Today, New York City announced that FedEx will pay $2.4 million to settle a claim that the shipping giant delivered untaxed cigarettes to consumers in New York.
According to the lawsuit, CigarettesDirect2U.com, a site based in Kentucky, delivered about 160,000 cartons of cigarettes to residents in New York. Those cigarettes were sold without paying the proper $15-a-carton tax the city usually collects on cigarettes. The $2.4 million in damages is equal to the amount of estimated revenue the city feels it would have collected on cigarettes sold.
FedEx Ground said in a statement that it had â€śadmitted no wrongdoing, but agreed to the settlement to avoid what would have certainly been a prolonged and much more expensive resolution process.â€ť It added, â€śWe fully support New York Cityâ€™s efforts in this matter and are cooperating with New York City to ensure that shippers comply with our policy against illegal tobacco shipments.â€ť
The site, which is no longer in business, is also named in an additional lawsuit by the city for violating the federal Contraband Cigarette Trafficking Act, which forbids â€śdelivery of untaxed cigarettesâ€ť to anyone other than cigarette wholesalers.Â Allegedly the company sold 400,000 cartons of cigarettes to city residents, said Eric Proshansky, a lawyer for the city.
Read more at NY Times