E-Cigarette Merchants Must Comply With New FDA Policy

Feb 17, 2020

In January 2020, the U.S. Food and Drug Administration released a policy which focused enforcement against unauthorized flavored e-cigarette products that appeal to minors, including mint and fruit flavors. Under this new policy, any company that does not halt the manufacture, distribution, sale of this unauthorized flavored cartridge-based e-cigarettes within 30 days, will face FDA enforcement actions.

HHS Secretary Alex Azar explained the reason for this action:

“By prioritizing enforcement against the products that are most widely used by children, our action today seeks to strike the right public health balance by maintaining e-cigarettes as a potential off-ramp for adults using combustible tobacco while ensuring these products don’t provide an on-ramp to nicotine addiction for our youth. We will not stand idly by as this crisis among America’s youth grows and evolves, and we will continue monitoring the situation and take further actions as necessary.”

Another guiding element that influenced this move was the results of the 2019 National Youth Tobacco Survey which revealed that more than 5 million U.S. middle school and high school students are current e-cigarette users. This means that they have used it in the last 30 days.The majority have reported that they used the cartridge-based products as their preferred brand.

Also, the study showed that of the young e-cigarette users in 2019, 1.6 million were using the product frequently (20 or more days out of a 30-day period). Nearly 1 million were using e-cigarettes daily.

An additional federal survey revealed that the youth were particularly drawn to e-cigarette flavors such as fruit and mint. Even more so than the standard tobacco and menthol flavors.

It reveals a disturbing trend as the use of e-cigarettes increases the risk of nicotine addiction and other health problems. Specifically, there is evidence to prove that early exposure to nicotine in young people can affect their developing brain. This can easily segue to trying conventional cigarettes in the future.

Starting 30 days from the publication of this announcement, the FDA will prioritize enforcement against illegally marketed electronic nicotine delivery systems or (ENDS) products by honing in on the following products that do not have premarket authorization, including:

  • Any flavored, cartridge-based ENDS products (other than tobacco or menthol flavored)
  • All other ENDS products that the manufacturer has failed to take adequate measures to prevent minors’ access
  • Any ENDS products that is targeted to minors or likely to promote use of ENDS by minors

What Does This Mean For E-Cigarette Merchants?

The recent governmental studies reveal a disturbing trend in which certain e-cigarette merchants can be contributing to minors becoming addicted to tobacco at a young age. Tragically there have been deaths among youth due to the use of e-cigarettes.

As an e-cigarette merchant, it is crucial that you stay in compliance with federal laws. If you sell your products online, consider adding more sophisticated age-verification technology to discourage minors from purchasing your merchandise online.

Final Thoughts

Compliance has its advantages and nobody wants to be in a situation where they are breaking the law outright.  Furthermore, if you have an e-cigarette merchant account, you are obligated to stay abreast of all federal and state laws that govern your industry. Staying in compliance will ensure that your merchant service provider can keep you on board and continue to provide you with the payment processing services you need.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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