Attorneys General Across the U.S. Cracking Down on Illegal Secondary Market Online Sales of Alcohol
As the holiday season kicks into full gear more and more people will be trying to get their hands on that impossible to find bottle of bourbon, whiskey, tequila or whatever spirit their heart desires. Rather than arriving at the liquor store at 4am in 30° temperatures and standing in a line that wraps around the building many people choose to do their shopping from their easy chair by visiting their favorite website to search the secondary market to find that impossible to find hooch.
In that search many will turn to social media sites like Facebook, a bidding site like Ebay or an everything is for sale site like Craigslist. Any online purchase is buyer beware but when it comes to consumables there’s additional risk. It’s possible what you are buying is the real-deal but it’s also possible that bottle with the sealed cap is filled with a lesser product or one that had been adulterated to give the aroma and appearance of the real McCoy.
A quick online search shows things are easy to find online. The Pappy Van Winkle Collection for $15,000 or even an empty bottle of Pappy for $249? Hmm. Caveat emptor = buyer beware.
In an effort to help curb online sale of alcohol by non-licensed sites the National Association of Attorneys General (NAAG) sent letters to leading U.S. online vendors, asking them to undertake certain steps to curtail illegal alcohol sales online.
The National Association of Attorneys General sent letters to Craigslist, eBay, and Facebook. The letter is included below in its entirety. The Association says, “These digital platforms have given rise to the sale of unlicensed and unregulated alcohol. The sale of illegal alcohol online may include counterfeit, mislabeled, or fraudulent products. This presents a risk to consumers, including minors, who are exposed to illegal products that may not meet health standards.” And of course the government wants there cut too.
Attorneys General from 46 States Sign Letters
“We believe that everyone has an ethical and moral responsibility to protect consumers, especially those who are most vulnerable to fraud. Self-regulation and self-policing to prevent illegal and unfair trade practices and ensure consumer safety are minimum responsibilities for your respective companies. You have the technical prowess and power to accomplish basic protections against illegal sales,” reads the letter signed by 46 state and territory attorneys general, including NAAG President Jeff Landry (Louisiana) and Aaron Frey (Maine).
The attorneys general asked the vendors to take the following steps:
Review the current content posted to their companies’ websites and remove illegal postings for the sales and/or transfer of alcohol products.
Develop and deploy programming to block and prevent users of their platforms from violating state law by posting content for the sale and distribution of alcohol products on their websites.
The attorneys general also asked the vendors to establish a working group with stakeholders to discuss and establish “realistic and effective protocols for internet platforms and content providers related to illegal and unlicensed alcohol sales via digital platforms.”
Which States are Missing?
We’ll save you some time from searching the entire list by state. Turns out Puerto Rico and Washington, D.C. attorneys have signed the letter. The states missing from the list are Alaska, Arizona, California (home to all three companies that received the letters), Missouri, New Hampshire and Wyoming.
Distillers Not Happy with Secondary Market Either
The NAAG is not alone. While at Bourbon & Beyond this year Fred Minnick was acting as emcee for a session with the Van Winkle family. Part of the conversation turned to the secondary market. Preston Van Winkle, Marketing Manager for Old Rip Van Winkle Distillery was quick to respond.
Fred asked Preston, “If you could be in a room with a known counterfeiter one-on-one who was reselling, what would you say or do to that person?
“It would be ugly,” said Preston. “I would make them drink the whole bottle of whatever rock-gut they put in that bottle… We are deadly serious about this. We are just trying to protect our customers.”
And with that, here’s the official letter NAAG send to Scott Schenkel, eBay Interim Chief Executive Officer, Jim Buckmaster Craigslist Chief Executive Officer and Mark Zuckerburg Facebook Chief Executive Officer. The one featured here was sent to Facebook the other two letters are identical.
Stay Informed: Sign up here for the Distillery Trail free email newsletter and be the first to get all the latest news, trends, job listings and events in your inbox.
October 22, 2019
Facebook Chief Executive Officer
1 Hacker Way
Menlo Park, CA 94025
Social media and digital platforms have become interwoven into the fabric of our society. Consumers have become increasingly dependent on the broad access to goods for sale through these mediums. Unfortunately, the near unlimited access to goods has increasingly exposed consumers, including minors, to unlicensed sales of alcohol and counterfeit products. We are seeking your assistance to address some of the challenges to consumer protection associated with online marketplaces and to improve the legitimacy of these sales.
We are aware of the occurrence of unlicensed, unregulated, and untaxed alcohol sales through digital platforms. Some of the products sold in this manner may be counterfeit, mislabeled, or fraudulent. The consumer may not know that this method of alcohol sales is illegitimate, or that these blackmarket products could pose health risks. Bad actors may exploit the anonymity of a digital platform to evade regulation, law enforcement, taxation and responsibility.
The 21st Amendment to the U.S. Constitution firmly invests the right to regulate the sale of alcoholic beverages with each state. Each online content company operating within the United States has a legal obligation to comply with federal and state law. But that is simply a legal obligation. We believe that everyone has an ethical and moral responsibility to protect consumers, especially those who are most vulnerable to fraud. Self-regulation and self policing to prevent illegal and unfair trade practices and ensure consumer safety are minimum responsibilities for your respective companies. You have the technical prowess and power to accomplish basic protections against illegal sales.
Today, we call upon you to join us in this shared responsibility to protect our youth, the Constitution and the integrity of the digital marketplace. Toward this goal, we ask your companies to undertake some initial steps to address this shared problem:
- Review the current content posted to your companies’ websites and remove illegal postings for the sales and/or transfer of alcohol products.
- Develop and deploy programming to block and prevent your platform users from violating state law by posting content for the sale and distribution of alcohol products on your websites.
We also invite you to join with us to establish a workgroup with stakeholders from industry and government. Together, this group can discuss and establish realistic and effective protocols for internet platforms and content providers related to illegal and unlicensed alcohol sales via digital platforms.
Thank you for your prompt attention to this matter. We would appreciate hearing from you about the actions your company has taken, or will take, to protect consumers in the online marketplace.
We know that by working together we can harness the great power of your platform and the great responsibility invested in our offices to address these harmful and illegal activities.