March 2000


Mention the word "crackdown" in tobacco retailing and what comes to mind? Sting operations designed to catch careless retailers who sell tobacco to underage customers.

Now, fast forward to the age of Internet retailing. Substitute conscientious tobacco shops for the convenience stores, delis, newsstands, and gas stations that generally comprise the bulk of under-age sales offenses. Then, replace face-to-face transactions with the cut and dry reality of technology-driven, web-based retailing. Under the current rules of the game, the two don't mix well at all.

Age verification in "bricks-and-mortar" retailing, as the age-old, low-tech alternative is now called, has evolved into a highly regulated, if not terribly subjective, process. Under federal law, if a customer appears to be under the age of 27, retailers must verify that they are over 18.

But how many Internet retailers, much less shops that also handle mail order sales, require age verification prior to the completion of a sale?

Hardly any, which is why shops that have joined the Web-based band-wagon have felt falsely secure in assuming that the nearly exclusive use of credit cards for e-commerce transactions would be sufficient to simultaneously ensure an adult customer.

Back to the crackdown. In December, Attorneys General from 14 states joined together in a sting operation to smoke out the sources of underage sales of bidis, focusing on the Internet. Underage operatives were provided credit cards; their mission, to purchase bidis online. Snared in the operation were five stores from throughout the country - all RTDA members, and all fuming mad. This kind of thing would never happen in their stores, and the bitter feeling that they were being strung up as an example is hard to shake.

Saber rattling? Not to the five stores in question. Forced to sign settlements with at least one of the states (Oregon), any of the dealers caught selling tobacco products to minors again could be fined as much as $25,000 for each instance under the agreement - 50 times the state's maximum $500 penalty for selling tobacco products to minors.

The RTDA has recognized the rapidly evolving complexities of tobacco e-commerce, and its board members convened in January to address the issue. It's goal: to provide members working information in this uncharted territory. For example, can you name the two U.S. states that require customers to be 21 or older to purchase tobacco products, not 18 as in the other 48 states? Many issues remain unclear: the RTDA advises its members that cigarette sales across state boarders are illegal, while states require retailers engaged in such activity to supply lists of customers so that state excise taxes may be collected directly from the consumer.

While this sting focused on bidis, can anyone rest easy knowing the next test could be aimed squarely at online cigar merchants? Will you be in compliance if you are the next target?

E. Edward Hoyt III