New York City, States Reach Settlement With USPS on Cigarette Lawsuit

Post office to enact changes to help detect illegal packages from abroad
United States Postal Service
Photograph: Shutterstock

NEW YORK — The United States Postal Service (USPS) is changing the way it detects cigarette packages in international mail, destroying cigarette packages sent illegally to the United States and designating a compliance manager to oversee Prevent All Cigarettes Trafficking (PACT) Act compliance.

These reforms, among others, were agreed to in a settlement between the USPS and the plaintiffs: New York City, California, Connecticut, Illinois and Pennsylvania, according to the settlement filed Monday in the U.S. District Court for the Eastern District of New York.

The settlement stems from an October 2019 lawsuit where New York City and the state of California sued the USPS, alleging it transmitted packages that the USPS knew or had reasonable cause to believe contained cigarettes in violation of the PACT Act.  

Although the PACT Act has largely deterred domestic sellers from shipping cigarettes through the mail to destinations within the United States, it has been less effective in stopping delivery of cigarettes mailed from overseas because the USPS has routinely returned identified packages of cigarettes to their foreign shippers, who often then reship the packages back to the United States, Connecticut Attorney General William Tong said. Investigations 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, he said. 

“Today’s settlement forces the U.S. Postal Service to do its job to stop the flow of foreign contraband cigarettes into the United States,” Tong said. “These smuggled cigarettes cost all states, including Connecticut, hundreds of thousands of dollars in lost tax revenue, and hinder smoking cessation efforts. Our agreement compels the postal service to implement comprehensive reforms to detect and stop these illegal shipments.”

The USPS denied any allegations of unlawful conduct or wrongdoing.

“Although the postal service considers that it has always been in full compliance with federal law regarding the handling of cigarette packages in international mail, we do support the goals of the settlement agreement, and for that reason we have decided to resolve this lawsuit, and to work cooperatively with all of the parties to this case to advance those goals,” the USPS told CSP in a statement.

Some of those goals include:

  • Creating strong disincentives to illegal cigarette smuggling.
  • Providing government enforcement officials with more effective enforcement tools to combat cigarette smuggling.
  • Making it more difficult for cigarette traffickers to engage in and profit from their illegal activities.
  • Increasing the collection of excise taxes on cigarettes and reducing tax evasion.
  • Protecting the public health, including reducing youth access to cigarettes.

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