UPS Agrees to End Cigarette Deliveries To Individuals
By MICHAEL GORMLEY, Associated Press Writer
Oct 24,2005
ALBANY, N.Y. - The world's largest shipping carrier, UPS Inc., will stop delivering cigarettes to individuals in the United States under an agreement announced Monday with state Attorney General Eliot Spitzer.
The agreement is the latest in federal and state efforts to combat the sale of under-taxed cigarette and to fight underage smoking. Most under-taxed or untaxed cigarettes are sold by Indian tribes, where the taxation of sales to non-Indians is disputed.
Monday's agreement leaves only the U.S. Postal Service among major carriers to continue to deliver cigarettes to individuals, Spitzer said. He called that practice "an embarrassment." Spitzer continues to negotiate with Federal Express, but they are thought to handle a small amount of the trade, said Spitzer spokesman Marc Violette.
Despite a new policy adopted by the Postal Service in September to refuse delivery of illegal products, the federal service allows employees to accept packages suspected of containing under-taxed cigarettes, Spitzer said.
"Internet cigarette traffickers are increasingly using the federal mail system to distribute their wares," Spitzer said. He said the Postal Service "clearly" has the authority to refuse to deliver cigarettes to individual smokers. "It is an embarrassment that major private companies have stopped carrying contraband cigarettes, but the federal government continues to accept them," said Spitzer, a Democrat running for governor. "Congress needs to step in and stop this practice immediately."
The Postal Service can't stop delivery even if it suspects a package clearly marked as coming from a retailer contains untaxed cigarettes, said Postal Service spokesman Gerry McKiernan.
"There could be souvenirs in the package. We don't know because we can't see inside the package," he said.
Instead, the Postal Service will watch for packages if advised by law enforcement agencies. They also will alert law enforcement agencies when the service is shipping those packages, he said.
"It's up to law enforcement agencies to enforce the law," McKiernan said.
He said private companies have contracts with firms that regularly use their services which identifies materials being shipped. The Postal Service doesn't.
"As far as I'm concerned, it's illegal," said Audrey Silk of New York City Citizens Lobbying Against Smoker Harassment and a Libertarian Party candidate for New York City mayor. "They are exploiting children ... when you employ `for the children' you can get the public to do anything."
Earlier this year, DHL banned cigarette deliveries to individuals nationwide and the nation's largest credit card companies stopped processing payments for cigarette sales.
Spitzer said Internet and mail-order cigarette retailers violate federal, state and local laws governing taxes and underage smoking. Sales to minors also violate federal wire fraud and mail fraud laws, he said.
The agreement with Spitzer matches a nationwide policy at UPS aimed at avoiding the difficulty of complying with a "patchwork" of different state laws enacted in 28 states since 2003, said Steve Holmes, spokesman for the global company based in Atlanta. He said he had no estimate of how much business would be lost.
"Regardless of that issue, we believe it's a prudent business decision and we want to do what's right, of course, by the laws, but we want to do right by our customers and we want to do right by our communities as well," he said.
Violations of the UPS policy would eventually result in suspension of service, according to the agreement.
States lose more than $1 billion a year in tax revenue from Internet tobacco sales, according to the U.S. Bureau of Alcohol, Tobacco and Firearms. Enforcement, however, has been difficult, even though in many states, including New York, the Internet sale of tobacco products is illegal.
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On the Net:
Attorney General's Office: http://www.oag.state.ny.us/
Bureau of Alcohol, Tobacco, Firearms and Explosives: http://www.atf.gov/
http://www.ups.com/
Spitzer has the UPS working for him as his own policing force.
Violates the free commerce laws?
http://www.oag.state.ny.us/press/2005/oct/9tiupsaodfinal.oct.pdf
The Smokes Are in the Mail
The City
October 30, 2005
The Internet advertisements are galling to New York's attorney general, Eliot Spitzer. They offer tax-free cigarettes, mailed to your home, saving you loads of taxes. Worse, this contraband tobacco can arrive in your mailbox whether you are 60 years old or 6.
So Mr. Spitzer and other attorneys general have been working to stop this illegal traffic in their home states. They found that it was difficult to stop the tax-free cigarettes at their source - Indian reservations, in some cases, which sold to non-Indians, as well as Internet sites.
So they adopted other tactics. First, they persuaded most major credit card companies to refuse to process online payments for cigarette sales to individuals. Then they persuaded mailing and shipping companies to stop sending tobacco to individual customers.
DHL Worldwide Express agreed to stop shipping to consumers this summer. Now, United Parcel Service, the world's largest shipping company, has promised to stop cigarette shipments to individuals next month. FedEx, the second-largest United States package company, has said that it ships tobacco only to companies or dealers, not individuals. This leaves one major avenue for sellers - the United States Postal Service.
For more than a year, Mr. Spitzer and his colleagues have been trying to close this remaining channel. The Postal Service, however, argues that the law requires it to provide one type of mail that is "sealed against inspection." That type is first class, which includes the priority service preferred by many of these tobacco operations.
Post office lawyers argue further that there is only one sure-fire way to find out whether these rectangular packages coming from Internet tobacco warehouses are cartons of cigarettes - a search warrant, one for each package.
The post office has agreed to make a few changes. Its personnel cannot solicit business from these cigarette operations. And clerks are being asked to advise the post office inspection division when they suspect that tax-free smokes are slipping into the mailrooms.
Under the law, however, clerks cannot refuse to ship priority or first-class mail. Congress could help matters by putting tax-free cigarettes on the list of nonmailable items, like liquor, guns and explosives. That would raise the risk level by making cigarette shipments a violation of federal law, punishable by fines and prison sentences.
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SPITZER'S SMOKE-OUT
November 2, 2005
THE ISSUE: The attorney general's role in UPS' recent decision to stop delivering cigarettes.
The Post's recent editorial about Internet cigarettes was badly misinformed ("Spitzer's Cig Showdown," PostOpinion, Oct. 30).
First, you claim that Attorney General Eliot Spitzer "bullied" UPS into agreeing to stop shipping cigarettes to consumers, even though UPS "has violated no law." To the contrary, the Public Health Law explicitly prohibits common carriers like UPS from delivering cigarettes to individuals.
Second, you assert that "whether Indian vendors who sell to non-Indians have to collect taxes is in dispute." To the contrary, the U.S. Supreme Court has explicitly upheld the rights of states to tax these cigarettes.
Third, you say that cutting off Internet sales will push cigarette sales into the "black market." To the contrary, Internet sales are the black market.
While it is true that cigarette smuggling remains a problem, many more cigarettes are sold illegally over the Internet.
Internet sales evade lawful taxes, divert sales from legitimate retailers, provide an easy way for children to buy cigarettes, increase health-care costs and help cigarette traffickers generate huge profits for their other criminal activities.
Numerous federal and state laws prohibit these sales, just as they prohibit the sales of cocaine and child pornography on the Internet.
The attorney general is doing his job by enforcing these laws, and The Post should be supporting, not opposing, our efforts to stop this criminal behavior.
Darren Dopp
Assistant to the Attorney General
Albany
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