their crimson hind legs were eaten during the Gold Rush. But as the red-legged frog declined in numbers, the bullfrog — with its even bigger hind legs — was introduced to menus during California’s booming growth in the late 19th and early 20th centuries.

AP correspondent Ed Donahue reports on an international effort to bring back a type of frog.

The red-legged frog population was decimated by the insatiable appetite of the bullfrogs and the disease the non-native species brought in, but also because it lost much of its habitat to drought and human development in the shape of homes, dams and more.

Hollingsworth couldn’t estimate the number of red-legged frogs that remain but said they have disappeared from 95% of their historical range in Southern California.

Robert Fisher of the U.S. Geological Survey’s Amphibian Research and Monitoring Initiative Program searched for the frog for decades across 250 miles from Los Angeles to the border. He found just one in 2001 and none after that.

Scientists using DNA from red-legged frogs captured in Southern California before their disappearance discovered they were more genetically similar to the population in Mexico than any still in California.

In 2006, Fisher, Hollingsworth and others visited Baja where they had heard of a small population of red-legged frogs. Anny Peralta, then a student of Hollingsworth at San Diego State University, joined them. They found about 20 frogs, and Peralta was inspired to dedicate her life to their recovery.

Peralta and her husband established the nonprofit Fauna del Noroeste in Ensenada, Mexico, which aims to promote the proper management of natural resources. In 2018, they started building ponds in Mexico to boost the frog population that would later provide eggs to repopulate the species across the border.

But just as they were preparing to relocate the egg masses, the COVID-19 pandemic hit. Peralta and the U.S. scientists scrambled to secure permits for the unusual cargo and a pilot to fly the two coolers of eggs closer to the border. The rest of their journey north was by road, after the eggs passed a U.S. border guard inspection.

Over the past five years, Hollingsworth and his team have searched for sounds to prove their efforts to repopulate ponds in Southern California worked.

On Jan. 30, he heard the quiet, distinct grunting of the red-legged frog’s breeding call in an audio flagged by AI.

“It felt like a big burden off my shoulder because we were thinking the project might be failing,” Hollingsworth said. “And then the next couple nights we started hearing more and more and more, and more, and more.”

Over the next two months, two males were heard belting it out on microphone 11 at one of the ponds. In March, right below the microphone, the first egg masse was found, showing they had not only hatched from the eggs brought from Mexico but had gone on to produce their own eggs in the United States.

Conservationists are increasingly turning to artificial intelligence to monitor animals on the brink of extinction, track the breeding of reintroduced species and collect data on the impact of climate change and other threats.

Herpetologists are building on the AI-powered tools already used to analyze datasets of bird sounds, hoping that it might help build audio landscapes to identify amphibians and track their behavior and breeding patterns, said Zachary Principe of The Nature Conservancy, which is working with the museum on the red-legged frog project. The tools could also help scientists analyze tens of thousands of audio files collected at universities, museums and other institutions.

Scientists working to restore the red-legged frog population in Southern California hope to soon be provided with satellite technology that will send audio recordings to their phones in real time, so they can act immediately if any predators — in particular bullfrogs — are detected.

It could also help track the movement of the frogs, which can be difficult to find in the wild, especially because cold-blooded creatures cannot be detected using thermal imagery.

The AI analysis of the pond audio has saved time for Hollingsworth and the others, who previously had to painstakingly listen to countless hours of audio files to detect the calls of the red-legged frog — which resembles the sound of a thumb being rubbed on a balloon — over the cacophony of other animals.

“There’s tree frogs calling, there’s cows mooing, a road nearby with a motorcycle zooming back and forth,” Hollingsworth said of the ponds’ audio landscape. “There’s owls, there’s ducks splashing, just all this noise”

The red-legged frog is the latest species to see success from binational cooperation along the near-2,000-mile border spanning California, Arizona, New Mexico and Texas. Over the years, Mexican gray wolves have returned to their historic range in the southwestern U.S. and in Mexico, while the California Condor now soars over skies from Baja to Northern California.

Based off the latest count, scientists estimate more than 100 adult red-legged frogs are in the Southern California ponds, and tadpoles were spotted at a new site.

The team plans to continue transporting egg masses from Baja, where the population has jumped from 20 to as many as 400 adult frogs, with the hope of building thriving populations on both sides of the border. Already the sites are seeing fewer mosquitos that can carry diseases like dengue and Zika.

A restoration pond in Baja that Peralta’s organization built recently teemed with froglets, their tiny eyes bobbing on its aquatic fern-covered surface. They could, one day, lay eggs for relocation to the U.S.

“They don’t know about borders or visas or passports,” Peralta said of the frogs. “This is just their habitat, and these populations need to reconnect. I think this shows that we can restore this ecosystem.”

The Trump administration’s latest allegations of mortgage fraud have raised questions about a long-standing housing issue known as owner-occupancy mortgage fraud. But that type of fraud can be difficult to prove, experts say.

President Donald Trump announced in a Truth Social post on Monday night that he was removing Federal Reserve Governor Lisa Cook. He cited allegations made by Federal Housing Finance Agency Director Bill Pulte that Cook committed mortgage fraud by claiming homes in two different states as her primary residence at the same time.

Cook’s attorney on Tuesday said Cook will file a lawsuit to challenge her removal.

“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” the lawyer, Abbe Lowell, said in a statement.

The Department of Justice has also recently targeted Sen. Adam Schiff, D-Calif., and New York Attorney General Letitia James with similar mortgage fraud allegations.

Here are the key things to know about owner-occupancy mortgage fraud, according to experts.

The main reason a borrower could be motivated to claim a primary residence on a mortgage application is to get a lower interest rate for that home.

Typically, mortgages for a primary residence have lower interest rates and homeowner’s insurance costs, said Keith Gumbinger, vice president of mortgage website HSH.

Mortgage interest rates are generally 0.5% to 1% higher for investment properties than for primary homes, according to Bankrate. Homeowners also typically pay about 25% more for insurance as a landlord compared with a standard homeowners policy, according to the Insurance Information Institute.

Owner-occupied means “you’re going to live there the majority of the time,” Gumbinger said. But there are limited exceptions, including for military service, parents providing housing for a disabled adult child or children providing housing for parents, according to Fannie Mae.

If a homeowner changes primary residences, they need to inform their mortgage lender that the original property is no longer owner-occupied, Gumbinger said.

There are also federal and state tax benefits for primary residences, according to Albert Campo, a certified public accountant and president of Campo Financial Group in Manalapan, New Jersey.

For example, when an owner sells a home and makes a profit, they can take a capital gains exemption worth up to $250,000 for single filers or $500,000 for married couples filing jointly, as long as they meet certain IRS rules, including owner occupancy for two of the past five years.

For tax purposes, a homeowner can have only one primary residence at a time.

When a taxpayer owns more than one home, proving which one is the primary residence is “always based on facts and circumstances,” Campo said. For example, a primary residence is typically where an owner spends most of their time, votes, files their tax returns and receives mail, he said.

A 2023 report from the Federal Reserve Bank of Philadelphia found that more than 22,000 “fraudulent borrowers” misrepresented their owner-occupancy status, out of 584,499 loans originated from 2005 to 2017. The data was based on a subsample from more than 15 million loans originated during this period.

Typically, the fraudulent borrowers took out larger loans and had higher mortgage default rates, the authors found.

However, this type of fraud may be “difficult to detect until long after the mortgage has been originated,” the authors wrote.

“There is a difference between the court of law and the court of public opinion,” Jonathan Kanter, a law professor at Washington University in St. Louis and a former assistant attorney general, told CNBC’s “Squawk Box” last week when asked about Cook. “In the court of law, this is small ball and very difficult to prove.”

“You’d have to establish not only that she filled out the form incorrectly, but she had the specific intent to deceive, to defraud banks, as opposed to just making a mistake,” he said.

During fiscal year 2024, 38 mortgage fraud offenders were sentenced in the federal system, according to the United States Sentencing Commission’s interactive data analyzer. That number is up slightly from 34 offenders in 2023, but down from 426 offenders in 2015, the earliest date in that tool’s dataset. The U.S. Sentencing Commission data does not break out the types of mortgage fraud.

The Trump administration’s latest allegations of mortgage fraud have raised questions about a long-standing housing issue known as owner-occupancy mortgage fraud. But that type of fraud can be difficult to prove, experts say.

President Donald Trump announced in a Truth Social post on Monday night that he was removing Federal Reserve governor Lisa Cook. He cited allegations made by Federal Housing Finance Agency Director Bill Pulte that Cook committed mortgage fraud by claiming homes in two different states as her primary residence at the same time.

Cook’s attorney on Tuesday said Cook will file a lawsuit to challenge her removal.

“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” the lawyer, Abbe Lowell, said in a statement.

The Justice Department has also recently targeted Sen. Adam Schiff, D-Calif., and New York Attorney General Letitia James with similar mortgage fraud allegations.

Here are the key things to know about owner-occupancy mortgage fraud, according to experts.

The main reason a borrower could be motivated to claim a primary residence on a mortgage application is to get a lower interest rate for that home.

Typically, mortgages for a primary residence have lower interest rates and homeowner’s insurance costs, said Keith Gumbinger, vice president of mortgage website HSH.

Mortgage interest rates are generally 0.5% to 1% higher for investment properties than for primary homes, according to Bankrate. Homeowners also typically pay about 25% more for insurance as a landlord compared with a standard homeowners policy, according to the Insurance Information Institute.

Owner-occupied means “you’re going to live there the majority of the time,” Gumbinger said. But there are limited exceptions, including for military service, parents providing housing for a disabled adult child or children providing housing for parents, according to Fannie Mae.

If a homeowner changes primary residences, they need to inform their mortgage lender that the original property is no longer owner-occupied, Gumbinger said.

There are also federal and state tax benefits for primary residences, according to Albert Campo, a certified public accountant and president of Campo Financial Group in Manalapan, New Jersey.

For example, when an owner sells a home and makes a profit, they can take a capital gains exemption worth up to $250,000 for single filers or $500,000 for married couples filing jointly, as long as they meet certain IRS rules, including owner occupancy for two of the past five years.

For tax purposes, a homeowner can have only one primary residence at a time.

When a taxpayer owns more than one home, proving which one is the primary residence is “always based on facts and circumstances,” Campo said. For example, a primary residence is typically where an owner spends most of their time, votes, files their tax returns and receives mail, he said.

A 2023 report from the Federal Reserve Bank of Philadelphia found that more than 22,000 “fraudulent borrowers” misrepresented their owner-occupancy status, out of 584,499 loans originated from 2005 to 2017. The data was based on a subsample from more than 15 million loans originated during this period.

Typically, the fraudulent borrowers took out larger loans and had higher mortgage default rates, the authors found.

However, this type of fraud may be “difficult to detect until long after the mortgage has been originated,” the authors wrote.

“There is a difference between the court of law and the court of public opinion,” Jonathan Kanter, a law professor at Washington University in St. Louis and a former assistant attorney general, told CNBC’s “Squawk Box” last week when asked about Cook. “In the court of law, this is small ball and very difficult to prove.”

“You’d have to establish not only that she filled out the form incorrectly, but she had the specific intent to deceive, to defraud banks, as opposed to just making a mistake,” he said.

During fiscal year 2024, 38 mortgage fraud offenders were sentenced in the federal system, according to the United States Sentencing Commission’s interactive data analyzer. That number is up slightly from 34 offenders in 2023, but down from 426 offenders in 2015, the earliest date in that tool’s dataset. The U.S. Sentencing Commission data does not break out the types of mortgage fraud.

Frontier Airlines is going after customers of Spirit Airlines, whose financial footing has gotten so shaky in recent weeks that it warned earlier this month it might not be able to survive another year without more cash.

Frontier on Tuesday announced 20 routes it plans to start this winter, many of them in major Spirit markets like its base at Fort Lauderdale International Airport in Florida. Frontier overlaps with Spirit on 35% of its capacity, more than any other airline, according to a Monday note from Deutsche Bank airline analyst Michael Linenberg.

Some of Frontier’s new routes from Fort Lauderdale include flights to Detroit, Houston, Chicago and Charlotte, North Carolina. It’s also rolling out routes from Houston to New Orleans; San Pedro Sula, Honduras; and Guatemala City.

Frontier had tried and failed to merge with its budget airline rival several times since 2022.

“I’m not here to talk about M&A,” Frontier CEO Barry Biffle said in an interview with CNBC on Tuesday when asked whether Frontier would buy Spirit. Biffle said he expects that Frontier would pick up the majority of Spirit’s market share if Spirit collapsed.

Both carriers have struggled from changing customer tastes for more upmarket seats and trips abroad, an oversupply of domestic capacity, and higher labor and other costs. Spirit’s situation has become more dire however, after it emerged from four months of bankruptcy protection in March facing many of the same problems.

Ultra-low-cost airlines are also challenged by larger rivals like United Airlines, American Airline and Delta Air Lines that have rolled out their own no-frills basic economy tickets but also offer customers bigger choices of destinations and other perks onboard like snacks and beverages.

Stock prices of rival airlines surged after Spirit’s warning earlier this month.

Biffle said the carrier wants to become the country’s largest budget airline and has rolled out loyalty matching programs to grab more customers. Frontier’s capacity was slightly smaller than Spirit’s in the second quarter, through the latter had slashed its flying by nearly 24% from a year earlier, while Frontier was down only 2%.

Spirit last week said it drew down the entire $275 million of its revolver and while it reached a two-year extension on its credit card processing agreement with U.S. Bank N.A., it agreed that it would hold back up to $3 million a day from the carrier.

The airline lost $245.8 million in the second quarter. Frontier lost $70 million.

Spirit has been looking for ways to slash costs, including furloughing and demoting hundreds more pilots and cutting unprofitable routes. Hundreds of flight attendants are on unpaid leaves of absence.

Spirit CEO Dave Davis said in an Aug. 12 staff memo after its “going concern” warning that “the team and I are confident that we can build a Spirit that will continue to provide consumers the unmatched value that they have come to expect for many years to come.”

The carrier reached a deal with bondholders who agreed to convert debt to equity in its Chapter 11 bankruptcy, but it didn’t cut other costs like renegotiating aircraft leases. Leasing firms have been reaching out to rivals in recent weeks to gauge whether competitors would take any of the Airbus planes that are in Spirit’s hands, according to people familiar with the matter, who asked to speak anonymously because the talks were private.

— CNBC’s Phil LeBeau contributed to this report.

Uncle Herschel is returning to the Cracker Barrel chair.

After online outrage by conservatives who accused the country-themed restaurant chain of changing its values or going “woke” when it rolled out a new logo, the company said Tuesday that it was returning to its old branding.

‘We thank our guests for sharing your voices and love for Cracker Barrel. We said we would listen, and we have. Our new logo is going away and our ‘Old Timer’ will remain,’ Cracker Barrel said on Facebook.

‘At Cracker Barrel, it’s always been — and always will be — about serving up delicious food, warm welcomes, and the kind of country hospitality that feels like family,’ the company said. ‘As a proud American institution, our 70,000 hardworking employees look forward to welcoming you to our table soon.’

Cracker Barrel, which has restaurants in 43 states, on Aug. 18 announced its new ‘All the More’ campaign and logo change, which removed the old man perched on a chair and the barrel from Cracker Barrel signs.

The new logo did not go over well in some spheres, and on social media, conservative critics accused the restaurant chain of abandoning its traditional values or of being ‘woke.’

President Donald Trump weighed in on the matter earlier Tuesday, writing on his social media platform, Truth Social, that the company should return to the old logo.

After Cracker Barrel announced the reversal Tuesday, Trump said on the platform: ‘Congratulations ‘Cracker Barrel’ on changing your logo back to what it was. All of your fans very much appreciate it.’ Trump also wished the company good luck.

Taylor Budowich, a deputy White House chief of staff, claimed on X that he’d spoken with people at Cracker Barrel by phone Tuesday about the issue and said, ‘They thanked President Trump for weighing in on the issue of their iconic ‘original’ logo.’

Cracker Barrel did not immediately respond to a request for comment about a White House call.

Shares of Cracker Barrel jumped sharply Tuesday night after it announced the reversal. Since the debut of the new logo on Aug. 18, shares are down nearly 13%.

Cracker Barrel tried to tamp down the controversy Monday by admitting ‘we could’ve done a better job sharing who we are and who we’ll always be’ and issuing reassurances that its values had not changed.

The change was part of a “strategic transformation” that started in 2024 to revitalize the brand, CNBC reported when the new logo was introduced. The company has said that the initiative included ‘refreshing the brand identity’ and making changes to its menu.

Other companies have been met with right-wing outrage for advertising or other business decisions, including when Bud Light had a branded content partnership with transgender TikToker Dylan Mulvaney.