Deal halts cigarette sales on Internet

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Deal halts cigarette sales on Internet

Major credit card firms agree not to be part of transactions that avoid state taxes.

By Michael Gormley / Associated Press


ALBANY, N.Y. -- Major credit card companies will refuse to participate in Internet sales of cigarettes nationwide under a government agreement made Thursday.

The U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the companies and state attorneys general agreed to work together to prevent the long unchecked use of credit cards to buy cigarettes over the Internet across state lines. The agreement is effective immediately.

The result is that virtually all credit cards will no longer participate with Web sites based in the United States and abroad that sell cigarettes and tobacco products in every state, said New York Attorney General Eliot Spitzer. The card companies also agreed to take action against Internet sellers that authorities identify as violating state and federal laws regulating cigarette sales.

The effort is important because enforcement has been difficult, even though in many states, including New York, the Internet sale of tobacco products is illegal. The trade undercuts traditional business operators, often avoids sales tax for states and localities, and can be a way for underage consumers to buy cigarettes and chewing tobacco before they turn 18.

Last month, Michigan officials sent tax notices to 500 smokers who tried to avoid the $2-per-pack cigarette tax by buying their smokes on the Internet. Michigan hiked its state tax on cigarettes by 75 cents-a-pack in July 2004, raising taxes on a carton to $20, and has lost millions in tax revenue from online sales.

"By working with all the major card companies, we will severely restrict the availability of the Internet retailers to make these illegal sales," said Spitzer, one of the lead attorneys general in the partnership.

The negotiations were also led by California Attorney General Bill Lockyer and Oregon Attorney General Hardy Myers. Attorneys general from Colorado, Idaho, Louisiana, Maryland, Pennsylvania, Vermont and Wisconsin also participated.

Smokers can still buy cigarettes over the Internet, but they would have to use checks, money orders or some other payment system.


http://www.detnews.com/2005/business...C03-120892.htm