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Attorneys General reach agreement with Lorillard to reduce illegal internet cigarette sales

(From the Attorney General's office)
Attorney General Paul G. Summers announced today Tennessee has joined 33 other states in an agreement with Lorillard Tobacco Co. to reduce illegal cigarette sales over the Internet and mail.

"We applaud Lorillard for taking this major step to stop the supply of cigarettes on the Internet, which often end up in the hands of minors," Attorney General Summers said. "We hope other cigarette makers will also come forward and take responsibility as corporate citizens to stop these illegal sales."

The protocols being adopted nationwide as a result of the agreement include:

• Termination of cigarette shipments to any Lorillard customers found to be engaging in illegal Internet and/or mail orders;
• Reduction in the amount of orders to customers that the Attorneys General determine to be engaged in illegal re-sales to Internet vendors; and
• Suspension from company incentive programs for any retailer found to be engaging in illegal sales.

Most Attorneys General believe that virtually all cigarette sales over the Internet or direct mail may violate state and/or federal laws because many sellers are not verifying the age of buyers, not reporting to state authorities as required by federal law, or not complying with other state and federal law. Many of the foreign website sales also violate federal smuggling, cigarette labeling, money laundering and contraband product laws.

"Lorillard always has supported compliance with laws dealing with the illegal sale of our products, and has instituted measures to punish those who are determined to be in violation of the law," said Ronald S. Milstein, Senior Vice President, Legal and External Affairs of Lorillard. "We are pleased to enter this voluntary accord with the attorneys general to provide a framework for further cooperation with law enforcement and add additional safeguards against the illegal sale of our products. We believe that these measures will assist our active efforts to combat counterfeit product sales and will help us and our customers to comply with the laws and regulations intended to stop sales to consumption of our products by youth."

Today's agreement is a major development in the multi-pronged efforts by state Attorneys General to restrict payment, shipment and supply operations of illegal Internet cigarette traffickers. In January 2006, the states reached a similar agreement with Philip Morris USA. In March 2005, Attorneys General announced the major credit card companies had agreed to stop processing credit card payments for the Internet retailers. Later in the year, UPS, FedEX and DHL agreed to stop shipping packages for vendors engaged in illegal sales.


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