New Hampshire Sales Protocol Agreement With Lorillard Tobacco

New Hampshire Sales Protocol Agreement With Lorillard Tobacco

July 10, 2006 -- New Hampshire Attorney General Kelly Ayotte today announced that Lorillard Tobacco Co. ("Lorillard") has agreed to implement new measures to prevent the illegal sale of its cigarettes over the Internet and through the mail. These protocols are being adopted nationwide and voluntarily by Lorillard pursuant to an agreement reached with 33 Attorneys General across the country1 . A similar agreement was reached with Philip Morris USA in January.The protocols provide for: (a) termination of shipments of cigarettes to any of Lorillard's direct customers that the Attorneys General have found to be engaging in illegal Internet and mail order sales; (b) reduction in the amount of product made available to direct customers found by the Attorneys General to be engaged in the illegal re-sale of Lorillard's cigarettes to the Internet vendors; and (c) suspension from the company's incentive programs any retailer found by the Attorneys General to be engaging in such illegal sales.

"We have overwhelming evidence that if we can keep tobacco products out of the hands of underage users we can dramatically reduce the ultimate number of people who eventually become addicted," Attorney General Ayotte said. "Since internet sellers usually are unable to adequately ensure that their products are not delivered to underage users, this agreement is very significant."

In addition, most Internet vendors fail to charge taxes, and research has shown that lower cigarette prices lead to increased smoking rates, particularly among youth. These factors make age verification a critical safeguard in protecting children from a lifetime of smoking.

"Lorillard always has supported compliance with laws dealing with the illegal sale of our products, and has instituted measures to punish those who are determined to be in violation of the law," said Ronald S. Milstein, Senior Vice President, Legal and External Affairs of Lorillard. "We are pleased to enter this voluntary accord with the attorneys general to provide a framework for further cooperation with law enforcement and add additional safeguards against the illegal sale of our products. We believe that these measures will assist our active efforts to combat counterfeit product sales and will help us and our customers to comply with the laws and regulations intended to stop sales to and consumption of our products by youth."

Today's agreement is another major development in multi-pronged efforts by state Attorneys General to restrict the payment, shipment and supply operations of the illegal Internet cigarette traffickers. In March 2005, Attorneys General announced that the major credit card companies had all agreed to stop processing credit card payments for the Internet retailers. Later in the year, both DHL, UPS and FedEx agreed to stop shipping packages for the vendors engaged in these illegal sales.

1 The negotiations with Lorillard were led by the New York State Attorney General's Office. In addition, the Attorneys General from the following jurisdictions have joined this agreement: Alabama, Arkansas, California, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Montana, Nebraska, Nevada, New Hampshire, New Mexico, Northern Mariana Islands, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia and Wyoming.

Source: New Hampshire AG's Office