bank settlement

     LOS ANGELES (CN) – In a settlement between First Regional Bank and California Attorney General Edmund Brown Jr. Thursday, the bank must pay $60,000 after they did nothing to stop retailers who conducted rampant illegal online tobacco sales while using the banks electronic payment processing. “Retailers always seem to be a step ahead of us” admits Deputy Attorney General Laura Kaplan, while explaining her pursuit of the banks.
     “We found that illegal internet sales are very pervasive and decided to take a multifaceted approach to dealing with the problem. Unless you get the banks, credit-card companies, and carriers to cooperate in not facilitating online tobacco sales, it’s difficult to stop these problems” says Kaplan.
                While Kaplan conceded that First Regional Bank was not directly breaking any laws, she maintained that it had been advised by several state governments that it was helping illegal cigarette sales and that its inaction was therefore vulnerable to charges of aiding and abetting.
     California is concerned about illegal online sales of tobacco because such sales are a major source of tobacco for minors.
     To legally sell tobacco online in California, the seller must call the buyer to confirm the sale before sending the tobacco, have a two-carton minimum purchase, report the sale of tobacco products, and sell legal cigarettes, among other things.
     Scott Maybee, one of the largest on-line cigarette distributors, did none of this, and sold cigarettes which were not fire-safe, said Kaplan with the Attorney General’s office. Maybee used First Regional Bank since 2006 for electronic payment processing, and both the bank and the retailer were pursued by Brown in June of 2008.
     First Regional Bank entered into a settlement. Maybee did not, and was sued.
     Under the terms of the settlement, First Regional Bank will join the ranks of major credit-card companies and shippers who do not conduct business with retailers that illegally sell cigarettes online. The bank will also pay $40,000 in civil penalties and $20,000 in reimbursement to the state for the costs of the investigation, and will collect more information on their customers to differentiate between the legal and illegal retailers.
     The state, represented by Deputy Attorney General Laura Kaplan, discovered First Regional Bank was processing the money of the law-breaking retailers when it conducted a sting of Maybee.

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