From carbon quota fraud to electric bicycle battery fraud

The carbon quota scam: an edifying precedent

Between November 2008 and June 2009, the CO2 quota scam netted between 1.6 and 1.8 billion euros in France. On a European scale, the loss amounted to €5 to €10 billion, according to Europol. The Cour des Comptes (French Audit Office) described it as“the largest tax fraud ever recorded in France in such a short space of time”.

The Emissions Trading Scheme (ETS), set up by the European Union in 2005 under the Kyoto Protocol, enabled polluting industries to buy and sell CO2 emission rights. The fraudsters exploited a loophole in the system: the Bluenext platform, managed by the Caisse des Dépôts et Consignations, enabled these allowances to be traded, with VAT applied at 19.6%.

The crooks set up ephemeral companies, bought tax-free quotas abroad, resold them in France with VAT, then disappeared without paying back the tax collected. With the profits, they reinvested in new operations, creating a “carousel” effect that flourished for seven months before the government reacted by exempting the quotas from VAT in June 2009.

2025: the electric bike sector in turmoil

Today, Asian importers are applying the same fraudulent scheme to bicycle batteries and electrification kits. In July 2025, the Direction Nationale du Renseignement et des Enquêtes Douanières seized 7,020 electric-assist bicycles from six warehouses in France, for an estimated loss of 6 million euros in unpaid duties and taxes.

Operation Calypso, carried out by the European Public Prosecutor’s Office in September 2025 at the port of Piraeus in Greece, revealed the scale of the phenomenon: 2,435 containers were seized, mainly containing electric bicycles, but also textiles and shoes. The total loss is estimated at 800 million euros. Of the e-bike containers inspected, only 10% to 15% of the actual number of units were declared to customs.

The mechanism remains identical to that of carbon quotas: Asian wholesalers import their products tax-free, declaring falsified values to customs, then resell them inclusive of VAT on platforms such as TEMU, Amazon or CDiscount, without paying the correct amount of VAT to the State.

Bypassing European standards

In addition to tax fraud, these fraudulent imports circumvent European safety standards. The certificates of conformity accompanying these products are sometimes falsified. Some industry professionals report having had their hands on “literally photoshopped” certificates, a situation that raises questions when other companies are investing considerable resources to have their products approved to EN 15194 standards.

This European standard governs electrically-assisted bicycles and guarantees their compliance with safety requirements. Independent laboratory testing, such as that carried out by LCIE, represents a major investment for manufacturers who play by the rules. Faced with competition that does not comply with these obligations, companies that respect the standards find themselves in a situation of unfair competition.

Fire hazards: a real threat

Non-compliant batteries and kits multiply the risk of fire. In New York, between January and June 2023, more than a hundred fires were caused by electric bike and scooter batteries, resulting in 13 deaths. Across the USA, over 200 incidents were reported in 2021 and 2022, with at least 19 fatalities. In London, firefighters note that a lithium battery-related fire occurs approximately every two days.

In France, insurers and fire departments are sounding the alarm. In 2024, France Assureurs and Assurance Prévention commissioned CNPP to carry out large-scale tests on lithium-ion battery fires. In a test carried out in November 2024, a pallet of 40 batteries was set alight under controlled conditions. The results demonstrate how dangerous these incidents can be: batteries can reach 800 degrees Celsius in just a few minutes, with a “flare” effect projecting ignited cells into a radius of 7 to 10 meters.

Faced with these risks, some residential buildings have banned battery charging within their walls. Insurers refuse to pay compensation if the user has been negligent, notably by using an unapproved charger or non-compliant equipment. In New York City, emergency local laws have been passed banning the sale of electric bikes and batteries that are not certified to meet safety standards.

French contractors find themselves caught in a vice. On the one hand, they invest fortunes to comply with standards: laboratory tests, EN 15194 certifications, various approvals. On the other, they face unfair competition from fraudulently imported products, sold at prices that defy all economic logic.

The DGCCRF is rigorously controlling French companies, but is struggling to effectively monitor massive imports. E-commerce platforms act as intermediaries for criminal networks, which organize their supply circuits using front companies and falsified documents. Warehouses regularly change address to cover their tracks, operating on the same principle as “mules” in drug trafficking.

The European Union strikes back

Faced with the scale of the phenomenon, the European Union has introduced anti-dumping duties on Chinese electric bicycles, ranging from 21.8% to 83.6% depending on the manufacturer. These taxes are designed to protect European industry from unfair trade practices.

Laura Codruţa Kövesi, Chief Prosecutor of the European Public Prosecutor’s Office, said during Operation Calypso: “Criminal organizations have taken VAT and customs fraud to an industrial scale. We are being invaded by criminal organizations from third countries, particularly China.” She stressed that these networks have created a “criminal ecosystem supported by the corruption of customs and tax officials”.

Six people were implicated in the operation, including two Greek customs officers. The charges relate to repeated false registration, complicity in customs fraud and VAT fraud.

What can you do as a consumer?

This situation calls for vigilance. An abnormally low price on a battery or electrification kit should arouse suspicion. These products may not comply with European safety standards, may present fire hazards, and may not be covered by warranty.

Poor-quality batteries are sensitive to shocks and temperature variations, and can go into thermal runaway, a phenomenon in which the temperature rises uncontrollably to the point of combustion. Experts recommendusing only certified batteries and chargers from reputable manufacturers.

A French industry for bicycles and their components exists and complies with European standards. Companies like Syklo, which have their products

Conclusion: history repeating itself

Fifteen years after the carbon quota scam, the same VAT fraud mechanisms are flourishing in the electric bike sector. The difference lies in the addition of a security dimension: on top of the tax damage, there’s a real risk to consumers’ lives.

The “D’argent et de sang” series recalls that it took seven months and 1.6 billion euros in losses before the French government reacted to carbon quota fraud. In the case of batteries and electric bikes, the European authorities have become aware of the problem and are stepping up their operations. It remains to be seen whether these actions will suffice to curb a phenomenon which, according to the European Public Prosecutor’s Office, has reached an “industrial scale”.