Word on the street is that one or more of the major credit card issuers are scrutinizing transactions in which their cards are used for remote sales of cigars and other tobacco products.
In 2005, the major credit card companies entered into an agreement regarding remote sales of cigarettes with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives and state Attorneys General across the country. The initiative was designed to curb illegal Internet sales of cigarettes. The credit card companies have adopted a number of measures, including: (1) policies to prohibit the use of credit cards for the illegal sale of cigarettes over the Internet; and (2) agreeing to investigate and take action with respect to any Internet sellers identified by law enforcement as using their credit cards for illegal online cigarette sales.
The 2005 agreement applied only to online cigarette sales, and not necessarily to online sales of other tobacco products. Based on information obtained over the last several weeks, it now appears that the issuers are scrutinizing online sales of other tobacco products, including cigars and electronic cigarettes.
The Troutman Sanders Tobacco practice has advised many clients regarding the legal issues relating to remote sales of tobacco products, so please contact us if you are interested in more information about this issue.