Payment giants urged to crack down on illegal e-cigarette sales
Officials say most online e-cigarettes violate federal law and youth use remains a growing public health threat
A bipartisan coalition of state attorneys general is pressing major financial companies to do more to stop illegal e-cigarette sales, warning that payment systems are helping fuel a fast-growing youth nicotine market.
California Attorney General Rob Bonta said the coalition — joined by the City of New York — sent letters to nine major payment processors, including Visa, Mastercard, American Express, PayPal, and Stripe, urging stronger action to block unlawful tobacco transactions.
The group also contacted Capital One, Citigroup, Block (which operates Square, Cash App and Afterpay), and Sezzle.
“Illegal e-cigarette sales remain widespread, posing a serious public health concern,” Bonta said, adding that payment platforms “have a responsibility to ensure their services are not being used to facilitate these illegal sales.”
Regulators target the money flow
The letters give the companies 15 days to detail how their systems are being used in e-cigarette transactions and what safeguards they have in place.
The move revives a strategy used in the early 2000s, when states partnered with payment processors to curb online cigarette sales to minors. Officials say a similar approach is now needed as vaping products — especially flavored ones — proliferate online.
Attorneys general also pointed to recent actions involving Shopify, where regulators say unlawful e-cigarette sales have been identified, alongside broader enforcement efforts including lawsuits and referrals to federal authorities.
Most online e-cigs deemed illegal
Under rules enforced by the U.S. Food and Drug Administration, all new tobacco products must receive premarket authorization before being sold in the U.S. So far, the agency has cleared only 41 e-cigarette products — all in tobacco or menthol flavors.
That leaves the vast majority of e-cigarettes sold online in violation of federal law, regulators say, classifying them as “adulterated” products that cannot legally be marketed or shipped across state lines.
The Prevent All Cigarette Trafficking Act adds further restrictions, requiring online sellers to verify age, comply with tax rules, and follow state and local laws.
The PACT Act requires all distributors of cigarettes, which include e-cigarettes and other smokeless tobacco products (such as snuff or chewing tobacco), who sell or advertise in interstate commerce, to register with and report certain information to ATF and the tax administrators of the states where shipments of tobacco are made or advertised.
Patchwork of state bans
Many states and localities have moved ahead with their own restrictions, particularly targeting flavored products that appeal to younger users.
In California, lawmakers enacted sweeping limits through Senate Bill 793 and later expanded enforcement with Assembly Bill 3218, which took effect in 2025. The law created a state-maintained “Unflavored Tobacco List” defining which products can legally be sold.
What this means for consumers
For consumers, the crackdown could reshape where and how e-cigarettes are sold:
Fewer online options: Payment restrictions could cut off access to many unauthorized sellers
Higher compliance checks: Age verification and transaction monitoring may tighten
Potential price shifts: Reduced supply channels could affect pricing and availability
The bottom line
By targeting payment processors, regulators are aiming at a critical choke point in the e-commerce ecosystem — the ability to complete a sale. Whether the strategy works could determine how effectively states can rein in a largely online market that has outpaced traditional enforcement tools.