For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: January 26, 2006

Wasden and Philip Morris USA Reach Agreement to Reduce Illegal Internet Cigarette Sales

(Boise) - 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 Philip Morris cigarettes on the Internet, Attorney General Lawrence Wasden announced today. The attorneys general of 37 states joined the agreement.

“It is nearly always illegal to sell or buy cigarettes over the Internet,” Attorney General Wasden said. “Philip Morris should be commended for taking a major step to cut off the supply of cigarettes for subsequent illegal Internet sales. I hope other tobacco companies will follow Philip Morris’ lead.”

Wasden said nearly all sales of cigarettes over the Internet are illegal because the sellers are violating one or more state and federal laws, including: (1) state age verification laws; (2) the federal Jenkins Act; (3) state laws 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 RICO law. Many of the sales by foreign websites also violate federal smuggling, cigarette labeling, money laundering, and contraband product laws.

Under the terms of the voluntary agreement, Philip Morris will:

  • Terminate cigarette shipments to any direct customers that the attorneys general have found to be illegally selling cigarettes over the Internet or through the mail;
  • Reduce the amount of cigarettes sold to direct customers found by the attorneys general to be engaged in the illegal re-sale of cigarettes to Internet vendors; and
  • Suspend from the company’s incentive programs any retailer found by the attorneys general to be engaging in illegal sales.

This agreement is the third major development in the states’ multi-pronged effort to restrict the payment, shipment, and supply operations of illegal Internet cigarette traffickers. In March 2005, major credit card companies 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.

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