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.
