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(WASHINGTON D.C.) – Attorney General Bill Lockyer today announced the launch of a public-private initiative by state and local law enforcement authorities and credit card firms to prevent the illegal sale of cigarettes over the Internet.
"This partnership is a major step toward stopping the unlawful sale of cigarettes over the Internet, and reducing our children's exposure to these deadly products," said Lockyer. "In California, we have moved aggressively to combat such sales, and my office has forced six online retailers to cease doing business in our state. But it's a growing problem, and it will take cooperation between government and the private sector to fight it effectively."
Participants in the initiative include Lockyer and attorneys general from across the country, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the major credit card companies. Lockyer's office, and the Attorney General offices of New York and Oregon, led the negotiations with the companies.
Details of the initiative were discussed today at a meeting in Washington D.C.. Among the participants were: the Colorado, Oregon, Pennsylvania and Vermont attorneys general; representatives from Lockyer's office, and the Attorney General offices of Idaho, Louisiana, Maryland, New York and Wisconsin; ATF officials; and representatives of the major credit card companies.
All the participants agreed to work together to prevent the processing of payments for illegal Internet cigarette sales. Almost all online purchases of cigarettes are paid for with a credit card.
"We are taking a multi-faceted, multi-jurisdictional approach to halting illegal Internet cigarette sales," said Vermont Attorney General William H. Sorrell, president of the National Association of Attorneys General (NAAG). "We believe this is the most effective and efficient strategy to enforce state and federal laws regulating online sales. We are very appreciative of the work by these companies."
Added Idaho Attorney General Lawrence Wasden, co-chair of NAAG's Tobacco Committee: "This partnership is an excellent example of how attorneys general and ATF can work together successfully with support from private businesses."
Added Michael Bouchard, ATF assistant director for field operations: "Today, public and private partnerships are the key to success for law enforcement. ATF investigations show that millions of dollars each year in illegal sales of cigarettes are diverted to fund terrorists and criminal organizations. ATF will aggressively continue to pursue violations of law. However, through today's initiative, we are addressing the problem of illegal sales across multiple jurisdictions with tremendous support from the country's largest credit card companies. We welcome the help."
Virtually all online sales of cigarettes are illegal because the sellers violate one or more state and federal laws, including statutes that: require sellers to verify the age of buyers, to prevent sales to minors; require sales to be reported to state tax authorities (federal Jenkins Act); and prohibit or regulate direct sales of cigarettes to consumers. Other laws that Internet sales violate include federal mail and wire fraud statutes, the federal Racketeer Influenced and Corrupt Organizations Act (RICO), state and federal tax laws, and federal smuggling, contraband, money laundering and cigarette labeling laws.
In addition to being illegal, Internet cigarette sales present a significant risk to public health. In particular, cigarettes sold on the Internet are much cheaper than cigarettes sold by brick-and-mortar retailers because the Internet sellers falsely advertise that their cigarettes are tax-free. Studies have demonstrated lower cigarette prices lead to increased smoking rates, which in turn lead to more smoking-related illnesses and deaths.
Attorneys general contend that 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, often simply requiring the purchaser to click a button stating that he or she is over 18 years old. Numerous studies have shown that the earlier an individual begins to smoke, the more likely it is that the person will become addicted to smoking, and thus age verification through photo IDs is essential to protect children from a lifetime of addiction and smoking-related illnesses.
All the major credit card companies have longstanding policies that prohibit the use of their cards for illegal transactions. However, during today's meeting, state and federal authorities detailed the many laws violated by online cigarette sales. The companies agreed to take a variety of steps to ensure their services are not used to facilitate these illegal transactions.
Among the many actions some of the credit card companies have adopted to stop illegal online sales are: adopting policies to prohibit the use of credit cards for the illegal sale of cigarettes over the Internet; and agreeing to investigate and take action against any Internet sellers identified by law enforcement as using their credit cards for illegal online cigarette sales.
Some experts estimate online cigarette sales will comprise 14 percent of total sales nationwide, or roughly $5 billion, by the end of 2005. The number of online retailers operating in the United States totals from 800 to 1,000, according to some reports.