|Selling Tobacco to Minors Online Draws Fire
By: Makebra M. Anderson
NNPA National Correspondent
Originally posted 7/11/2005
WASHINGTON (NNPA) – New York Attorney General Eliot Spitzer, has spearheaded an aggressive campaign against online tobacco retailers accusing them of making it easy and cheap for kids to buy cigarettes.
His attempts to stop all sales of tobacco products online have smoker’s rights advocates outraged.
“I think that the proposal to forbid online cigarette sales is unnecessary and takes away the consumer's freedom to purchase cigarette products from any store he or she chooses,” argues Erik Horne, founder of SmokingPermitted.com, a non-profit organization dedicated to the advancement of smoker's rights for young adults. “No other legal product would be subject to the same type of restriction. You can order clothing, books, electronics, and even alcoholic beverages on the Internet. Why is this different?”
This is different according to Spitzer because “virtually all Internet …cigarette retailers violate federal, state and local laws, including tax laws, age verification laws, delivery restrictions and reporting requirements…”
According to Public Health Law §1399-ll, commonly known as “Unlawful Shipment of Cigarettes,” it is illegal for a person who sales cigarettes to ship cigarettes to an unlicensed cigarette tax agent. It also makes it illegal for a carrier such as UPS or FedEx to transport cigarettes to an unauthorized recipient.
“UPS, Federal Express and the United States Postal Service all allow you to specify ‘ADULT SIGNATURE REQUIRED’ on the package, meaning the courier will not deliver it to anyone under the age of 21. The legal age to purchase cigarettes is 18 or 19 in every state—problem solved,” Horne explains.
Audrey Silk, from New York City Citizens Lobbying Against Smoker Harassment (CLASH), also believes that Spitzer’s attempts have nothing to do with public health.
“I’m embarrassed that my own state attorney general is leading this,” she says. “It’s a well-known strategy of anti-smoking activist to throw out ‘for the children’ in an attempt to gain support. Kids do not purchase cigarettes over the internet. They don’t have credit cards.”
But according to The Journal of the American Medical Association (JAMA), kids are purchasing cigarettes online.
JAMA reports that “Kids as young as 11 were successful more than 90 percent of the time in purchasing cigarettes over the Internet and there was little effort to verify the age of Internet cigarette purchasers at the time of purchase or at the time of delivery.”
Marc Violette from the Attorney General’s office says that the inability to verify age is the reason all Web sites selling tobacco products should to be shut down.
“It’s a violation of the law to sell cigarettes to anyone without verifying their age. If you go to a store and try to purchase a pack of cigarettes, the clerk behind the counter will ask you to show identification. With the Internet, there is no face-to-face proof of identification, so this is a method that is very easy to exploit in getting tobacco into the hands of underage users,” he explains.
Some carrier’s say that is has become too taxing to comply with the strict laws regulating Internet tobacco sales. That’s why DHL has decided to stop delivering cigarettes to individual consumers that purchase from illegal Web sites.
“For us [online tobacco retail] is not a core commodity. It doesn’t represent a big revenue component of our business,” Jon Olin, general counsel for DHL explains. “In this case, compliance with state laws, tax laws and signature requirements for adults regarding the delivery of cigarettes was quite burdensome operationally.”
The announcement by DHL came with praise from Attorney General Spitzer and others.
“By taking proactive steps to prevent delivery of cigarettes to individuals nationwide, DHL has made clear that it does not want to be affiliated with the illegal cigarette traffickers,” Spitzer said in a statement. “We hope other shippers will follow DHL’s lead and refuse to do business with Internet and mail order cigarette retailers who routinely flout the law.”
The commitment by other carriers hasn’t come. Peggy Gardner of UPS says that her company is in meetings with Spitzer and that those meetings are open and cooperative.
“We do ship tobacco products, but with restrictions. Anyone that ships with us has to be a licensed dealer or distributor and if they are shipping cigarettes to individual consumers they can only do that through a contract,” Gardner explains. “We’re concerned whenever its alleged that a shipper uses our system for illicit purposes. We’re equally committed as anyone else to cooperate with authorities to make sure that our system is used as it’s designed.”
UPS says that they only ship products from legitimate Internet companies. Some say that the purpose of buying cigarettes online is to avoid high taxes, so no online tobacco Web site is legal.
“We’re in favor of carriers not delivering to individual consumers and we’ve long supported the action that’s been taken,” said Dana Bolden, a manager at Philip Morris USA. “We haven’t found any Internet seller out there that complies with all applicable laws—be it paying taxes or age verification.”
Stephen Helfer, host of CCTV’s The Smoking Section in Massachusetts and a smoker’s rights, advocate acknowledges that smokers are breaking the law by purchasing cigarettes online.
“All of this is being pumped up to get more taxes,” Helfer said. “The taxes on cigarettes are criminal to begin with and I think it’s good for people to avoid paying these taxes any way that they can. One way to avoid these taxes is to buy cigarettes over the internet or roll your own cigarettes.”
The reason Internet cigarette prices are much lower is because they almost never include the cigarette excise tax and sales tax charged by the state.
Some say that the inability to collect these taxes reduces state revenues by millions of dollars annually.
A report by Forrester Research Inc., a company that provides advice about technology's impact on business and consumers, says that states loss approximately $200 million in tobacco tax revenue in 2001 and as the number of Internet purchases increase so will the amount of money states stand to lose. By the end of 2005, the report estimates that states will be denied nearly $1.4 billion.
“Every pack of cigarettes that is sold to a consumer online…is avoiding a legal tax on those cigarettes placed on them by the state legislature. We’re trying to make sure that every purchase of a pack of cigarettes came with the appropriate taxes,” Violette said.
“We’re not looking to shut down a legitimate tobacco industry. We are taking steps to shut down an illegal industry that exist only because they have easy access to credit cards and shipping methods. If we remove those two supports, then hopefully we will disable the industry to the greatest extent possible.”
In March, Spitzer pressured credit card companies to help prevent the illegal sale of tobacco products online. Again, he was successful.
MasterCard now forbids anyone from using a MasterCard to pay for tobacco unless it is bought at a brick-and-mortar store.
“We put out the bulletin to remind our global membership that MasterCard does not tolerate illegal activities of any kind. Strict adherence to MasterCard's standards has become increasingly important as the use of the Internet for e-commerce has exploded,” said MasterCard senior vice president Joshua Peirez in a statement.
“Consumers purchasing cigarettes from an out-of-state merchant cannot avoid paying state-mandated tobacco taxes and other tariffs, and vendors need to be mindful of properly documenting and reporting such sales and shipments.”
Silk, an affiliate of FORCES International, a pro-choice consumer organization, says that the attack on smokers is ridiculous.
“If this is about the taxes that [the government] says is owed on these products then stop being lazy and go after the individuals. Just because it seems like an impossible task, you don’t go after the shippers,” she says.
But Violette says that because internet sites are so easy to create and dismantle this is the only way.
“Internet sites pop up very quickly, can be set up very quickly and moved very quickly. It’s like wack-a-mole. You wack one mole and two others come up,” he explains. “Rather than attacking the websites directly, we simply starve them of their ability to do business by taking away their ready access to credit card sales and deny them the ability to easily ship stuff through national recognized shippers. That’s a far more effective approach.”