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August 17, 2022

Where There’s Smoke, There’s... Increasing Regulatory Focus

By , , ,

In June, the US Food and Drug Administration made waves as it announced a full ban on the popular e-cigarette provider Juul Labs’ products in the United States. After an extended review period of nearly two years, the FDA ruled that all currently marketed Juul products must be removed from the US market. For now, Juul has appealed the decision and can continue to sell during the appeal process.

Nevertheless, the move underscores how e-cigarettes and vaping have captured the attention of regulators – in particular, the FDA.

In January 2020 the FDA announced new guidelines on e-cigarette products, including the banning of flavored nicotine products. The rationale for banning flavored products is with the intent of lessening the appeal of tobacco products to youth. The CDC reports that in 2021, over 81% of high school students and 75% of middle school students who used tobacco, used a flavored tobacco. Those numbers climb even higher when considering e-cigarette use specifically.

 

FDA turns its focus to e-cigarettes

The initial policy surrounding the FDA regulations regarding electronic cigarettes was one of non-enforcement. FDA regulations from 2016 dictated that all Electronic Nicotine Delivery Systems (ENDS) must have FDA approval to be marketed legally. However, the FDA decided to defer any enforcement of these measures – essentially leaving the space loosely regulated.

Then, in January 2020, the FDA released its finalized enforcement policy on “flavored cartridge-based e-cigarettes”, requiring companies to submit e-cigarette products for approval. Since then, the FDA has followed up with a steep rise in warning letters and enforcement actions against non-compliant merchants.

The FDA’s Center for Tobacco Products issued a total of 140 warning letters in 2020. In 2021, that number doubled, with the issuance of 296 such warning letters. At the time of writing, 2022 has seen a similar pace: 160 FDA warnings have already been issued, and the year is not over.   

 

E-cigarette industry should expect more regulation

Despite the crackdown on unlicensed sale of ENDS, the FDA has moved to authorize various ENDS products which it has evaluated and deemed safe.

A list of approved tobacco products granted marketing authorization by the FDA can be found here: https://www.fda.gov/tobacco-products/premarket-tobacco-product-applications/premarket-tobacco-product-marketing-granted-orders

However, traditional tobacco is an extremely regulated industry; it can be expected that ENDS will come to be regulated much the same way.

What does this mean for payment providers?

The electronic cigarettes industry and its online reach continue to grow significantly. Between July 2021 and July 2022, EverC proprietary data indicated that the number of known ecommerce URLs selling tobacco products online nearly doubled.

With the FDA’s expanding focus on this industry and the steady increase in online ENDS merchants, payment providers should stay updated on the latest regulations surrounding e-cigarettes and ensure that any sponsored merchants are maintaining compliance. Remember: if your merchants are selling unauthorized products or disobeying regulations, you may be held liable.

EverC technology can help you mitigate the risks of these and other high-risk merchants.

See it in action