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 TRENTON
– New Jersey has entered into a landmark, multi-state agreement
with Philip Morris USA whereby the tobacco company will incorporate
policies and procedures aimed at combating the illegal sale of Philip
Morris cigarettes over the Internet and through the mails.
In
announcing the new agreement, Acting Attorney General Nancy Kaplen noted
that Philip Morris is adopting the protocols voluntarily, as part of
an agreement reached with New Jersey and 36 other participating state
Attorneys General across the country.
Under
terms of the agreement, Philip Morris will halt the shipment of cigarettes
to any of the tobacco firm’s direct customers who have been found
by the participating states to be engaging in illegal Internet and mail
order sales.
In
addition, the company has agreed to reduce the amount of product made
available to direct customers found by the states to be engaged in the
illegal resale of Philip Morris USA cigarettes to Internet vendors.
Philip Morris will also suspend from the company’s incentive programs
any retailer found by the states to be engaging in such illegal sales.
“This
is an important agreement -- one we anticipate will make a difference
in discouraging the illicit sale of cigarettes by reducing the available
supply of product to illegal sellers. This agreement sets a new standard
for the industry, one we encourage other cigarette manufacturers to
follow,” said Kaplen.
Said
New Jersey Division of Taxation Director William Thompson, ”We
are pleased that a major retailer has taken a leadership role to stem
the illegal sale of cigarettes by mail order and internet vendors. This
agreement is one of several recent steps undertaken industry-wide
to combat illegal sales, prevent illegal use of cigarettes and stop
evasion of cigarette tax law."
According
to Acting Attorney General Kaplen, the participating 37 Attorneys General
across the United States believe that virtually all sales of cigarettes
over the Internet are illegal because the sellers are violating one
or more state and federal laws.
Those
laws include: (1) state age verification laws; (2) the federal Jenkins
Act (which requires that such sales be reported to state authorities);
(3) state laws prohibiting or regulating the direct shipment of cigarettes
to consumers; (4) state and federal tax laws; (5) federal mail and wire
fraud statutes; and (6) the federal Racketeer Influenced and Corrupt
Organizations law. Many of the sales made via foreign Web sites also
violate federal smuggling, cigarette labeling, money laundering and
contraband product laws.
The
participating states also maintain that Internet cigarette sales present
a significant risk to public health, because most Internet vendors fail
to charge taxes, and it is well-established that lower cigarette prices
lead to increased smoking rates.
Moreover,
while “brick-and-mortar” retailers check photo IDs to prevent
children from buying cigarettes, the vast majority of Internet sellers
have age verification systems that are inadequate or non-existent. Numerous
studies have shown that the earlier an individual begins to smoke, the
more likely it is that the person will become addicted, and thus age
verification through photo IDs is essential to protect children from
a lifetime of smoking.
Today’s
agreement is the third major development in the states’ multi-faceted
effort to restrict the payment, shipment and supply operations of illegal
Internet cigarette traffickers. In March 2005, the participating Attorneys
General announced that the major credit card companies had all agreed
to stop processing credit card payments for Internet retailers. Later
in the year, both DHL and UPS agreed to stop shipping packages for vendors
engaged in these illegal sales.
Philip
Morris USA is the first tobacco product manufacturer to agree to reduce
the supply of cigarettes to direct customers who supply vendors engaged
in the illegal re-sale of company-manufactured cigarettes via the Internet.
Acting Attorney General Kaplen said that participating Attorneys General
will continue to encourage other tobacco product manufacturers to take
steps to reduce the supply of their cigarettes that are re-sold by illegal
Internet cigarette traffickers.
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