Recent research reports have revealed that the number of Internet tobacco sites
is over 200, having more than doubled in just a year, and that their turnover
has risen through $1bn annually, heading for $5bn by 2005.
At first sight you'd think the tobacco companies might not disapprove of another
distribution channel; and you'd be wrong. On Monday Philip Morris Company said
that it had filed lawsuits against a number of Internet cigarette sellers, alleging
trademark violations.
19 states have raised cigarette taxes this year, and the Internet sites, many
of which blatantly advertise that they don't pay taxes or collect customer information,
are booming. Philip Morris says that many Internet cigarette vendors don't bother
to verify the age of purchasers, contravening federal regulations, and incorrectly
claim that their cigarettes are tax-exempt.
Although Internet cigarette sales sites all depend on avoiding state sales
and use taxes, the latter charge relates to sites on indian reservations, which
claim they have sovereign immunity from taxes. About half of the 200 reported
Internet tobacco sales outfits are on reservations.
"Philip Morris is committed to pursuing all available options to ensure
that its products are sold in strict compliance with the law," said Jack
Holleran, vice president of brand integrity at Philip Morris's US operations.
"We are also committed to taking appropriate action to protect our trademarks
to ensure that adult smokers continue to receive the consistent high-quality
products they have come to expect from our brands.