Policy History

Numerous policies enacted over the past decade have sought to regulate online tobacco sales. Although these efforts have not yet been fully successful at enforcing tax laws or preventing online retailers from selling cigarettes to minors, they represent important steps forward.

Regulating Internet-based tobacco sales has proven tricky due to the industry’s worldwide reach; complexities related to regulation of interstate commerce, tribal sovereignty and overseas vendors; enforcement challenges; and the fact that case law is still being formed. Early efforts by states to intervene directly with vendors or to collect unpaid taxes from buyers have met with limited success. Broader national legislation and agreements have had a greater impact, but loopholes and a lack of enforcement are persistent challenges.

Q.U.I.T. Framework | Voluntary Agreements | PACT Act | FDA Authority

Selected key policy developments are described below. See All Legislation for other relevant policies.

 

Q.U.I.T. Framework

Q.U.I.T., which stands for Quarantine of Unhealthy Internet Trade, is a policy framework developed by ITV researchers to inform regulations of online cigarette sales. The framework has been applied in several federal laws and agreements.

Recognizing that it may be difficult to effectively intervene directly with online tobacco vendors, Q.U.I.T. offers strategies to block illegal activity at every step along the supply chain, from tobacco manufacturers to the point of delivery at the consumer’s doorstep. For example:

• Tobacco manufacturers could be prohibited from selling cigarettes to Internet-based tobacco vendors who disobey youth access and taxation laws.
• URLs of noncompliant vendors could be seized.
• Various methods of payment used to purchase tobacco online could be blocked.
• Restrictions could be placed on the shipment and delivery of tobacco products.
• Consumers could be educated about their requirement to pay taxes on cigarettes purchased from out-of-state Internet vendors.

Some of these strategies have been implemented in practice. For example, a series of voluntary agreements were implemented in 2005 to restrict shipping and credit card tobacco purchases, dramatically limiting payment and shipping options for sellers and buyers (see below for further discussion).

The general approach of disrupting the distribution process (and thus “quarantining” vendors) could be applied to other potentially harmful products sold over the Internet, such as firearms, illicit drugs, or child pornography.

For further discussion, see Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions.

 

Voluntary Agreements to Restrict Shipping and Credit Card Purchases of Tobacco (2005)

Two landmark voluntary agreements made represent the first serious national attempt to curtail the unlawful behavior of Internet-based tobacco vendors:

• On March 17, 2005, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and several state Attorneys General signed an agreement with the major credit card companies and PayPal to ban the processing of credit card payments for tobacco purchased online.
• On October 24, 2005, a similar agreement was reached with all major private shipping companies, including UPS and FedEx, to ban the delivery of cigarettes to consumers.

Following the bans, there was a 3.5-fold reduction in traffic to the most popular tobacco-selling websites. The bans did not, however, solve the problem. Many vendors began accepting alternative payment options, such as personal checks and money orders. Many also began using shipping options that were not included in the agreement—primarily the U.S. Postal Service—a loophole that was exposed in an ITV study and largely closed with the passage of the PACT Act in 2010 (see below).

For further discussion, see Effectiveness of State and Federal Government Agreements with Major Credit Card and Shipping Companies to Block Illegal Internet Cigarette Sales and

Internet Cigarette Vendor Compliance with Credit Card Payment and Shipping Bans.

 

PACT Act (2010)

On March 31, 2010, President Obama signed the Prevent All Cigarette Trafficking Act of 2009 (“PACT Act,” P.L. 111-154). With few exceptions, the law makes cigarettes nonmailable matter and requires all online cigarette vendors to verify the age and identity of customers and pay all applicable taxes. (Read law) (Legislative history)

Although the PACT Act is a valuable law that does much to limit the public health repercussions of the online tobacco industry, loopholes remain and effective enforcement of the law has proven challenging. For example, vendors may still ship tobacco through carriers not covered by PACT. In addition, some of the law’s provisions are being challenged in the courts, potentially diminishing its effectiveness. Although no formal study has evaluated PACT compliance and enforcement, some vendors have been documented brazenly flaunting their noncompliance.

For further discussion, see the ITV Research Team’s Response to Advance Notice of Proposed Rulemaking on Non-Face-to-Face Sale and Distribution of Tobacco Products and Advertising, Promotion, and Marketing of Tobacco Products.

 

Family Smoking Prevention and Tobacco Control Act (2009)

On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act was signed into law. Through it, Congress granted FDA the authority to regulate the manufacture, distribution, and marketing of tobacco products to protect public health (read an overview of the Act). This development represents a significant change in the policy landscape for the tobacco industry. For further discussion of FDA’s subsequent tobacco regulation efforts, see Policy News.