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September 26, 2003

Miller: Mail-Order Tobacco Seller Violates Consumer Fraud Act

Lawsuit alleges misrepresentations, and failure to block sales to children.

DES MOINES.   Attorney General Tom Miller filed a lawsuit today alleging that "Smokers Warehouse Club, Inc." is violating Iowa consumer fraud laws in its advertisement and mail-order sales of so-called "tax-free" cigarettes.

"We allege that Smokers Warehouse ads falsely claim the tobacco is tax-free, and we allege the company fails to ensure that children cannot obtain cheap cigarettes unlawfully from the company by mail delivery," Miller said.

Smokers Warehouse Club ads list an address of 11427 Commercial Ave., Richmond, Illinois. Richmond is northwest of Chicago.

Smokers Warehouse print ads tout "TAX FREE CIGARETTES" at "only 67-cents per pack." One ad said Smokers Warehouse will provide bulk tobacco and a cigarette-rolling device to make cigarettes at home at a cost of $19.95 plus $5.95 for shipping and handling, or a total of $25.90. One shipment is said to make 30 packs (or three cartons) of cigarettes.

Iowa's lawsuit says Smokers Warehouse falsely claims the tobacco is tax-free and fails to inform potential buyers that they are subjecting themselves to possible tax collection efforts and criminal prosecution - a deceptive and omissive practice under Iowa's Consumer Fraud Act.

The suit also alleges that Smokers Warehouse's failure to assure that tobacco isn't sold to minors constitutes an unfair practice under Iowa law. The ads are readily accessible to minors, minors may be attracted by low prices, and purchases from Smokers Warehouse apparently "involve no effort whatsoever to check a valid identification" of the purchaser's age, according to the suit.

Miller said that on September 14th a fourteen-year-old Iowa girl under the supervision of a Consumer Protection Division investigator placed an order for Smokers Warehouse tobacco in her own name but using a credit card in her mother's name. "The company required no proof of age whatsoever," Miller said.

"Five days later a shipment of tobacco and a cigarette-making device arrived at the home addressed to the minor. The tobacco was sent in a package with no indication it was tobacco, and was left on the doorstep with no requirement of verifying the age of the addressee or obtaining a signature of an adult upon delivery," he said.

"That lack of safeguards is unacceptable."

The lawsuit, filed Friday morning in Polk County District Court in Des Moines, asks the court to enter an injunction prohibiting the alleged deceptive, misleading, omissive, and unfair practices, and impose civil penalties up to $40,000 per violation of the state Consumer Fraud Act.

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