Attorney General Tom Miller had alleged consumer fraud violations, that the
Kentucky-based company, www.dirtcheapcig.com,
Inc., failed to prevent cigarette sales to minors, and failed to inform
Iowa purchasers that Iowa excise taxes are required on Internet purchase
of tobacco products.
In a consent judgment filed today, Judge Robert J. Blink prohibited dirtcheapcig.com, Inc., from shipping cigarettes into
Iowa, and the company's web site must clearly and conspicuously disclose that it does not make sales into Iowa.
Iowa and other states have conducted "stings" of Internet tobacco sales to minors. A 14-year-old Iowa girl purchased
cigarettes from the dirtcheap web site, under supervision of a Consumer Protection Division investigator, using her own
name and a credit card in her mother's name. The minor was not required to submit proof of age, and a carton of cigarettes
was delivered to her home.
Cigarettes sold through the dirtcheap web site were "unstamped" -- they
didn't bear the revenue stamp indicating payment of Iowa's excise tax.
Customers who buy unstamped cigarettes over the Internet must pay taxes,
and online retailers must not mislead customers that they don't have to
pay them. Dirtcheap's $20,948 restitution payment will go to the Iowa
Dept. of Revenue.
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