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FedEx Clamps Down on Cigarette Delivery

Postal Service Now Major Delivery Agent for Contraband

February 7, 2006

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FedEx Express and FedEx Ground (FedEx) have agreed to undertake changes to their business practices that will strengthen their policies prohibiting the delivery of cigarettes to consumers throughout the United States, New York Attorney General Eliot Spitzer announced.

"I commend FedEx for joining in this important effort," said Spitzer. "This is another example of private industry joining with law enforcement to address important social problems. When private companies like FedEx take the initiative to protect their services from being used by those engaged in criminal conduct, we all win."

FedEx's current policy already prohibits tobacco sellers from using its services to ship tobacco products to consumers in the United States.

Under the agreement, FedEx will undertake specific disciplinary action against companies that violate its tobacco shipping policy, including terminating services for shippers who repeatedly violate the policy. FedEx will also work with the Attorney General's Office to root out shippers that traffic in illegal cigarette sales.

Today's agreement covers Federal Express Corporation, FedEx Ground Shipment Systems, Inc., and their affiliated companies.

The FedEx agreement is part of a continuing effort to end the sale and shipment of contraband cigarettes over the Internet and through the mails. Internet and mail order cigarette retailers operate in violation of numerous federal, state and local laws, including tax laws, age verification laws, delivery restrictions, reporting requirements, and federal wire fraud and mail fraud statutes.

A coalition of federal, state and local law enforcement agencies has been working on several initiatives to stop these illegal sales, including federal and state criminal indictments of cigarette sellers, seizures of contraband cigarettes, and efforts to strengthen cigarette trafficking prohibitions.

In 2005, both DHL and UPS agreed to cease delivery of cigarettes to consumers throughout the United States. In addition, in March 2005, the major credit card companies all agreed to take steps to ensure that their credit card systems are not used to process payments that further illegal cigarette sales.

Finally, last month, Philip Morris USA (PM USA) reached an agreement with a coalition of 37 Attorneys General to reduce the supply of PM USA cigarettes to those engaged in such illegal sales.

Today's agreement means that the three major package delivery companies – FedEx, UPS and DHL – have all agreed to prohibit deliveries of cigarettes to individual consumers nationwide. However, the cigarette traffickers continue to use the United States Postal Service as courier for their illegal sales.

"Congress needs to act to close the Postal Service loophole as soon as possible," said Attorney General Spitzer.

"The Postal Service effectively has become the delivery arm of a massive criminal enterprise shipping contraband cigarettes nationwide. I have nothing but praise for the efforts to the U.S. Postal Inspection Service, which is working with us to stop these traffickers, but they have a nearly impossible task. Congress needs to address this problem now."

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