Mayor Adams, City of New York, Coalition of States Secure Settlement With USPS to Improve Practices Against Illegal Cigarette Shipments

August 1, 2022

New York City Mayor Eric Adams and New York City Corporation Counsel Sylvia O. Hinds-Radix today announced a settlement with the United States Postal Service (USPS) that implements robust measures to end the unlawful practice of mailing cigarettes into the United States by foreign shippers. The settlement resolves a lawsuit filed by the City of New York and four state attorneys general alleging the USPS transported cigarettes in violation of a 2010 federal law.

“We were not going to stand idly by as foreign shippers circumvented federal law in an effort to avoid billions in taxes and hook underage kids on nicotine,” said Mayor Adams. “With today’s action, we are not only getting the USPS to agree to address longstanding shortfalls in their practices, but are making clear to foreign shippers that their products may be seized and destroyed if they continue to ship cigarettes illegally through the mail.”

“We are pleased the Postal Service has agreed to implement extensive controls to stop the flow of illegal cigarette shipments through its facilities,” said Corporation Counsel Hinds-Radix. “Illegal mail-order cigarette deliveries deprive federal, state, and local government of billions of dollars in tax revenue and allow underage access to cigarettes. The City of New York will continue to hold accountable entities that transport cigarettes illegally and turn a blind eye to the law.”

Enacted by Congress in 2010, the Prevent All Cigarette Trafficking (PACT) Act prohibits the USPS from knowingly accepting or transporting cigarettes in the mail unless authorized by certain narrow exceptions. For the most part, the PACT Act appears to have deterred domestic sellers from shipping cigarettes using the USPS, but has been less effective in eliminating cigarettes mailed from overseas.

Investigations undertaken by the New York City Sheriff’s Office and multiple state attorneys general from across the country have revealed that hundreds of thousands of packages of cigarettes are estimated to be mailed through foreign postal services, transferred into the U.S. mail system, and delivered to U.S. households each year. These investigations include package audits at USPS international mail facilities and undercover investigations of international cigarette sellers delivering to U.S. households. The investigations demonstrated that the USPS’s practices for detecting and stopping the transport and delivery of cigarettes from overseas sources to consumers have been ineffective over the last decade.

Following unsuccessful attempts by the city and others to negotiate improvements to the USPS’s compliance with the PACT Act, in October 2019, the city co-led a lawsuit in federal court in Brooklyn, seeking a permanent injunction prohibiting the USPS from delivering packages known or reasonably believed to contain cigarettes and prohibiting the USPS’s practice of returning identified packages of cigarettes to shippers. The USPS’s attempt to dismiss the lawsuit was denied, and the court ruled that the USPS was subject to suit by state and local governments for violations of the PACT Act and that the USPS’s practice of returning cigarette packages to overseas senders, as alleged in the complaint itself, violated the PACT Act.

In the settlement, the USPS has agreed to implement the following comprehensive reforms:

• Upgrade its Advance Electronic Data technology to significantly improve its ability to detect cigarette packages in international mail.

• Permanently discontinue its practice of returning cigarette packages to senders that would often just resend the packages in another attempt to get them delivered. Instead, the USPS has agreed to destroy these cigarette packages as allowed by law, a costly disincentive to these international shippers.

• Provide the identifying information of illegal shippers to plaintiffs’ law enforcement arms so enforcement actions can be taken.

• Designate a compliance manager to oversee and manage PACT Act compliance, including ensuring that the changes in this agreement are implemented.

• Form a joint committee with representatives of each of the plaintiffs that will assess the USPS’ progress on implementing reforms.

• Implement additional policies and employee training to ensure compliance with the PACT Act, and help employees recognize and dispose of packages containing cigarettes.

Cigarette smoking is a leading cause of preventable premature death in the United States. Smoking annually kills more than 480,000 people nationwide, a figure that exceeds the combined number of deaths from alcohol, motor vehicle collisions, and firearms. According to the World Health Organization and numerous public health studies, maintaining high taxes on cigarettes is the most effective anti-smoking policy intervention, particularly among youth.

The city’s action against the USPS follows prior successful actions against Federal Express, United Parcel Service, and LaserShip, among others, for shipping cigarettes in violation of the PACT Act.

Joining the City of New York in announcing this settlement are the attorneys general of California, Connecticut, Illinois, and Pennsylvania.