National Academies Press: OpenBook

Ending the Tobacco Problem: A Blueprint for the Nation (2007)

Chapter: Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions

« Previous: Appendix L: Controlling the Retail Sales Environment: Access, Advertising, and Promotional Activities
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

M
Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions

Kurt M. Ribisl

University of North Carolina - Chapel Hill

School of Public Health


Annice E. Kim

University of North Carolina - Chapel Hill

School of Public Health


Rebecca S. Williams1

University of North Carolina - Chapel Hill

School of Public Health

INTRODUCTION

An editorial in Tobacco Control by Connolly (2001) expressed concern about the tobacco industry embracing a relatively unregulated Internet because “many of the public health interventions that we have developed to curb real world lung cancer could go up in a puff of cyber smoke (Connolly 2001). Taxes, ad bans, and youth access laws are easily eroded online.” There is great potential for the sales and marketing of tobacco products on the Internet to undermine the progress that has been made in tobacco control. Experts at the Centers for Disease Control and Prevention (CDC) selected the “recognition of tobacco use as a health hazard and subsequent public health antismoking campaigns” as one of the 10 greatest public health achievements of the twentieth century (CDC 1999). Recent evidence-based reviews (Task Force on Community Preventive Services 2005) and reports by the U.S. Surgeon General (DHHS 2001) have concluded that tobacco control policies and programs account for much of this progress. One of the most potent strategies for reducing tobacco use involves increasing tobacco prices, which is typically accomplished through increasing state and federal excise taxes on tobacco products. When tax-free cigarettes are sold on the Internet, this reduces their price and can undermine the public health benefits of increased cigarette prices. Restricting tobacco product advertising and marketing has

1

Acknowledgments: Support for this research and the preparation of this appendix was provided by a grant from the Robert Wood Johnson Foundation to the School of Public Health at the University of North Carolina at Chapel Hill (“Examining the Sales Practices of Internet Cigarette Vendors: Implications for Policy Development, Implementation, and Enforcement”—Kurt M. Ribisl, principal investigator). Additional support in the form of dissertation research awards were provided to Annice Kim and Rebecca Williams by the Association of Schools of Public Health (ASPH) with funding by the American Legacy Foundation (Legacy) as part of their Scholarship, Training, and Education Program for Tobacco Use Prevention (“STEP UP”). This appendix does not necessarily represent the views of ASPH, Legacy, Legacy Foundation staff, Legacy’s Board of Directors, the Robert Wood Johnson Foundation, or its Board of Directors.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

also reduced consumption, with complete advertising bans having the greatest impact. Since 1971, advertising for tobacco products has been banned on all broadcast media in the United States. Under the 1998 Master Settlement Agreement, Joe Camel and other cartoon characters were banned from appearing in cigarette advertisements, sponsorships were restricted, and cigarette advertisements were banned on billboards and buses. Outside of the United States, many countries have implemented complete bans on all forms of tobacco advertising. The landmark Framework Convention on Tobacco Control, a worldwide public health treaty sponsored by the World Health Organization in 2003 (Shibuya et al. 2003; Taylor and Bettcher 2000), urges all ratifying countries to ban all tobacco advertising (if their constitution permits it), including cigarette advertising on the Internet. The impact of advertising bans and restrictions at home and abroad will be diluted if the tobacco industry aggressively markets its products online and if bans, such as those included in the Framework Convention, are not adequately implemented and enforced.

This appendix addresses two fundamental questions: (1) What are the major threats to tobacco control posed by the sales and marketing of cigarettes on the Internet and (2) what current policies and practices and promising new ones can counteract these threats? The first section provides background on the scope and magnitude of Internet cigarette sales. The next section examines the three major threats to tobacco control efforts: online sales of cheap “tax-free” cigarettes, online marketing and promotional efforts by Internet cigarette vendors and tobacco companies, and online cigarette sales to minors. In the final section we review policies designed to regulate these practices and conclude with a proposed framework for regulating Internet cigarette sales.

BACKGROUND ON INTERNET CIGARETTE SALES

Trends in the Number of Internet Cigarette Vendors

Over the past 6 years, there has been a substantial increase in the number of Internet cigarette vendors. Although there is no national licensing system for Internet vendors that would precisely enumerate the number, researchers have relied on comprehensive web searching strategies to estimate the number of Internet vendors. Ribisl and colleagues (2001) used a standardized searching protocol whereby data collectors manually entered several search strings (e.g., discount cigarettes, tax-free cigarettes) into multiple search engines (Ribisl et al. 2001). This approach identified 88 unique domestic Internet cigarette vendors in January 2000. Unpublished follow-up studies using a similar protocol identified 195 domestic vendors in January 2002 and 338 domestic and international vendors in January 2003. Of the 338 sites found in 2003, 266 (78.7 percent) were domestic, 34 (10.1 percent) were outside the United States, and the location could not be determined for 38 (11.2 percent). In January 2004, 775 Internet cigarette vendors were identified, of which 323 (41.7 percent) were domestic, 347 (44.8 percent) were outside the United States, and the location could not be determined for 105 (13.5 percent). In January 2005, 664 Internet cigarette vendors were identified. Of those vendors, 306 (46.1 percent) were domestic, 300 (45.2 percent) were outside of the United States, and the location could not be determined for 58 (8.7 percent). Although a small number of international vendors were identified in January 2000 and 2002, they were excluded from the sample because the original study focused on domestic vendors and policies that were unique to the United States (e.g., presence of a U.S. Surgeon General’s warning on the site). However, in 2003 and subsequent years, the eligibility criteria were

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

expanded to include international vendors after a pilot study revealed that their numbers were growing.

The growth in the number of Internet cigarette vendors from 2000 to 2005 could be a true increase or it could simply reflect improvements in the sampling protocol. At each wave of data collection, several sources of information (such as shopping portals and search directories) were used in addition to keyword searching to identify new vendor websites. Starting in 2004, however, keyword searching was replaced with new automated searching strategies developed by Cyveillance, a private sector online risk monitoring and management firm. They entailed deploying specially developed algorithms and intelligent web spiders that reviewed more than 40 million websites, as well as postings to nearly 100,000 message boards and newsgroups and 1 million spam email messages to identify websites that were likely to be Internet cigarette vendors, which were then reviewed by trained research assistants for inclusion in the study.

A small change was also made to the protocol for removing “duplicate” sites. In the first three waves from 2000 to 2003, when two sites appeared to be nearly identical based on visual inspection of the site and the contact information, only one site was coded. However, starting in 2004, each site with a domain name (i.e., website address) was counted as an individual website because they are listed separately on search engines and are rated separately by organizations that collect data on visitor traffic to the site. This minor change in protocol would have a small effect on increasing the number of sites compared to prior waves of data collection. The extent to which the growth in the number of Internet cigarette vendors represents a true increase versus better detection or the revised protocol is currently being explored in an ancillary study. However, it is likely that the increase in the number of vendors identified represents both true growth and better detection methods. It is important to realize that the number of websites identified by these rigorous search strategies is still a lower-bound estimate of the true number of Internet cigarette vendors. First, these studies have only examined sites written in English, and there would be more Internet cigarette vendors if foreign language sites were included. Second, the World Wide Web contains billions of web pages and even the most comprehensive search strategy will miss some sites. Given the dynamic changing nature of the Internet, the searching protocol was modified and improved at each wave with the goal of identifying the highest number of Internet cigarette vendors at each given period.

Location of Internet Cigarette Vendors

Many Internet cigarette vendors are located on tribal lands and countries outside the United States, which presents regulatory and enforcement challenges. In January 2005, among domestic vendors, 63.4 percent appeared to have a Native American affiliation. Sites were coded as having a Native American affiliation if they explicitly mentioned being located on sovereign land or an Indian reservation, or if they featured Native American wording or imagery, such as descriptions of tax-related treaties or pictures of an Indian chief or Native American artwork. In January 2005, the Seneca Indians located on two reservations near Buffalo, New York comprised 77.7 percent of Native American sites. In fact, 98.1 percent of sites in the State of New York were Native American, which explains why New York State has consistently led the nation in the number of websites selling cigarettes. Background information on the Seneca and their retail, mail order, and Internet tobacco operations is provided elsewhere (Ribisl et al. 2001; Tedeschi 2005). Figure M-1 shows the growth and location of Internet cigarette vendors from 2000 to 2004.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

Outside of New York, the next greatest concentration of Internet cigarette vendors occurs in southern tobacco-producing states, such as Kentucky, North Carolina, and Virginia. Historically, these states have had low cigarette excise taxes. As of March 18, 2005, the mean excise tax in tobacco-producing states was 19.8 cents per pack compared to 93.1 cents per pack for other states (McMahon 2005). Why would proximity to low cigarette excise taxes be important to Internet cigarette vendors? A newspaper article described how one unemployed North Carolina resident set up www.CutRateSmokes.com and operated his small online business out of his home. The owner mentioned selling a carton of Marlboro cigarettes for $26.50 a carton (plus a flat fee of $6.00 for shipping), which was a bargain for smokers paying approximately $70.00 a carton in New York City. Although his source of cigarettes was not identified in the article, presumably he was purchasing them from a North Carolina warehouse club for approximately $19.99, which would still allow him to resell them online for a small profit. This example illustrates how web vendors located in low-tax states can profitably sell cigarettes to smokers residing in high-tax states. Although the cigarette excise taxes are paid for in the “source” state, they are not being collected and remitted to the revenue department in the “destination” state. Similar to tax-free cigarette sales from Indian reservations, they also constitute a source of tax avoidance because it is very rare for recipients of the cigarettes to pay the back taxes that are owed in their own state.

Another trend is the emergence and growth of Internet cigarette vendors located outside the United States. This may reflect a growth in international vendors or, alternatively, a trend of U.S. Internet cigarette vendors relocating their businesses offshore in order to escape U.S. regulations. Determining the true location of Internet cigarette vendors has become increasingly difficult. Over time, the number of vendors not listing a location for their operations has been increasing. Nevertheless, many vendors make claims that they are selling from “outside of the United States,” “Europe,” or “a duty-free zone.” Table M-1 describes the claimed location of 664 Internet vendors identified in January 2005. The United States led all other countries in the number of English language websites selling cigarettes, followed by Switzerland (22.9 percent), the United Kingdom (1.2 percent), Spain (1.1 percent), and Indonesia (1.1 percent). There were also 34 “international” sites (5.1 percent) and 55 “European” sites (8.3 percent); these regional locations were inferred based on information provided on the site. Neither country nor regional location could be determined for 58 (8.7 percent) sites. Among the 606 sites with country-specific or regional location information, 306 (50.5 percent) were based in the United States and 300 (49.5 percent) were based outside of the United States.

Manufacturers Selling Directly to Consumers

Cigarette manufacturers have traditionally sold their cigarettes to wholesalers or distributors who then sell to the retailers. The retailer then sells the cigarettes to the smoker. Recently, there have been changes in the distribution channel whereby some small manufacturers are now selling their brands directly to consumers via the Internet. Also, some large manufacturers are selling selected brands online. For example, the upscale manufacturer of premium cigarettes, Nat Sherman, sells its own brand on its website (www.natsherman.com). Philip Morris, the market leader in the United States, does not sell its cigarette brands online, but R.J. Reynolds sells its supposedly reduced-exposure product, Eclipse (www.eclipse.rjrt.com), and provides coupons and other special offers for its generic brand Doral (www.smokerswelcome.com) online. The promotional aspects of the Smokers Welcome site and others like it are described in the marketing and promotion section of this chapter. In 2000, the Brown & Williamson Tobacco Company announced that it was going to sell its less popular cigarette brands directly to consumers via

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

mail order, telephone, and eventually, the Internet. The company established a subsidiary, BWT Direct LLC, because it claimed that scarce shelf space at U.S. retailers forced retailers to stock only the most popular cigarette brands (Fairclough 2000). The company appears to have discontinued its direct sales of cigarettes to consumers. In general, relatively little is known about the market share of direct sales of cigarettes from manufacturers and the implications of this new delivery channel for tobacco control efforts.

Estimated Sales of Cigarettes Online

Two approaches have been put forth to estimate the extent of Internet cigarette sales: (1) industry report projections and (2) assessing smokers’ Internet cigarette purchasing behavior over time. Several industry reports have attempted to estimate the market size and share of Internet cigarette sales. In 2001, the private firm Forrester Research estimated that by the end of 2005, online tobacco sales would exceed $5 billion and comprise 14 percent of all U.S. tobacco sales (Rubin et al. 2001). A 2002 report by Prudential Securities (Campagnino 2002) projected that Internet cigarette sales would account for 5.9 percent of industry volume in 2005, but these figures should be interpreted with caution because most are outdated and based on proprietary assumptions and methodologies that were not adequately described or peer-reviewed. The U.S. Department of Commerce conducts a Census of Retail Trade that estimates annual revenue and the number of establishments selling various product categories, including tobacco products. In the nonstore retailer category, “electronic shopping and mail order” houses were estimated in 1997 to have sold $127,801,000 in “cigars, cigarettes, tobacco, and smokers’ accessories (excluding sales from vending machines operated by others)” (U.S. Department of Commerce 2001). This is a small fraction of the total $36.8 billion sales for the category. Aside from being outdated, another shortcoming in the methodology of this economic census is that it covers only the subset of establishments with a payroll, which tend to be the larger establishments. An upcoming Census of Retail Trade might provide a more useful estimate of the magnitude of Internet and mail order tobacco sales. Both of the private industry projections seem to be overestimates given recent studies described below that have examined sources of cigarettes for smokers, which have generally concluded that a relatively small proportion of smokers purchase their cigarettes via the Internet.

A study of 5,215 adult smokers from the 1999 California Tobacco Survey found that 70 percent of respondents regularly purchased cigarettes from traditional retail markets, such as convenience stores and gas stations, compared to only 5.1 percent who purchased from lower ornon-taxed sources such as out-of-state outlets, military bases, or the Internet (Emery et al. 2002). Only 0.3 percent of smokers in California regularly purchased their cigarettes from the Internet in 1999. A subsequent survey in 2002 found a small increase whereby 1.1 percent of California smokers reported purchasing cigarettes on the Internet. A study of 3,602 smokers who were originally in the Community Intervention Trial for Smoking Cessation (COMMIT) study were asked in 2001 about their cigarette purchasing patterns, including purchasing cigarettes on the Internet (Hyland et al. 2005). Overall, 59 percent of smokers reported engaging in a high price avoidance strategy, such as purchasing at a reservation or switching to discount cigarettes. The rate of regularly purchasing cigarettes from the Internet was 2.0 percent overall, with a range of 0 percent in Greensboro, North Carolina, where the state excise tax was 5 cents per pack to 9 percent in Yonkers, New York, where the state excise tax was $1.11 at the time. The rate of purchasing online was higher in communities with higher state excise taxes, unless the community was in close proximity (<40 miles) to an Indian reservation.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

Most recently, the 2003 International Tobacco Control (ITC) Four Country Survey of 6,682 smokers in the United States, the United Kingdom, Canada, and Australia found that 6.1 percent of U.S. smokers, 19.7 percent of UK smokers, 3.7 percent of Canadian smokers, and 1.1 percent of Australian smokers reported a low or untaxed source for their last cigarette purchase. American smokers reported buying cigarettes online more than the other three countries in the survey, with 1.3 percent of American smokers reporting the Internet as the source for their last cigarette purchase. Canada, the United Kingdom, and Australia had very low percentages of smokers reporting buying their cigarettes online, with 0 percent, 0.1 percent, and 0.1 percent respectively. In each country, except Canada, these estimates represented an increase over the percentage of smokers purchasing their cigarettes online during a wave of data collected 7 months earlier, when 0.6 percent of U.S. and 0.0 percent of UK and Australian smokers reported the Internet as the source of their most recent cigarette purchase (Hyland et al. 2006).

Studies have also been conducted in states with high state excise taxes. A telephone survey of 3,447 current adult smokers in New Jersey found that 0.8 percent usually purchased their cigarettes on the Internet in 2000, which rose to 3.1 percent in 2002 after the state increased its cigarette excise tax (Hrywna et al. 2004). In New Jersey, the rate of ever purchasing cigarettes on the Internet rose from 1.1 percent in 2000 to 6.7 percent in 2002. Smokers who bought cigarettes online were more likely to be white, to be older, and to report fewer quit attempts in the past year. Similarly, after New York City levied an additional excise tax of $1.50 on top of the state excise tax of $1.50 per pack of cigarettes, there was a tenfold increase in tax receipts and an 89 percent increase in cigarettes purchased outside of the city, 18.1 percent of which were purchased over the Internet (Frieden et al. 2005). A recent economic study examined patterns over time for state cigarette excise taxes, tax-paid cigarette sales, and cigarette consumption (Stehr 2005). The analysis suggested that the decline in tax-paid sales (i.e., elasticity of tax-paid sales) in response to tax increases is significantly greater than the decline observed in consumption (i.e., elasticity of consumption) measured by population surveys. In other words, when cigarette prices increase because of a tax hike, the percentage decline in tax-paid sales is greater than the decline in actual smoking rates. The fact that both do not decline equally suggests that some smokers are simply avoiding the taxes. The author estimated that from 1985 to 2001, 9.6 percent of cigarettes were purchased without payment of state taxes. Similar findings were observed in another econometric study that found that the rise of the Internet, and the associated ability of consumers to purchase tax-free cigarettes, has altered the elasticity of tax-paid cigarette sales and suggests that states now have a reduced ability to raise revenue by increasing cigarette taxes (Goolsbee and Slemrod 2004).

In summary, the number of Internet cigarette vendors appears to have increased substantially over the past half-decade, with a growing proportion of sites coming from outside the United States. Longitudinal studies in selected states and countries suggest that the proportion of adults purchasing online may be rising, especially in states with higher excise taxes. However, few smokers appear to be purchasing cigarettes online if they have ready access to cheaper cigarettes from nearby Indian reservations or if they reside in a state with a low excise tax. The issue of tax avoidance is described in greater detail in the following section.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

THREATS

Threat 1:
The Internet as a Source of Cheap Cigarettes from Tax Avoidance

The public health benefits of raising cigarette prices to reduce consumption are undermined by sales of low-tax or tax-free cigarettes online. Up to 78 percent of Internet cigarette vendors advertise selling cigarettes tax-free (GAO 2002a), which is attractive to price-sensitive smokers residing in states with high excise taxes. Internet vendors can sell cigarettes more cheaply than brick-and-mortar retail outlets because they are generally selling low-tax or untaxed products from tobacco-producing states, foreign countries, or American Indian reservations. Their customers are generally smokers residing in high-tax areas. Figure M-2 is a scatterplot based on one Internet vendor’s shipping records that shows the relationship between a state’s cigarette excise tax rate and the number of shipments to that state per 100,000 smokers (based on state-level rates of current smoking for adults). There are very few shipments to states where the excise taxes are fairly low, and the highest rate of shipment occur in the six states with the highest excise taxes. The shipment rate was only moderately related to other possible predictors, such as state-level rates of Internet access (Frieden et al. 2005).

The availability of low-cost cigarettes online may have a negative impact on public health because price-sensitive smokers who might have considered quitting or reducing their consumption after a tax hike can continue to smoke by purchasing cheaper cigarettes online. In the COMMIT study, 59 percnet of smokers reported trying to avoid high cigarette prices when taxes increased (Hyland et al. 2005). Hyland and colleagues (2005) found that when cigarette prices increased, price-sensitive smokers who are not motivated to quit most commonly seek out lower-priced or tax-free cigarettes, rather than switch to generic brands or use coupons, especially when lower-priced tax-free sources are readily available. Given that the Internet is accessible to approximately 66 percent of the U.S. population (Pew Internet and American Life Project 2005), price-sensitive smokers may seek out cheaper cigarettes online when cigarette taxes increase. A small-scale study of New York and New Jersey smokers found that smokers who purchased cigarettes online were motivated primarily by lower prices (Kim et al. 2006). Additionally, smokers who purchased cheaper cigarettes from the Internet and other lower-taxed sources significantly increased their consumption over time, compared to smokers who reported paying full-price at traditional brick-and-mortar retail stores. This result is consistent with findings from a prior longitudinal study of New York smokers that 68.4 percent of smokers who paid full price at retail outlets attempted to quit, compared to only 44.4 percent of smokers who paid lower-tax prices from American Indian reservations (Hyland et al. 2005). Among those who paid full price, 20 percent successfully quit smoking at follow-up, compared to only 10.2 percent who purchased cigarettes from Indian reservations. These studies suggest that easy access to low-tax cigarettes online may influence price-sensitive smokers to continue smoking when retail prices increase, thereby undermining the public health benefits of increased cigarette excise taxes.

Despite concerns that Internet cigarette sales may undermine the efforts of raising cigarette taxes, recent data suggest that increasing taxes still confers tax revenue benefits on states. In 2002, New York City raised its city’s cigarette excise tax from $0.08 to $1.50, which occurred in addition to the New York State excise tax of $1.50. After the New York City tax increase, tax receipts increased tenfold even though the proportion of cigarettes reportedly purchased by smokers outside of New York City increased 89 percent (Frieden et al. 2005). Of cigarettes purchased elsewhere, 29.0 percent were bought in New York State outside of New York City, 21.7 percent were bought in a different state, 18.1 percent were bought over the Internet, 12.4 percent

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

were bought from another person, and 7.8 percent were bought from an American Indian reservation.

Tax evasion from online sales also deprives governments and tobacco control or public health programs of much needed revenue. Forrester Research estimated that states would lose more than $1.4 billion in 2005 due to the sale of untaxed cigarettes on the Internet (Rubin et al. 2001). It is likely that the actual amount of lost revenue to states is lower, but still quite significant. When Congress held the first ever hearings about problems posed by Internet tobacco sales,2 economist Patrick Fleenor presented estimates of state and local revenue losses under three scenarios. The first scenario assumed Internet retailers would capture a 2 percent market share in 2003, and this yielded $552.4 million in lost state and local government revenue. The second scenario assumed Internet retailers would capture a 6 percent market share in 2005, and this yielded $1.7 billion in lost state and local government revenue. The final scenario assumed a 14 percent market share in 2005, which yielded nearly $4 billion in lost revenue. As mentioned earlier, there are no firm national estimates of Internet tobacco sales, so the exact revenue losses cannot be calculated at this time, but it is likely that the 2005 market share was considerably lower than the 14 percent estimate and probably lower than the 6 percent estimate. Given that the 2003 International Tobacco Control Four Country Survey showed that 1.3 percent of adult smokers made their last cigarette purchase online (Hyland et al. 2006), the 2 percent market share estimate is probably the most accurate estimate, yielding more than half a billion dollars in lost revenue to state and local governments.

Although there are no federal laws that require Internet vendors to collect and remit cigarette taxes to taxation authorities, under state law consumers who purchase cigarettes on the Internet are liable for their own state’s cigarette excise tax and, in some instances, for sales and/or use taxes (GAO 2002b). One of the ways to prevent lost revenue from cigarette excise taxes is by having policies that require vendors to register with states and share their customer lists. The Jenkins Act (Title 15, Chapter 10A, Sections 375–378) is a federal law from 1949 that regulates interstate commerce of cigarettes and has the potential to reduce tax evasion on the Internet (Banthin 2004; GAO 2002b). The Jenkins Act requires that tobacco vendors selling out-of-state must “first file with the tobacco tax administrator of the state into which such shipment is made.” The vendors must also report all cigarette sales to state taxation authorities by the tenth day of each calendar month. These reports must include “the name and address of the person to whom the shipment was made, the brand, and the quantity thereof.” Thus, if a smoker from New York City purchases three cartons from an Internet vendor in Virginia, the Virginia Internet vendor is obligated to report to the New York tobacco tax administrator the name and address of the buyer and the brand and quantity of cigarettes purchased. The penalties for violation are a misdemeanor with a fine of not more than $1,000 or imprisonment of 6 months, or both.

An investigation conducted by the U.S. General Accounting Office (GAO) concluded that most websites openly stated that they violate the Jenkins Act and that there have been no successful prosecutions of noncompliant Internet cigarette vendors (GAO 2002b). The GAO concluded that the Jenkins Act is violated, in part, because it is a misdemeanor and not a felony. In addition, there has been little enforcement because the U.S. Federal Bureau of Investigation has jurisdiction, and this has been a low priority for them because of their new challenges and priori-

2

HR 1839 (May 1, 2003): Youth Smoking Prevention and State Revenue Enforcement Act: Hearing before the Subcommittee onCourts, the Internet, and Intellectual Property of the Committee on the Judiciary, House of Representatives, 108th Congress. Serial No.19. Washington DC.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

ties related to the threat of terrorism. The GAO recommended that the penalties for noncompliance be elevated to a felony and jurisdiction be given to the Bureau of Alcohol, Tobacco, Firearms and Explosives. Finally, although many tribal websites claim that they are not subject to the Jenkins Act provisions because they reside on sovereign lands, the GAO concluded that they are obligated to comply and the U.S. Supreme Court has ruled that the federal government can regulate interstate commerce including tribal commerce that occurs across state lines.

The GAO report was based on the advertised sales practices of websites. Our research team conducted a purchase survey to assess the actual rate of compliance with the Jenkins Act, which we believed would be very low based on reviewing website content and anecdotal reports in the media. The study is currently being prepared for publication. One buyer in California purchased cigarettes from 101 Internet vendors, all of which should have filed a Jenkins Act report for California. Research staff then asked the state’s taxation authority, the California Bureau of Equalization, what proportion of the 101 vendors filed reports. None of the 101 vendors filed a Jenkins Act report.

Several states have identified individuals who have purchased cigarettes online because a small number of Internet vendors have filed Jenkins Act reports in the past and because some Internet vendors have turned over their customer lists to taxation authorities as a condition of legal settlements. In addition, the Massachusetts Revenue Department has identified Massachusetts residents who received deliveries of cigarettes from out-of-state Internet vendors by requiring shippers, such as United Parcel Service (UPS), to hand over their records (Mohl 2003; 2004). The GAO report (GAO 2002b) profiled the efforts of six states to promote Jenkins Act compliance by notifying Internet vendors of their duty to comply with the act. Relatively few Internet vendors complied. For instance, only 13 of 262 Internet vendors in Massachusetts responded to the notification with reports of their customers. However, in cases where the states received customer names and addresses, state revenue authorities then notified individual smokers to collect back taxes. In California, approximately 23,500 were identified from 20 Internet vendors. Approximately 13,500 of the 23,500 notified responded and the state recovered approximately $1.4 million in back taxes, penalties, and interest. More recent news reports (Copeland 2005) have described how other cities and states, such as New York City, Pennsylvania, and Ohio, have sent thousands of letters to smokers who purchased their cigarettes on the Internet.

In summary, the Internet offers cheap so-called tax-free cigarettes for smokers concerned about high retail cigarette prices in their area. The availability of low-cost cigarettes from low-taxed sources, including the Internet, appears to be related to decreased quit attempts, thereby undermining the public health benefit of higher cigarette prices. Of the three threats to tobacco control posed by the Internet, tax avoidance is probably the most significant. Concern over revenue losses caused by Internet cigarette sales, however, should not deter states from increasing cigarette excise taxes. Despite some losses due to Internet sales and other tax evasion activities, states still experience a net increase in their tax revenue when increasing their cigarette taxes (Farrelly et al. 2003). An important topic for future study, according to Farrelly and colleagues (2003), is to better understand the effectiveness and the cost-effectiveness of controlling tax evasion and Internet sales.

Threat 2:
Marketing and Promotional Efforts

The Internet provides unprecedented opportunities to market and promote tobacco products in a largely unregulated medium. A Surgeon General’s report on smoking noted that “the future of tobacco advertising and promotion may lie in cyberspace” because “the Internet offers endless

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

possibilities for promoting tobacco use and marketing tobacco products” (DHHS 2001, p.16). These advertising and promotional messages are available 24 hours a day, 7 days a week to smokers who are online. The Internet has the potential to be a more potent medium than static print advertising in magazines because of its ability to individually tailor marketing strategies and to engage in these activities relatively unnoticed in the vast World Wide Web. As a result, this medium presents new challenges for the monitoring and regulation of tobacco marketing and promotions. In this section, we examine the range of marketing and promotional strategies that Internet cigarette vendors use based on findings from our ongoing longitudinal study of Internet cigarette vendors. We also present results from a small study on cigarette spam e-mails, explore how the major tobacco companies are using the Internet to build relationships with their customers, and conclude with a discussion of several policies that have been proposed to regulate online tobacco marketing practices.

Wide Variety of Cigarette Brands and Tobacco Products

Internet cigarette vendors sell a wide variety of cigarette brands and tobacco products online. In 2005, we found that all these sites sold some type of cigarettes (Table M-2). Approximately 30 percent advertised selling duty-free cigarettes, which are manufactured for export only and are illegal to sell in the United States because they violate the Imported Cigarette Compliance Act of 2000. Another 22.7 percent sold clove cigarettes, while about 5 percent sold bidis or herbal cigarettes. Internet cigarette vendors sold an average of 39.3 (standard deviation [SD] 21.52, range = 1 to 98) unique cigarette brands, with 45 percent of sites selling 40 or more brands. Internet cigarette vendors also sold cigars (42.2 percent), smokeless tobacco such as Skoal (28.0 percent), loose tobacco for pipes and roll-your-own cigarettes (23.0 percent), and tobacco paraphernalia such as lighters, ashtrays, and cigar cutters (19.3 percent). Approximately 10 percent of sites sold other tobacco-related products such as candles and air fresheners designed specifically for smokers, and roughly 15 percent of sites also sold non-tobacco products such as coffee, moccasins, jewelry, or condoms. These results suggest that Internet cigarette vendors advertise and carry a wide range of tobacco and non-tobacco products for virtually every type of customer. Whereas traditional brick-and-mortar retail vendors are restricted in the number of tobacco products they can sell because of limited physical storage and shelving space, Internet cigarette vendors can carry a much larger inventory of items and offer greater brand and product selection that might be appealing to a wider customer base. This may become increasingly important if more smokers switch cigarette brands and alter their purchasing and consumption patterns in response to rising cigarette excise taxes. One report suggested that Internet cigarette vendors aggressively promote cheaper, deep-discount brands because they yield more than four times the profit for vendors than premium brands and because many smokers who buy online are very cost conscious (Campagnino 2002).

Price-Related Promotions

Internet cigarette vendors also offer price-related promotions that reduce the actual cost of cigarettes or add value to their purchase. In 2005, 31.8 percent of Internet cigarette vendors offered reduced-price specials (Table M-2) such as discounts on specific brands, monthly or weekly price specials, and coupons. Approximately 40 percent of sites advertised that they sold cigarettes tax-free; this was explicitly stated on their website or incorporated into their business name or website URL (Figure M-3). By advertising that their cigarettes are tax-free, Internet

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

cigarette vendors are targeting smokers who reside in high-excise-tax states and currently pay high cigarette prices at retail stores. Few sites offered gifts, multipack specials, or contests, but those doing so gave away items such as free cigarettes or enter-to-win vacation contests.

Peer-to-Peer Promotions

One of the advantages of selling products on the Internet is using features of email and website technology to facilitate word-of-mouth communication among peer social networks (Hoffman and Novak 1997). In our study, we found that Internet cigarette vendors use several peer-to-peer strategies to attract more customers to their site. Approximately a third of the sites offered mechanisms to refer friends to the site (30.1 percent) and ways to link to their site (16.7 percent), while a few offered wish lists to their customers (3.9 percent). Wish lists enable customers to create lists of cigarette and tobacco products they desire that they can make available to friends who might purchase the products for them. The “link-to-us” function enables customers to create a bookmark or link on their own personal website so that interested friends can click on the link, which takes them directly to the Internet cigarette vendor site. Once new customers are at the website, Internet cigarette vendors also use strategies such as “customer testimonials” and “top-selling brands” as a way to share information about other customers’ purchasing patterns and experiences. In 2005, 11.6 percent of Internet cigarette vendors utilized customer testimonials and 28.3 percent advertised “top-selling brands.” The ease of sharing information via the Internet allows Internet cigarette vendors to utilize strategies that encourage word-of-mouth promotions among peer networks. Direct peer-to-peer marketing becomes more important in the electronic marketplace because online businesses only have a virtual presence among billions of other web pages, making it difficult for customers to find Internet cigarette vendors unless they actively search for the sites or are referred to them by friends.

Customized Services

The interactive capabilities of the Internet allow Internet vendors to communicate directly with their customers via email, to tailor these communications precisely to individual customers’ needs, and to obtain relevant information from customers so that vendors can customize their services and serve their customers more effectively in the future (Hoffman et al. 1995). In 2005, approximately 45 percent of Internet cigarette vendors provided register or create-an-account capabilities, which allow vendors to collect information about their customers’ product and ordering preferences and to store this in their databases so that future interactions with the customer can be personalized (Figure M-4). Approximately 40 percent of Internet cigarette vendors also offered mailing lists, which are emailed newsletters announcing upcoming sales or promotions that can be tailored to individual consumers’ product preferences. Approximately 20 percent of Internet cigarette vendors also offer automated shipping programs that enable customers to designate how many cigarettes they want delivered on a regular time schedule. All of these features ease the ordering process for customers and help vendors to build personalized relationships with their customers, which might translate into customer loyalty and retention over time.

Use of Spam Email to Attract Customers to Internet Cigarette Vendor Websites

Internet cigarette vendors can also attract new customers to their site by sending out unsolicited email messages (spam) to a wide range of recipients. This is a relatively inexpensive strategy

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

since vendors can purchase lists of tens of thousands of email addresses for only hundreds of dollars. A pilot study analyzing cigarette spam emails found that lower prices (99 percent) and tax evasion (43 percent) were most emphasized in the subject line or body of the email message (Potts 2004). Commonly used messages for conveying low cost or tax evasion included phrases such as:

“Stop wasting your money on high priced cigarettes, get your cigarettes at a huge discount!”


or


“I have some very exciting news for you. No longer will you be taxed to death. You can buy premium brand cartons of cigarettes for only $13.95 a carton. That is $1.39 a pack for all the top brands.”

Results from this study suggest that Internet cigarette vendors are marketing lower tax-free prices as the main incentive to purchase cigarettes from their sites. Kim and colleagues (2006) found that 46 percent of smokers in their sample reported seeing ads about Internet cigarette sales from mass media sources such as local newspapers or magazines (20.9 percent), spam emails (16.0 percent), banners or pop-up ads (11.2 percent), and Val-U-Pak coupon mailers (11.2 percent) (Kim et al. 2006). Because many of these channels are direct-to-consumer (e.g., spam email, Val-U-Pak coupon mailer), these marketing strategies occur under the public radar and should be monitored. Future studies need to examine the extent of these marketing strategies and how they influence smokers’ decisions to purchase cigarettes online.

Extent of Marketing Online by Tobacco Companies

Relative to their aggressive promotions in other venues such as retail outlets, direct mail, and magazines, most of the major U.S. tobacco companies appear to have a fairly restrained approach to utilizing the Internet for promoting or selling their brands. In 2002, the tobacco industry claimed that it spent only $940,000 on company website-related expenses, which was less than 0.01 percent of its annual $12.5 billion advertising and promotional expenditures (FTC 2004). Tobacco company websites tend to be neutral in tone and provide factual information about their companies (Figure M-5). For example, the R.J. Reynolds official website has the latest information about its stock prices, whereas the Phillip Morris USA website has detailed information on health issues, responsible marketing, and its policies, including a section on Internet cigarette sales. The industry did not report spending any additional funds on other Internet advertising such as banner ads or direct email marketing in 2002. Tobacco companies appear to have varying levels of involvement in and support for Internet tobacco sales and marketing. Philip Morris appears to be the most critical of Internet sales and has actually filed federal lawsuits against Internet vendors for violating its trademarks (e.g., the Marlboro logo) and illegally selling Marlboros manufactured for export (Beirne 2002). Philip Morris has also lobbied for legislation that would restrict Internet tobacco sales. One reason that it may want to discourage Internet tobacco sales is related to the fact that buyers are very cost conscious and would begin to purchase deep-discount brands, which takes business away from costlier premium brands such as Marlboro (Beirne 2002). Other tobacco companies, however, appear to have a more favorable attitude toward the Internet than the market leader.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

In 2004, when Brown & Williamson (B&W) launched its KOOL Mixx hip hop ad campaign, it also included a web component. The House of Menthol website (www.houseofmenthol.com) featured information about the national DJ battle, free software demos, history of hip hop, and lists of retail stores where smokers could purchase the special edition KOOL Mixx cigarette packs (Figure M-6). The website was just one element of the marketing campaign, but as the House of Menthol website illustrates, tobacco companies can use the web to provide more promotional offers and to aggressively build the brand image with content that is engaging and interactive. B&W voluntarily pulled the ad campaign including the website after receiving pressure from attorneys general who threatened to sue claiming that the campaign violated the Master Settlement Agreement because it targeted youth and because it featured merchandise (e.g., a radio) with a cigarette brand name.

Some tobacco companies are using the web to advertise certain brands and to establish a database of smokers. R.J. Reynolds sells Doral cigarettes, a generic brand, on the web at www.smokerswelcome.com (Figure M-7). This site is advertised as “an online community for smokers by smokers” and offers attractive gifts for redeeming Doral pack seals and services such as online bulletin boards that help to engender a sense of community among Doral smokers. Phillip Morris operates a similar website, www.smokersignup.com, where smokers can sign up to receive coupons and other promotional offers via postal mail (Figure M-8). As more smokers participate in these direct-marketing programs (Lewis et al. 2004), tobacco control advocates will have to monitor these practices both offline and online and examine how they influence smokers’ attitudes and behaviors. Data from the National Youth Tobacco Survey conducted by the CDC in 2004 showed that 34.1 percent of middle school students and 39.2 percent of high school students reported seeing advertisements for tobacco products on the Internet (CDC 2005). Although Cohen and colleagues (2001) have called for studies to determine the effects of web-based tobacco advertising on the tobacco-related knowledge, attitudes, and behaviors of viewers, to our knowledge there are no published studies on this topic (Cohen et al. 2001).

Threat 3:
Youth Access to Cigarettes Via the Web

Will Internet Cigarette Vendors Sell to Underage Youth?

Several recent studies suggest that most Internet cigarette vendors sell to buyers without verifying age. In 2001, Ribisl and colleagues (2003) conducted a purchase survey in which four youth, aged 11–15, purchased cigarettes from 55 Internet cigarette vendors in 12 states. The vendors sold to minors in 76 out of 83 purchase attempts (92 percent overall sales rate). Very little was done to verify the age of the buyers in this purchase survey. Out of 83 money order and credit card purchase attempts, in only nine cases (11 percent) did the vendor request that the buyer submit a copy of a photo ID, the prevailing standard for age verification at retail outlets (Ribisl et al. 2003). Proof of age was not provided for any vendors, but only four of those nine purchases were refused due to lack of ID. Furthermore, although six (10.7 percent) vendors stated on their websites that they verify age at delivery (Ribisl et al. 2002), only one package arrived marked “Adult signature required for delivery.” The package was delivered to a parent while the youth buyer was at school, so there is no way to know whether the delivery person would have verified the age of the recipient if the youth buyer had received the package. More than 85 percent of the deliveries in the study were left at the door without any interaction with

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

the recipient. Altogether, youth in this study received 1,650 packs of cigarettes from Internet vendors.

A similar study asked college students to attempt to buy cigarettes from 32 Internet cigarette vendors without providing proof of age (Bryant et al. 2002). Of the 28 orders received by the vendor, 20 (71 percent) were filled and 4 orders (14 percent) were rejected because no proof of age was provided. Four orders were never received by the vendors, and four orders remained unfilled for other reasons.

Jensen and colleagues (2004) conducted a youth purchase survey where 30 youths, aged 15 to 16, were instructed to find an Internet cigarette vendor website on their own and to purchase one carton of cigarettes with their parent’s credit card (Jensen et al. 2004). This study showed that the youths were able to find Internet cigarette vendors on their own without being provided a list of vendors as our previous studies had done (Ribisl et al. 2003). Of the 30 youth, 29 (96.7 percent) were able to find a tobacco vendor and place an order, usually in under 20 minutes, and 23 (76.7 percent) successfully received their orders, with 91 percent of the packages delivered without requests for proof of age. Most recently, a purchase survey assessing compliance with California’s law designed to prevent youth access to cigarettes from Internet vendors found that none of the 101 vendors in the sample verified the age of the buyer in accordance with California law (Williams et al. In press). The results of these purchase surveys suggest that most Internet cigarette vendors do a poor job of preventing cigarette sales to minors.

Are Underage Youth Buying Cigarettes Online?

Several studies have assessed whether youth purchase cigarettes online. In the 2001 National Household Survey on Drug Abuse, 3.3 percent of adolescent smokers aged 12–17 reported buying cigarettes from the Internet in the past 30 days (Office of Applied Studies 2002). A study conducted in 1999–2000 found that, among current smokers under 18 years of age (n = 1,689), 2.2 percent reported attempting to purchase cigarettes online (Unger et al. 2001). Those who attempted purchases were younger, smoked more frequently, and reported greater perceived difficulty in obtaining cigarettes from commercial and social sources.

In 2001, 1,323 9th grade smokers in three western New York counties were asked about purchasing cigarettes online: 2.3 percent reported ever having purchased cigarettes online, and 1.7 percent reported buying online in the past 30 days (Abrams et al. 2003). Nearly 9 percent intended to purchase cigarettes online during the next year. Youth who had been refused cigarette sales at retail outlets in the previous month were more than three times as likely to purchase cigarettes online than youth who had successfully purchased cigarettes at a retail outlet in the past month. A follow-up survey in 2005 found that 6.5 percent of 9th grade smokers reported ever having purchased cigarettes online, with 5.2 percent having purchased online in the past 30 days. Youth smokers were 2.6 times more likely to report having purchased cigarettes online in the past 30 days in 2005 than in 2001 (Fix et al. 2006).

Although these results suggest that few teens are currently buying cigarettes on the Internet, the small proportion of youth who do purchase online reported greater difficulty in obtaining cigarettes from retail outlets, suggesting that if retail access becomes sufficiently restricted, more youth might turn to the Internet to obtain cigarettes.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
How Can Internet Cigarette Vendors Discourage Youth Buyers?

There are four potential strategies for reducing sales to minors that can be used by Internet cigarette vendors: the posting of minimum age-of-sale warnings, the posting of health warnings, use of parental control filter information, and age verification.

Minimum age-of-sale warnings were featured on the home page of 83.4 percent of Internet cigarette vendor websites in 2005. Most state laws in the United States on youth access to cigarettes in retail stores require that vendors post the minimum age of sale. This same standard should be applied to online vendors, and age warnings should be prominent and immediately visible when the page is accessed. While 83.4 percent of vendors feature age warnings on their home pages, only 26.2 percent of vendors feature them at the top section of a web page that is immediately visible without scrolling when the page is accessed (note: this is when viewed on a monitor with 800 × 600 screen resolution, the prevailing standard for web designers).

Parental control filters (PCFs) are software programs that allow parents to restrict their children’s access to inappropriate material on the Internet, such as pornography and violence. Most PCFs automatically filter out sites in which tobacco is the primary focus, but this method is not comprehensive because PCFs rely heavily on website owners to register with them. Prior studies (Center for Media Education 1999; Reagan et al. 2002) have found that PCFs are ineffective at blocking pro-tobacco websites, with the most effective programs blocking 70 percent, and the least effective failing to block any. Regan and colleagues (2002) also noted that PCF programs disagreed on which sites to block, with the highest level of agreement between programs only blocking 21.4 percent of the same sites. Because PCFs are ineffective at blocking access to protobacco websites they should not be relied upon as an effective measure to block youth access to Internet cigarette vendors. They do provide some protection, but are not a stand-alone solution, since most Internet cigarette vendors (97.9 percent) do not register with PCFs and youth might be able to disable PCFs on their own.

Age verification is the most effective strategy for Internet cigarette vendors to reduce sales to minors. There are two main points at which age can and should be verified by vendors to ensure their customers are adults. Age should be verified both at the point of order and at the point of delivery. In retail stores, the point of order and delivery are one and the same, leaving only one point in time for age verification, the standard for which is a face-to-face matching of the customer to a valid driver’s license. In online transactions, age should be verified with photo ID before a sale is made, but should also be verified at the point of delivery, since matching the customer to the photo on a driver’s license is impractical in online transactions. Unfortunately, few Internet cigarette vendors (11 percent) request that their buyers submit a copy of their photo ID before making a sale, and often those that do will fulfill orders submitted without the requested ID (Ribisl et al. 2003).

While rigorous age verification methods, such as requiring photo ID submission, are uncommon among Internet cigarette vendors, self-age verification methods are more common, such as typing in a birth date (23.3 percent) or stating that by simply submitting an order, the customer is certifying that he or she is of legal age to purchase cigarettes (35.2 percent). These ineffective self-age verification methods (see Figure M-9) are not likely to deter youth buyers, and vendors should be discouraged from relying upon them.

Some vendors (15.2 percent) claim that by only accepting credit cards for payment, they are ensuring their buyers are adults, which assumes that only adults can obtain valid credit cards. However, it is plausible for teens to own their credit cards since vendors such as VisaBuxx market prepaid debit cards specifically for teens to use online. While accepting only credit card pay-

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

ments may deter most youth who don’t have access to a credit card, it should not be relied upon as a method of age verification.

Age verification at delivery is potentially the most effective strategy available to Internet cigarette vendors to reduce sales to minors, since it is the sole face-to-face opportunity for the customer to be matched to a photo ID. Currently, few Internet cigarette vendors verify the age of their customers at delivery. In our youth purchase survey (Ribisl et al. 2003), the age of the youth buyers was not verified at delivery by any vendors. There are several barriers to widespread adoption of age verification at delivery by Internet cigarette vendors, the most significant of which is that currently the only shipping carrier legitimately available to Internet cigarette vendors is the U.S. Postal Service, which does not offer an age verification at delivery service. UPS is the only delivery company in the United States with an age verification at delivery service. In October 2005, however, UPS announced that, like FedEx and DHL, it would no longer ship cigarettes to consumers (Gormley 2005), leaving no age verification at delivery options for Internet cigarette vendors.

Self-Regulation of Internet Cigarette Vendors

The Online Tobacco Retailers Association (OLTRA) is an organization of Internet Cigarette Vendors formed, ostensibly, to “bring a standard of service to the online tobacco industry” (www.oltra.com). OLTRA claims to be a self-regulating organization and state that in addition to providing member benefits such as group purchasing benefits, legal representation, and an “OLTRA Certified Website Seal,” all OLTRA member websites adhere to certain business standards, including only accepting customers aged 21 and over, requiring customers to submit a copy of their driver’s license prior to order fulfillment, and exclusively using the “UPS adult signature required” shipping method to ensure that tobacco products are not delivered to minors.

OLTRA’s claims about its members’ self-regulation were tested in a separate compliance survey (Williams 2005). During this purchase survey, which was designed to assess the extent of vendor compliance with California Business and Professions Code § 22963, California’s law regulating what Internet cigarette vendors must do to prevent sales to minors, 11 of the 20 member vendors listed on OLTRA’s website were included in the randomly selected study sample. Compliance with OLTRA’s standards among these member vendors was low. Of the vendors included in the study, only three required that their buyers be 21 and over, two required buyers to submit a copy of their driver’s license, and none used UPS age verification at delivery. These results suggest that OLTRA’s attempts at self-regulation are ineffective.

POLICY SOLUTIONS AND RECOMMENDATIONS

This final section examines some of the state-level policies in place to address the challenges posed by Internet cigarette sales and concludes with a recommended framework for addressing Internet cigarette sales. An analysis of laws governing Internet and mail order sales of cigarettes in the 50 U.S. states and the District of Columbia identified 33 state laws (Chriqui et al. Under Review). Data were collected as part of the National Cancer Institute’s State Cancer Legislative Database system, and this represents the first comprehensive analysis of state laws to prevent tax evasion and youth access from Internet cigarettes sales. Details of the laws are provided in Table M-3. Highlights of this analysis are that 31 states have provisions designed to reduce youth access, 32 states have tax evasion provisions, and 2 states totally ban all Internet and mail order tobacco sales. Details on the number and percentage of states with specific provisions within

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

these categories are listed in the table and not described here. The two rightmost columns denote whether these specific provisions are recommended in model legislation from the Campaign for Tobacco Free Kids (Lindblom 2005a; Lindblom 2005b; Lindblom 2005c) and Philip Morris.

Effectively regulating Internet cigarette sales is difficult for many reasons (Ribisl 2003), including its supergeographical reach, complexities related to regulation of interstate commerce, tribal sovereignty and overseas vendors, and the fact that case law is still being formed (Banthin 2004). Given these challenges, we propose a framework (see Figure M-10) with multiple strategies that may effectively regulate Internet cigarette sales. The main goal of the Q.U.I.T. (Quarantine of Unhealthy Internet Trade) Framework is to go beyond simply regulating the vendor, and to involve other members of the supply chain starting at the beginning of the distribution process where Internet cigarette vendors (ICVs) first acquire their cigarettes to the final culmination of the sale when consumers receive their cigarette deliveries. In this model, we propose several regulatory strategies that intervene along the sales and delivery process in order to “quarantine” online vendors who are not compliant with existing tobacco tax collection and age verification laws. The vendors are essentially quarantined by disrupting the distribution process, which prevents Internet cigarette vendors from selling their product to consumers. The approach can be applied to other potentially harmful products sold over the Internet, such as firearms, illicit drugs, or child pornography.

One strategy would be to block or regulate the supply of cigarettes to Internet cigarette vendors from tobacco manufacturers, distributors, or retailers (Step 1, Figure M-10). For example, suppliers could be required to sell only to Internet cigarette vendors who are compliant with existing youth access and taxation laws. This strategy requires that tobacco manufacturers, distributors, and retailers keep detailed documentation of their inventories of tobacco products, which shows the route from manufacturer to distributor and retailer. Although some Native American Internet vendors manufacture their own brands of cigarettes, most carry other brands made by the major cigarette manufacturers and thus depend on an outside distributor. Native American cigarette vendors file paperwork when buying cigarettes that allows them to purchase cigarettes without payment of state excise taxes, as long as the cigarettes are for sale to other tribal members. Many tribal vendors claim that their sovereignty rights permit them to sell to anyone from their reservation (where their website is located). New York State has been planning efforts to cut off the supply of tax-free cigarettes to the Seneca nation and other tribes by requiring suppliers to sell cigarettes only where all state taxes are paid. This approach tends to work better when the supplier is based in the United States and may not work as well for cigarettes being shipped from overseas from a vendor that also acquires them overseas.

A second strategy is to block a vendor from hosting its website by seizing the domain name and shutting down the online storefronts of noncompliant Internet vendors (Step 2, Figure M-10). This strategy was employed by UK customs authorities who seized the URLs of websites such as www.cigarettesfromeurope.com for not charging appropriate cigarette taxes to UK customers. Although the reasons were for trademark infringement and other violations, Philip Morris successfully seized the domain name www.yesmoke.com, which now redirects to its corporate website (Dunai 2004). Although Yesmoke migrated its online business to another website address (www.yesmoke.ch), the domain name seizure likely caused significant difficulties for the vendor and some customers may not know of the new website address. Although there are many complexities in the field of domain name law (Moringiello 2004), states have several legal rationales that would allow them to seize the domain name of Internet vendors and perhaps replace the website content with a message of their choosing (Burstein In press).

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

A third strategy would be to prevent the major payment-processing companies such as Visa, MasterCard, American Express, Diners Club, Discover, or PayPal from approving transactions for Internet cigarette sales (Step 3, Figure M-10). In March 2005, all of the companies listed above reached a landmark voluntary agreement with state attorneys general and the Bureau of Alcohol, Tobacco, Firearms and Explosives to stop processing credit card payment of Internet cigarette orders because Internet vendors were conducting illegal business by not charging appropriate state cigarette excise taxes and not verifying the age of buyers (AP 2005; Tedeschi 2005). The negotiations were led by attorneys general from California, New York, and Orgeon, and several other attorneys general also participated.

Restricting credit card payment does not entirely prevent all Internet cigarette sales because vendors can still utilize alternative payment methods such as money orders or personal checks, but nevertheless, according to media reports this policy has already caused scores of Internet vendors to lose business or shut down their operations (Tedeschi 2005). Credit cards are the most commonly used payment method offered by Internet cigarette vendors (Ribisl et al. 2001). The agreement applies to virtually all credit cards and affects websites based in the United States and abroad that sell to U.S. customers. Internet vendors that can document that they comply with all relevant laws will be allowed to accept credit cards under conditions of the agreement.

A fourth strategy would be to regulate delivery services such as the UPS or a postal service such as the U.S. Postal Service. For example, the vendor could be required to ship using a service that verified the age and identity of the buyer at the point of delivery. Moreover, cigarettes could be declared non-mailable matter, and delivery services could be banned from picking up packages of cigarettes from Internet cigarette vendors that appear on a “Do Not Ship” list comprised of vendors that do not comply with existing tax collection or youth access laws (Lindblom 2005c) (Step 4, Figure M-10). These provisions have been proposed as part of two federal legislative bills, the Green-Meehan Internet Tobacco Sales Enforcement Act (H.R. 2824) and the Prevent All Contraband Tobacco Act (PACT ACT, S. 1177), but neither bill has made it to the floor of the U.S. Congress. A spokesperson for UPS opposed any regulation that would require it to refuse packages from Internet tobacco vendors that violated tobacco tax laws (Campaign for Tobacco Free Kids 2005). However, in October 2005, UPS joined shipping carriers DHL and Federal Express involuntarily agreeing to cease shipping cigarettes to consumers (Gormley 2005), leaving the U.S. Postal Service as the only viable shipping option available to Internet cigarette vendors.

The final step in the distribution process would be to educate consumers about their requirement to pay taxes on cigarettes purchased from out-of-state Internet vendors (Step 5, Figure M-10). Although educational efforts might deter some customers from buying cigarettes online, this strategy is onerous because of the difficulty in reaching the nearly 50 million smokers in the United States. Instead, intervening upstream in the distribution process with several major manufacturers, distributors, Internet service providers, payment processing companies, or delivery companies can probably have greater impact than individually focused educational efforts.

In conclusion, the goal of the Q.U.I.T. framework is to disrupt one or more steps in the distribution channel that occur between the time cigarettes are manufactured and when they are delivered to the door of the smoker. The idea is that regulating vendors is not enough—so far, the overwhelming majority of Internet vendors have violated one or more laws designed to require tax reporting, prevent cigarette sales to minors, or ban the sale of imported duty-free cigarettes. Therefore, the focus is upon entities that do business with the Internet vendor. The goal is to prevent the noncompliant vendor from hosting a website, receiving payment from credit card com-

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

panies, and shipping its product to customers. There are weaknesses in any one approach; however, it is likely that the combination of strategies will be effective. Addressing the problems posed by Internet cigarette sales will require a collaborative effort among public health researchers, tobacco control advocates, state departments of revenue, attorneys general, policy makers, and legislators. Policies are needed that require Internet cigarette vendors to comply with the same provisions as brick-and-mortar retail vendors by charging appropriate state and local cigarette excise taxes and verifying the age of buyers. Until such policies are in place, online cigarette sales will undermine the public health benefit of raising cigarette prices.

FINAL RECOMMENDATION

For all Internet, mail order, and delivery tobacco sales, federal legislation is needed to ensure that customer ages and identities are verified at both the point of ordering and the point of delivery and that appropriate local, state, and federal taxes are collected. This legislation should include strong federal penalties for noncompliance while permitting state governments to have enforcement authority and the ability to pass stricter laws. The legislation should be written to effectively regulate the sales practices of tobacco vendors shipping to U.S. customers regardless of their physical location (i.e., vendors located on tribal lands or outside the United States). Moreover, all Internet and mail order vendors should be licensed at the federal level by an organization such as the Bureau of Alcohol, Tobacco, Firearms and Explosives. Vendors that violate youth access and tax laws should be placed on a do-not-ship list, and delivery services should not be allowed to transport their products.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

TABLE M-1Country and Region Locations of Internet Cigarette Vendor Websites, January 2005

Country

N=775

Number (%)

United States

323 (41.7)

Switzerland

118 (15.2)

International (outside the U.S., country not specified)

86 (11.1)

Europe (country not specified)

59 (7.6)

Spain

17 (2.2)

Panama

16 (2.1)

Indonesia

11 (1.4)

United Kingdom

6 (0.8)

Gibraltar

5 (0.7)

Asia

4 (0.5)

South Africa

4 (0.5)

Virgin Islands

3 (0.4)

Andorra

2 (0.3)

Canada

2 (0.3)

Russia

2 (0.3)

Other*

12 (1.5)

Location could not be determined

105 (13.5)

*Other category includes one vendor located in each of the following countries: Belize, Bulgaria, Dominican Republic, Germany, Mauritius, Malaysia, Netherlands, New Zealand, Romania, and Zimbabwe.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

TABLE M-2 Sales and Marketing Practices of Internet Cigarette Vendor Websites, January 2005

 

N=664

Number (%)

Types of tobacco products sold

Cigarettes

 

 

Premium/value/discount brands

770 (99.3)

 

 

Duty-free

189 (28.5)

 

 

Clove

151 (22.7)

 

 

Bidis

10 (1.5)

 

 

Herbal

21 (3.2)

 

Cigars

280 (42.2)

 

Smokeless tobacco

186 (28.0)

 

Loose tobacco

153 (23.0)

 

Tobacco paraphernalia

128 (19.3)

 

Other tobacco-related products

49 (7.4)

 

Number of cigarette brands sold*

 

 

 

1-20

158 (23.8)

 

 

 

21-40

217 (32.7)

 

 

 

41-60

145 (21.8)

 

 

 

61+

144 (21.7)

 

 

Non-tobacco products

82 (12.3)

 

 

Price-related promotions

 

 

 

 

Reduced price special

211 (31.8)

 

 

Tax-free prices advertised

253 (38.1)

 

 

Gift with purchase

15 (2.3)

 

 

Multi-pack special

58 (8.7)

 

 

Special contest

26 (3.9)

 

Peer-to-peer promotions

 

Refer-a-friend

200 (30.1)

 

 

Add to favorites/link to us

111 (16.7)

 

 

Wish list

26 (3.9)

 

 

Customer testimonials

77 (11.6)

 

List of most popular/top selling cigarettes

188 (28.3)

Customized services

 

Register/create an account

295 (44.4)

 

 

Mailing list

269 (40.5)

 

 

Automated shipping program

121 (18.2)

 

Other promotions^

47 (7.1)

 

* Number of cigarette brands ranged from 1 to 107.

^ Examples of other promotions include: free samples of cigarettes and continuity programs.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

TABLE M-3 Summary of the Components of State Cigarette Delivery Sales Lawsa by Area of Emphasis (as of December 31, 2005)

Component Description

Number of States

% states with laws (N=33)

% all statesb (N=51)

PMc Model Provision

CTFKd Model Provision

Preventing Youth Access to Cigarettes

25

76

49

Yes

Yes

Age/ID verification of purchaser

25

76

49

Yes

Yes

Required one time/first purchase only

11

33

22

Yes

No

Required at all times/every sale

13

39

26

No

Yes

Types of Age/ID Verification

22

67

43

Yes

Yes

Requires customer attestation only

4

12

8

No

No

Requires any 2: customer attestation, check govt. ID, or check age and/or ID against commercial database of government ID’s

16

49

31

Yes

No

Requires all 3: customer attestation, check govt. ID, and check age/ID against commercial database of gov ernment ID’s

4

12

8

No

Yes

Vendor required to use carrier that will:

19

58

37

Yes

Yes

Verify purchaser ID at delivery time

18

55

35

Yes

Yes

Obtain adult signature

16

49

31

Yes

Yes

Delivery only to address on ID

6

18

12

No

Yes

Preventing Tax Evasion

30

91

59

Yes

Yes

Requires delivery sales vendors to be licensede

23

70

45

Yes

Yes

Sale considered delivery sale regardless of seller location (i.e., outside/inside state or tribal)

17

52

33

Yes

Yes

Registration and reporting requirements and/or Jenkins Act (15 U.S.C. 326) compliance

22

67

43

Yes

Yes

Tax collection and remittance requirements

21

64

41

Yes

Yes

Preventing Youth Access and Tax

31

94

61

Yes

Yes

a For this analysis, “laws” was defined to includes statutes, administrative rules and regulations, and case law, as appropriate.

b “All states” includes the 50 states and the District of Columbia.

c PM=Philip Morris model law provision (Rubin et al. 2001).

d CTFK=Campaign for Tobacco-Free Kids model law provisions {Lindblom 2005a; Lindblom 2005b; Philip Morris USA 2003).

e Vendor licensure provisions were captured if specifically referenced in the delivery sales statutes. In other words, a state received credit for requiring delivery sales vendors to be licensed if they explicitly stated this requirement in the delivery sales law OR indicated that delivery sales vendors must comply with existing licensure provisions.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

Component Description

Number of States

% states with laws (N=33)

% all statesb (N=51)

PMc Model Provision

CTFKd Model Provision

Evasion

 

 

 

 

 

Ban shipping/delivery of cigarettes directly to consumers

4

12

8

No

Yes

Requires adherence to do not ship to list

4

12

8

No

Yes

Requires customer prior notification/ disclosure

15

46

29

No

Yes

Payment Issues

19

58

37

Yes

Yes

Required Payment Types

19

58

37

Yes

Yes

Credit card, debit card, OR check

11

33

22

Yes

No

Credit or debit card

4

12

8

No

Yes

Check or credit card

4

12

8

No

No

Payment type (credit card, debit card, or check) must be in buyer’s name

15

46

29

Yes

Yes

Credit/debit card billing address must match shipping address/government identification, and/or database address

2

6

4

No

No

“Tobacco product” language to be printed on credit card statement

1

3

2

No

Yes

Vendor to provide carrier with evidence of compliance with:

11

33

22

Yes

Yes

Licensure requirements

2

6

4

No

Yes

Tax collection/remittance provisions

10

30

20

Yes

No

Shipping document and/or packaging requirements

28

85

55

Yes

Yes

Specify tobacco product content

27

82

53

Yes

Yes

Specify minimum age of sale language

18

55

35

Yes

Yes

Specify tax collection/remittance obligation

18

55

35

Yes

Yes

Product quantity order/shipping restrictions

4

12

8

No

Yes

Specifies minimum amount

1

3

2

No

No

Specifies maximum amount

3

9

6

No

Yes

Penalties and Enforcement

31

94

61

Yes

Yes

Penalty Provisions

31

94

61

Yes

Yes

Penalties to Vendor

31

94

61

Yes

Yes

Penalties to Carrier

11

33

22

No

Yes

Penalties to Purchaser

13

39

26

Yes

Yes

Enforcement provisions and authority

24

73

47

Yes

Yes

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

REFERENCES

Abrams SM, Hyland A, Cummings KM. 2003. Internet cigarette purchasing among ninth-grade students in Western New York. Preventive Medicine 36:731-733.

Associated Press. 2000. Michigan cracks down on on-line cigarette sales. Globe and Mail. September 28, 2000:T2.

Banthin C. 2004. Cheap smokes: state and federal responses to tobacco tax evasion over the internet." Health Matrix Cleveland 14(2):325-356.

Beirne M. 2002. News analysis: Some see Web sales butting into PM profits. Brandweek. November 25, 2005.

Bryant JA, Cody MJ, Murphy ST. 2002. Online sales: profit without question. Tobacco Control 11(3): 226-227.

Burstein A. In press. Stopping Internet-based tobacco sales. Health Matrix: Journal of Law-Medicine.

Campagnino RT. 2002. Buying cigarettes over the Internet. Prudential Financial Research September 24, 2002.

Campaign for Tobacco Free Kids. 2005. Letter to UPS. Website. Available at: http://tobaccofreekids.org/reports/internet/UPSLetter.pdf; accessed August 3, 2005.

CDC (Centers for Disease Control and Prevention). 1999. Achievements in public health, 1900–1999: tobacco use— United States, 1900–1999. Morbidity and Mortality Weekly Report 48(43):986-993.

CDC. 2005. Tobacco use, access, and exposure to tobacco in media among middle and high school students–United States, 2004. Morbidity and Mortality Weekly Report 54(12):297-301.

Center for Media Education. 1999. Youth Access to Alcohol and Tobacco Web Marketing: The Filtering and Rating Debate. Washington DC: Center for Media Education.

Chriqui J, Ribisl KM, et al. 2005. A Review of State Laws Governing Delivery Sales of Cigarettes in the U.S.A.: Analysis of Provisions to Prevent Youth Access and Tax Evasion.Web page. Available at: http://2006.confex.com/uicc/wctoh/techprogram/P5196.HTM; accessed August 21, 2006.

Cohen JE, Sarabia V, Ashley M. 2001. Tobacco commerce on the internet: a threat to comprehensive tobacco control. Tobacco Control 10(4):364-367.

Connolly GN. 2001. Smokes and cyberspace: a public health disaster in the making. Tobacco Control 10(4): 299.

Copeland L. 2005. Online Tax Bill Due for Smokers. USA Today. March 8, 2005:3A.

DHHS (Department of Health and Human Services, Public Health Service). 2001. Monograph 14: Changing Adolescent Smoking Prevalence: Where It Is and Why. Atlanta, GA: DHHS.

Dunai M. 2004. Philip Morris blocks Yesmoke from sale of cigarettes in U.S. Wall Street Journal. August 25, 2004:B2.

Emery S, White MM, Gilpin EA, Pierce JP. 2002. Was there significant tax evasion after the 1999 50 cent per pack cigarette tax increase in California? Tobacco Control 11(2):130-134.

Fairclough G. 2000. BAT division will start taking phone, fax orders for cigarettes. The Wall Street Journal Interactive Edition.New York, 2000.

Farrelly MC, Nimsch CT, James J. 2003. State cigarette excise taxes: implications for revenue and tax evasion. RTI International.

Fix BV, Zambon M, Higbee C, Cummings KM, Alford T, Hyland A. 2006. Internet cigarette purchasing among 9th grade students in western New York: 2000–2001 vs. 2004–2005. Preventive Medicine 43(3):191-195

Frieden TR, Mostashari F, Kerker BD, Miller N, Hajat A, Frankel M. 2005. Adult tobacco use levels after intensive tobacco control measures: New York City, 2002–2003. American Journal of Public Health 95(6):1016-1023.

FTC (Federal Trade Commission). 2004. Report to Congress for 2002: Pursuant to the Federal Cigarette Labelling and Advertising Act. Washington DC: FTC.

GAO (General Accounting Office). 2002a. Internet Cigarette Sales: Limited Compliance and Enforcement of the Jenkins Act Result in Loss of State Tax Revenue. Washington DCL GAO 18.

GAO. 2002b. Internet cigarette sales: Giving ATF investigative authority may improve reporting and enforcement. Washington DC: GAO

Goolsbee A, Slemrod J. 2004. Playing with Fire: Cigarettes, Taxes, and Competition from the Internet. Website. Available at http://www.chicagogsb.edu/research/workshops/AppliedEcon/archive/WebArchive20032004/goolsbee.pdf; accessed August 21, 2005.

Gormley M. 2005. UPS Agrees to End Cigarette Deliveries. Associated Press. October 25, 2005. Albany, NY.

Hoffman D, Novak T. 1997. A new marketing paradigm for electronic commerce. Information Society 13: 43-54.

Hoffman D, Novak T, Chatterjee P. 1995. Commercial scenarios for the Web: opportunities and challenges. Journal of Computer-Mediated Communication 1(3):1-21.

Hrywna M, Delnevo CD, Staniewska D. 2004. Prevalence and correlates of internet cigarette purchasing among adult smokers in New Jersey. Tobacco Control 13:296-300.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

Hyland A, Bauer JE, Li Q, Abrams SM, Higbee C, Peppone L, Cummings K. 2005. Higher cigarette prices influence cigarette purchase patterns. Tobacco Control 14(2):86-92.

Hyland A, Higbee C, Li Q, Bauer JE, Giovino GA, Alford T, Cummings M. 2005. Access to low-taxed cigarettes deters smoking cessation attempts. American Journal of Public Health 95(6):994-995.

Hyland A, Laux FL, Higbee C, Hastings G, Ross H, Chaloupka FJ, Fong GT, Cummings KT. 2006. Cigarette purchase patterns in four countries and the relationship with cessation: findings from the International Tobacco Control (ITC) Four Country Survey. Tobacco Control 15 (Suppl 3):iii59-iii64.

Jensen JA, Hickman NJ, Landrine H, Klonoff EA. 2004. Availability of tobacco to youth via the Internet. Journal of the American Medical Association 291(15):1837.

Kim AE, Ribisl KM, Delnevo CD, Hrywna M. 2006. Smokers’ beliefs and attitudes about purchasing cigarettes on the Internet. Public Health Reports 121(5):594-602.

Lewis MJ, Yulis SG, Delnevo C, Hrywna M. 2004. Tobacco industry direct marketing after the Master Settlement Agreement. Health Promotion Practice 5(3 Suppl):75S-83S.

Lindblom E. 2005a. Model State Legislation to Prohibit All Internet or Mail Order Sales of Tobacco Products. Web Page. Available at http://tobaccofreekids.org/research/factsheets/pdf/0229.pdf. (accessed June 2, 2005).

Lindblom E. 2005b. Model State Legislation to Restrict Internet and Mail Order Tobacco Product Sales. Web Page. Available at http://tobaccofreekids.org/research/factsheets/pdf/0230.pdf (accessed June 2, 2005).

Lindblom E. 2005c. The Critical Importance of a Delivery-List Enforcement Provision in State Internet Tobacco Sales Legislation. Web Page. Available at http://tobaccofreekids.org/research/factsheets/pdf/0259.pdf (accessed August 3, 2005).

McMahon K. 2005. State Cigarette Taxes and Projected Benefits from Increasing Them. Campaign for Tobacco-Free Kids. Website. Available at: http://tobaccofreekids.org/research/factsheets/pdf/0148.pdf; accessed March 21, 2005.

Mohl B. 2003. UPS eyed as source for names: Firm may have given customer data to state in cigarette tax probe. Boston Globe. October 23, 2003:D1.

Mohl B. 2004. Internet cigarette retailers targeted state to sue for list of tax-evading clients. Boston Globe. February 17, 2004:C1.

Moringiello JM. 2004. Grasping intangibles, domain names and creditors' rights. Journal of Internet Law 8(3): 3-5.

Office of Applied Studies. 2002. How Youths Get Cigarettes: The NHSDA Report. Rockville, MD: Substance Abuse and Mental Health Services Administration.

Pew Internet and American Life Project. 2005. Latest Trends: Demographics of Internet Users. Web Page. Available at http://www.pewinternet.org/trends/User_Demo_03.07.05.htm (accessed April 10, 2005).

Philip Morris USA. 2003. Proposed Cigarette Delivery Sales Bill. Web Page. Available at http://www.tobaccofreekids.org/research/factsheets/pdf/0224.pdf (accessed June 2, 2005).

Potts C. 2004. Smoky spam: a content analysis of unsolicited electronic messages sent by Internet cigarette vendors. Health Behavior and Health Education. Chapel Hill, University of North Carolina School of Public Health: 47.

Reagan KA, Hong T, Cohen EL, Cody MJ. 2002. Blocking access to online tobacco sales sites. Tobacco Control 11(2):164-165.

Ribisl KM, Kim AE, Williams RS. 2001. Web sites selling cigarettes:How many are there in the USA and what are their sales practices? Tobacco Control 10:352-359.

Ribisl KM, Kim AE, Williams RS. 2002. Are the sales practices of Internet cigarette vendors good enough to prevent sales to minors? American Journal of Public Health 92:940-941.

Ribisl KM. 2003. The potential of the internet as a medium to encourage and discourage youth tobacco use. Tobacco Control 12(Suppl 1):i48-i59.

Ribisl KM, Williams RS, Kim AE. 2003. Internet cigarette sales to minors. Journal of the American Medical Association 290:1356-1359.

Rubin R, Charron C, Dorsey M. 2001. Online Tobacco Sales Grow, States Lose. Ottawa, ON: Forrester Research, Inc.

Shibuya K, Ciecierski C, Guindon E, Bettcher DW, Evans DB, Murray CJL. 2003. WHO Framework Convention on Tobacco Control: development of an evidence based global public health treaty. British Medical Journal 327(7407):154-157.

Stehr M. 2005. Cigarette tax avoidance and evasion. Journal of Health Economics 24(2):277-297.

Task Force on Community Preventive Services (2005). Tobacco. The Guide to Community Preventive Services: What Works to Promote Health? Zaza S, Briss PA, Editors. New York: Oxford University Press. Pp. 1-79.

Taylor AL, Bettcher DW. 2000. WHO Framework Convention on Tobacco Control: a global “good” for public health. Bulletin of the World Health Organization 78(7):920-929.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×

Tedeschi B. 2005. Trouble for Online Vendors of Cigarettes. New York Times. April 3, 2005:A1.

U.S. Department of Commerce. 2001. Merchandise Line Sales: 1997 Economic Census Retail Trade Subject Series. Washington DC: Economics and Statistics Administration and the National Telecommunications and Information Administration, U.S. Census Bureau.

Unger JB, Rohrbach LA, Ribisl KM. 2001. Are adolescents attempting to buy cigarettes on the internet? Tobacco Control 10(4):360-363.

Williams RS. 2005. Youth access to cigarettes online: advertised and actual sales practices of Internet cigarette vendors. Health Behavior and Health Education. University of North Carolina at Chapel Hill.

Williams RS, Ribisl KM, Feighery EC. 2006. Internet cigarette vendors’ lack of compliance with a California state law designed to prevent tobacco sales to minors. Archives of Pediatrics and Adolescent Medicine 160:988-989.

Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 653
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 654
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 655
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 656
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 657
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 658
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 659
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 660
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 661
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 662
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 663
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 664
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 665
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 666
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 667
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 668
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 669
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 670
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 671
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 672
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 673
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 674
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 675
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 676
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 677
Suggested Citation:"Appendix M: Sales and Marketing of Cigarettes on the Internet: Emerging Threats to Tobacco Control and Promising Policy Solutions." Institute of Medicine. 2007. Ending the Tobacco Problem: A Blueprint for the Nation. Washington, DC: The National Academies Press. doi: 10.17226/11795.
×
Page 678
Next: Appendix N: Media Campaigns and Tobacco Control »
Ending the Tobacco Problem: A Blueprint for the Nation Get This Book
×
Buy Hardback | $68.00
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

The nation has made tremendous progress in reducing tobacco use during the past 40 years. Despite extensive knowledge about successful interventions, however, approximately one-quarter of American adults still smoke. Tobacco-related illnesses and death place a huge burden on our society.

Ending the Tobacco Problem generates a blueprint for the nation in the struggle to reduce tobacco use. The report reviews effective prevention and treatment interventions and considers a set of new tobacco control policies for adoption by federal and state governments. Carefully constructed with two distinct parts, the book first provides background information on the history and nature of tobacco use, developing the context for the policy blueprint proposed in the second half of the report. The report documents the extraordinary growth of tobacco use during the first half of the 20th century as well as its subsequent reversal in the mid-1960s (in the wake of findings from the Surgeon General). It also reviews the addictive properties of nicotine, delving into the factors that make it so difficult for people to quit and examines recent trends in tobacco use. In addition, an overview of the development of governmental and nongovernmental tobacco control efforts is provided.

After reviewing the ethical grounding of tobacco control, the second half of the book sets forth to present a blueprint for ending the tobacco problem. The book offers broad-reaching recommendations targeting federal, state, local, nonprofit and for-profit entities. This book also identifies the benefits to society when fully implementing effective tobacco control interventions and policies.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    Switch between the Original Pages, where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text.

    « Back Next »
  6. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  7. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  8. ×

    View our suggested citation for this chapter.

    « Back Next »
  9. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!