A Refresher on FDA Retail Tobacco Compliance Checks

MINNEAPOLIS -- With the new year just beginning, it is important for tobacco retailers to be reminded about compliance checks conducted on behalf of the U.S. Food and Drug Administration. The FDA has been conducting tobacco compliance checks on U.S. retailers for the past five years. 

To conduct these compliance checks, the FDA contracts with an entity, usually a state government agency such as a health department or human services department, to carry out the retail store inspections. The FDA generally conducts two kinds of inspections: one involving an underage minor decoy who enters a store and attempts to purchase a regulated tobacco product; and the second involving a FDA contracted inspector who determines if other FDA tobacco regulations are being followed, such as the prohibition on self-service displays of cigarettes, RYO tobacco and smokeless tobacco (except in age-restricted stores that do not allow underage youth to be present in the store).

Here’s what to expect if a retailer is fails inspections at various levels ...

For a first-time tobacco compliance check that results in a violation, the FDA issues a warning letter to the retailer detailing the violation and requesting a response from the retailer regarding the corrective action to be taken to prevent a similar violation in the future. There is no fine levied against the retailer if a warning letter is issued. However, the FDA will usually make an unannounced follow-up inspection at the same retail store after a warning letter is issued to determine if a subsequent violation occurs or whether the corrective action taken by a retailer prevents future violations.

A Civil Money Penalty (CMP) Complaint is used by the FDA for additional violations of the retail tobacco regulations after the first inspection occurs. A CMP involves a money fine levied against the retailer.

The FDA tobacco regulations provide that the amount of the CMP or fine shall not exceed certain amounts, depending on the number of previous violations and the time period in which the violations occurred. The amounts as of Aug. 1, 2016, for civil money penalties assessed for violations that occurred after Nov. 2, 2015, are:

Number of regulation violations     CMP fine amount

• 1                                                                          $0 (warning letter)
• 2 within a 12-month period                                $275
• 3 within a 24-month period                                $550
• 4 within a 24-month period                                $2,200
• 5 within a 36-month period                                $5,501
• 6 within a 48-month period                                $11,002

The U.S Department of Health and Human Services, including the FDA, is required to adjust the fine amounts annually for inflation no later than January 15th of each year.

Under federal law, the FDA may pursue a No-Tobacco-Sale Order (NTSO) against retailers that have a total of five or more repeated violations of certain regulations within 36 months. Retailers are prohibited from selling regulated tobacco products at the specified location during the period of the NTSO.

In determining the period of a No-Tobacco-Sale Order, the FDA takes into account the nature, circumstances, extent and gravity of the violations and, with respect to the retailer, the ability to pay an additional fine, the effect of a no-tobacco-sale order on the ability to continue to do business, any history of prior such violations, the degree of culpability and such other matters as justice may require.

The FDA issues what are known as guidance documents that set forth the agency’s thinking on how federal regulations will be enforced. On Dec. 15, 2016, the FDA updated the two guidance documents relating to compliance checks, civil money penalties and no-tobacco-sales orders. These two guidance documents are titled “Civil Money Penalties and No-Tobacco Sale Orders for Tobacco Retailers” and “Civil Money Penalties and No-Tobacco Sale Orders for Tobacco Retailers: Responses to Frequently Asked Questions.” These guidance documents should be reviewed by retail staff that oversee daily store operations and compliance with federal tobacco retail regulations.