FOR IMMEDIATE RELEASE
January 30, 2006
|Tom Vincz, NJ Treasury
N.J. Enters Multi-State Agreement with Phillip Morris to Combat
Illegal Cigarette Traffic; Firm Will Put Voluntary Protocols in
Place to Discourage Unlawful Internet, Mail-Order Sales
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.
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
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.
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.