Massachusetts charges four online alcohol merchants with selling to minors

As the result of sting operations by its Attorney General’s Office, Massachusetts has charged that four out-of-state retailers violated state laws on selling to underage buyers. It also cited three other retailers and three shipping companies for failing to comply with state liquor laws.

The Massachusetts action supports the efforts of the state’s alcohol wholesalers, as well as others throughout the U.S., to prevent Internet sales from out-of-state retailers. “This investigation proves that selling alcohol directly to the public by skirting accountable state regulatory and tracking systems is fraught with danger,” says Juanita D. Duggan, CEO of the Wine and Spirits Wholesalers of America, a national trade group.

But James Seff, a lawyer who specializes in beverage laws and is the former chief counsel of the Wine Institute, an industry group for wine suppliers, says he doubts the Massachusetts cases will set a major legal precedent. But they could still have an effect on cases regarding Internet sales of alcohol set to appear before the U.S. Supreme Court later this year, he adds.

“The Supreme Court won’t consider the Massachusetts cases, but it doesn’t mean the justices won’t have read about it or have it on their minds,” says Seff, who is a partner with Pillsbury, Madison & Sutro in San Francisco. The Supreme Court will hear cases this fall regarding the efforts of New York and Michigan to enforce their laws on Internet sales. New York has a ban on Internet sales by out of state alcohol retailers, while Michigan has a law that allows such sales.

The Massachusetts sting operations, conducted in 2002 and earlier this year by the office of Attorney General Tom Reilly and the state’s Alcohol Beverages Control Commission, found that all seven retailers sold alcohol over the Internet to buyers under the state’s legal age of 21. The retailers named in the lawsuits, which were filed in Suffolk County Superior Court in Boston, are: Sherry-Lehman Wines and Spirits of New York, which operates SherryLehman.com; Wine Globe of San Mateo, CA, which operates WineGlobe.com; Queen Anne Wines and Spirits Emporium of Teaneck, NJ, whose retail web site is QueenAnneWine.com, and Clubs of America, Lakemoor, IL, which operates GreatClubs.com.

Reilly also forwarded to the Alcohol Beverages Control Commission for further review evidence regarding sales to minors against three other online retailers—Geerlings & Wade, Canton, MA; Wine.com, San Francisco; The Wine Messenger, New Rochelle, NY—and the shipping companies UPS, Fedex Corp. and DHL.

The state contends that the college students who participated in the sting operations were able to order wine, beer and hard liquor online including tequila and vodka from the seven web retailers without having to take any steps to verify their age as required by state law. “At most, some sellers required the students to check a box indicating that he or she was at least 21,” the attorney general’s office said. “All students received shipments at home without having to provide any form of identification or age verification.”

The state contends that UPS, Fedex and DHL violated the state’s liquor laws by failing to properly check the identifications of recipients to assure they all were at least 21 years old. But Seff, the beverage industry attorney, says that shipping companies usually only train their delivery drivers to verify the age of recipients in states that allow Internet sales of alcohol, and that Massachusetts is one of 26 states that doesn’t allow Internet sales.

Michael Yurch, the owner and president of Sherry-Lehmann Wines and Spirits, tells InternetRetailer.com he doesn’t plan to challenge the state’s action and will abide by whatever the court rules. He’s a strong supporter of Internet sales to let small retailers expand their markets, however, and says he’s been trying to work with credit card companies to develop a way of authenticating a buyer’s age. “We’ve been dealing with this issue since 1999,” he says.

Yurch has suggested that credit card companies, which actively market to college students of all ages, attach an extra code number to the credit card accounts of those under the age of 21 to alert merchants. He has also suggested a credit card system that would prevent the cards of minors from being able to process payments on the sites of certain types of merchants. The card companies have not responded, he says.