February 23, 2011

Chinese Companies Sued for Counterfeit Cigarettes

By the ZippyCart Shopping Cart Reviews Content Team

Altria Group, owner of Phillip Morris, filed suit against seven Chinese companies for allegedly selling counterfeit versions of Phillip Morris products, among them false copies of their iconic Marlboros. Phillip Morris says that this is the first time that an American company has sued a Chinese company for selling counterfeit cigarettes to Americans. The move is part of an ongoing campaign to shrink the “gray market” for cigarettes in the United States.

It’s no secret that cigarettes are expensive. States and cities impose taxes on cigarette sales for a variety of reasons, mainly because they know that addicted consumers will shell out for repeated fixes despite mounting costs, and secondarily as a “deterrent.” Some lawmakers and policymakers believe that increased prices will encourage addicts to quit. The cost of cigarettes and the biological need for them causes consumers to seek out cheaper alternatives — though to be fair, all consumers like to save money.

The “gray market” (sort of like a black market, but not as explicitly illegal) for cigarettes drives consumers in many different directions. Ecommerce offers access to pretty much every illegal and semi-legal avenue for cheap smokes. First comes online buying of “approved” cigarettes: recently New York Attorny General Eric Schneiderman filed suit against six online retailers for selling cigarettes online without paying the state’s (high) taxes. This is the main reason smokers turn to the internet for cigarettes: evading taxation. This also drives them to Native American reservations, where taxation laws are different. For a time some online stores selling cigarettes were based on reservations. A law passed in June of 2010 now forbids this practice.

Counterfeit cigarettes are the next discount avenue. They masquerade as the real thing, but aren’t officially licensed by the trademark holder and most (if not all) don’t pay the appropriate taxes. This may seem like a win-win for smokers, but these cigarettes often don’t follow quality or safety standards, meaning that a cigarette (already dangerous enough, some argue) could be rendered even more dangerous to the consumer.

Chinese companies weren’t the online ones swept up in the lawsuits. Phillip Morris also sued several Los Angeles-area retailers just for their parts in selling the phony cigarettes. The lawsuits coincided with raids by LA sherrif’s officers that resulted in 10 arrests and the seizure of over 9,000 packages of fake cigarettes.

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