ASH URGES ATTORNEYS GENERAL TO GO AFTER ILLEGAL INTERNET SALES
ASH Executive Director, John Banzhaf III, sent a letter to all fifty state attorneys general asking them to take greater steps to curb Internet and mail order sales of tobacco products that circumvent state and federal law. See a copy of the letter below
As cigarette taxes have increased and enforcement has made it more difficult for minors to acquire them, a booming Internet tobacco business has been born, with thousands of sellers offering brand-name products at rock-bottom prices. Many of these vendors do nothing to verify the age of the purchaser and advertise “no sales tax,” in spite of the fact that all tobacco sales are liable for state sales taxes under the 1947 Jenkins Act.
In California and New York, all such sales are illegal, and other states are likely to follow.
In January, 32 AGs signed letters to credit card companies informing them of the problem and asking them to block certain sales. Several companies and the PayPal online payment processing service have begun to clamp down on illegal sales being funneled through them. Click here to view this letter *
*This document is in Adobe Portable Document Format (PDF). If you can not view this document, visit Adobe.com to download a FREE version of Adobe Reader.
***Letter from ASH***
Thursday, February 17, 2005
The Honorable State Attorney General
RE:Urging Action to Curb Illegal Internet Sales of Tobacco in Your State, Especially to Children, AND Consideration of Bringing a RICO Law Suit As Just Sustained in New York
We write to suggest that your office take stronger action to limit the illegal sale of cigarettes over the Internet: i.e., those made to minors without verification of age, and those made in violation of the Jenkins Act requiring that the sales be reported to state authorities to avoid non-payment of taxes on tobacco products.
In particular, we urge your office to consider filing a law suit on RICO and other grounds now that a federal court has upheld the basic legal theory. See: City of New York v. Cyco.Net Inc., reprinted at http://ash.org/cyco.html. As you may know, several earlier state law suits have resulted in favorable settlements.
We urge your office to take this action not only to protect the millions of dollars of revenue which might otherwise be lost but, more importantly, as a major step to protect the health of your state's citizens – especially by preventing children from illegally obtaining cigarettes online and at low cost. We note:
* Several attorneys general have met or are about to meet with credit card companies to urge them to review the legality of processing on-line cigarette purchases.
* MasterCard has reportedly begun blocking sales from certain Internet tobacco sites to customers in two states, and was reviewing the legality of credit card sales to customers in others.
* At least one AG has urged postal officials and private carriers to stop delivering cigarettes bought online.
* Officials from the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives are meeting with credit card companies to explain how such sales can be illegal.
* Law enforcement officials have begun seizing cigarettes shipped illegally.
It appears that, although the law requires them to do so, many if not most Internet cigarette sellers do not effectively verify the age of their customers, and also do not report shipments of cigarettes to tax administrators of the states to which they are shipped. As a direct result, cigarettes wind up – illegally – in the hands of minors. Also, the state's efforts to deter the purchase of cigarettes through higher taxes are frustrated if customers are able to purchase this product for themselves and friends at lower prices through the Internet.
PROFESSOR JOHN F. BANZHAF III
Executive Director and Chief Counsel
Action on Smoking and Health (ASH)
2013 H Street, NW
Washington , DC 20006, USA
(202) 659-4310 // http://ash.org
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(ASH)
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Dedicated to Mr. and Mrs. Warren Wells