DOJ: News Release

Attorneys General, ATF Join With Credit Card Companies to Prevent Illegal Cigarette Sales Over the Internet

HELENA – Attorney General Mike McGrath on Thursday announced a joint public/private initiative to prevent the illegal sale of cigarettes over the Internet. Participants in the initiative include attorneys general from across the country, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and credit card companies.

“With the tobacco tax increase approved by Montana voters last November, it is even more important to step up our enforcement efforts,” McGrath said. “The cooperation of the nation’s credit card companies is vital to curbing illegal tobacco sales made over the Internet.”

While this national effort will help, McGrath noted that he was disappointed that the Montana legislature today tabled an important bill to revise the laws on tobacco enforcement. House Bill 687 would have given regulators the ability to fairly enforce Montana’s tax laws in today’s marketplace.

Virtually all sales of cigarettes over the Internet are illegal because the sellers are violating one or more state and federal laws, including:

  • state age verification laws
  • the federal Jenkins Act (which requires that cigarette sales be reported to state tax authorities)
  • state laws prohibiting the direct shipment of cigarettes to consumers
  • state and federal tax laws

McGrath said that, in addition to being illegal, Internet cigarette sales present a significant risk to public health, and especially our youth. Cigarettes sold on the Internet are attractive to children because there is inadequate age verification and they are much cheaper than cigarettes sold by brick-and-mortar retailers. This is because Internet sellers falsely advertise their cigarettes as tax-free.

“Putting lower priced cigarettes in kids’ hands is a proven recipe for addiction and smoking-related illnesses,” McGrath said.

All credit card companies have long-standing policies that prohibit the use of their credit card for illegal transactions. During the meeting held today, state and federal authorities outlined the many laws that are being violated, and the companies agreed to take a variety of steps to ensure that their services are not used to facilitate these illegal transactions.

At the meeting, credit card companies agreed to: (1) adopt policies to prohibit the use of credit cards for the illegal sale of cigarettes over the Internet; and (2) investigate and take action with respect to any Internet sellers identified by law enforcement as using their credit cards for illegal online cigarette sales.

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