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

Date: September 18, 2008

Wasden: First Regional Bank Agrees to Stop Servicing Unlawful Online Tobacco Retailers

(Boise) - First Regional Bank (First Regional), based in California, has agreed to stop providing electronic payment processing services to online tobacco retailers, which illegally sell cigarettes over the Internet, Attorney General Lawrence Wasden announced today.

“This is the first time a bank has agreed to take steps to address processing illegal online tobacco sales,” Attorney General Wasden said. “Stopping the flow of illegal and often cheap cigarettes is a significant advance for public health and will be a step in the right direction to stop the online sale of tobacco to young people.”

An investigation by Attorney General Wasden and the Attorneys General in New York and California determined that First Regional serviced online tobacco retailers used by consumers throughout the United States. The online tobacco retailers universally were selling their cigarettes to Idaho citizens in violation of various Idaho laws enacted to control and regulate such sales to children and the public. First Regional’s banking services facilitated and enabled these online tobacco retailers to process their illegal tobacco sales electronically.

First Regional’s agreement to take a variety of measures to address this important public health issue will benefit Idahoans.

Under the agreement, First Regional will:

  • Maintain and adhere to an express formal policy prohibiting the facilitation of online tobacco sales;
  • Train its employees about the tobacco policy requirements;
  • Publish its tobacco policy on its public website;
  • Obtain basic information about its customers, i.e., name (“doing business as” names, acronyms, abbreviations or telephone numbers cannot be used), geographical and physical location, sales history, principals, etc.;
  • Conduct a background check on potential customers;
  • Adopt procedures for termination of merchants who violate the tobacco policy; and
  • Terminate merchants violating the tobacco policy.

Online tobacco retailers operate illegally in a number of ways, including failing to file required monthly sales reports with the tax department of the states into which they are shipping cigarettes; selling cigarettes not certified and approved for sale pursuant to the Idaho Tobacco Master Settlement Agreement Complementary Act; and shipping over 10,000 cigarettes per month without reporting them to the state, as required by federal law. In Idaho it is against the law to possess more than one carton of unstamped cigarettes. Yet, online tobacco retailers often ship multiple cartons to consumers.

“This agreement furthers the successful efforts of Idaho and the other states that are part of the Tobacco Master Settlement Agreement, a public health agreement which, among other goals, aims to stop the flow of cheap cigarettes to young people,” Attorney General Wasden said. “Through the states’ efforts, leading credit card companies have already agreed to cease allowing their cards to be used to facilitate these unlawful sales, and several major shippers have refused to deliver cigarettes purchased online. Cutting down on electronic sales, such as those facilitated by First Regional, will make it more difficult for these retailers to continue selling.”

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