Monday, October 24, 2005

ALBANY, N.Y. (AP) — The world’s largest shipping carrier, UPS Inc., will stop delivering cigarettes to individuals in the United States under an agreement announced yesterday with New York Attorney General Eliot Spitzer.

The agreement is the latest in federal and state efforts to curb the sale of under-taxed cigarettes and to thwart underage smoking.

Earlier this year, DHL banned cigarette deliveries to individuals nationwide and the nation’s largest credit card companies stopped processing payments for cigarette sales.

The U.S. Postal Service continues to deliver cigarettes to individuals, which Mr. Spitzer called “an embarrassment.”

“Internet cigarette traffickers are increasingly using the federal mail system to distribute their wares,” Mr. Spitzer said. He said the Postal Service “clearly” has the authority to refuse to deliver cigarettes to individual smokers.

He said Internet and mail-order cigarette retailers violate federal, state and local laws governing taxes and underage smoking. Sales to minors also violate federal wire fraud and mail fraud laws.

The agreement matches a nationwide policy at UPS aimed at avoiding the difficulty of complying with a “patchwork” of different state laws enacted in 28 states since 2003, said Steve Holmes, spokesman for the Atlanta company. He had no estimate of how much business would be lost.

“Regardless of that issue, we believe it’s a prudent business decision and we want to do what’s right, of course, by the laws. But we want to do right by our customers and we want to do right by our communities as well,” he said.

UPS does not deliver tobacco products, alcohol or firearms directly to consumers, Mr. Holmes said.

The Postal Service can’t stop delivery even if it suspects a package clearly marked as coming from a retailer contains untaxed cigarettes, said Postal Service spokesman Gerry McKiernan.

“There could be souvenirs in the package. We don’t know because we can’t see inside the package,” he said.

He said the Postal Service will watch for packages if advised by law-enforcement agencies. They also will alert law-enforcement agencies when the service is shipping those packages, he said.

“It’s up to law-enforcement agencies to enforce the law,” Mr. McKiernan said.

FedEx Corp. requires tobacco products to be shipped only to licensed dealers or distributors, said spokeswoman Kristin Krause.

Other products, such as alcohol and firearms, feature other shipping rules but, “I can’t think of anything else that has the same policy as tobacco,” Ms. Krause said.

States lose more than $1 billion a year in tax revenue from Internet tobacco sales, according to the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. Enforcement, however, has been difficult, even though in many states, including New York, the Internet sale of tobacco products is illegal.

• Staff writer Marguerite Higgins contributed to this report from Washington.

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