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Campaign Praises Visa For Taking Strong Action to Stop Illegal Internet Tobacco Sales to Kids, Urges Other Credit Card Companies to Follow Suit

October 29, 2002

Washington, D.C. — In a letter sent today to the chief executive officers of the major credit card companies, the Campaign For Tobacco-Free Kids praised Visa International and Visa USA for taking an important step in addressing the growing problem of Internet and mail-order sales of age-restricted products, including tobacco products, and urged the other credit card companies to follow suit.

In a recently issued rule aimed at improving compliance with federal and state laws, Visa instructed its member banks to ensure that Internet merchants do not use Visa cards in illegal transactions. In particular, Visa will require all Internet sellers that accept Visa cards for purchases of age-restricted products, such as cigarettes, to establish effective age verification procedures that will block sales to kids. In particular, Visa recognizes that requiring credit cards for purchases of age-restricted products, such as cigarettes, is not an appropriate safeguard against sales to minors and that without proper verification children have easy access to tobacco sales via the Internet.

The Campaign For Tobacco-Free Kids urged MasterCard, American Express and Discover Card to follow Visa's lead and compel Internet merchants that accept these cards to comply with all applicable laws and employ effective identity and age verification procedures to keep tobacco products from kids.

There are currently more than 200 websites in the U.S. that sell tobacco products, and many more overseas. Sales of tobacco products on the Internet are growing rapidly and will account for 14 percent of the total U.S. market by 2005, according to a recent Prudential Securities report. Many Internet vendors are not complying with existing laws governing tobacco sales to minors as well as state cigarette tax collection laws. A recent study in the American Journal of Public Health found that one in five cigarette-selling websites do not even say that sales to minors are prohibited and more than half require only that the buyer say they are of legal age, thus giving children easy access to on-line tobacco purchases. In addition, the U.S. General Accounting Office recently reported that three-quarters of all Internet tobacco sellers explicitly say that they will not report cigarette sales to tax collection officials, thus violating Federal law. A study by Forrester Research Inc., a private research firm, estimates that states are currently losing as much as $200 million annually in uncollected tobacco taxes through Internet sales.

The Campaign's letters to the credit card companies make it clear that addressing these problems will require more than just the new Visa rules. 'To be effective, measures to protect our kids from Internet tobacco sales must be adopted by all of the major credit card companies and regularly enforced, with Internet sellers that fail to comply losing their ability to make credit card sales,' said Matthew L. Myers, President of the Campaign For Tobacco-Free Kids. 'New state and federal laws are also needed to supplement these constructive private sector efforts. By following Visa's lead, the credit card industry can take an important step toward keeping deadly tobacco products sold on the Internet out of the hands of our nation's kids.'

The Campaign's letters to the credit card companies

Information about Internet tobacco-selling websites