Shopify will prohibit the sale of vape products as US regulators ramp up their efforts to combat illegal e-cigarettes
Shopify is taking steps to ban vape sales as pressure from US authorities intensifies in their efforts to combat the illegal e-cigarette trade.
E-commerce platform Shopify is poised to ban the sale of vape products across its platform as soon as this week, in response to ongoing pressure from a bipartisan coalition of U.S. state attorneys general aiming to limit the online sale of illegal e-cigarettes.
The action signifies a major step taken against the swiftly growing illicit vape market, which authorities estimate to be valued at approximately $9 billion in the United States.
Sources familiar with the matter indicate that Shopify has been in discussions with a group of 25 state attorneys general since last year regarding concerns about the ongoing sale of illegal vape products through online channels.
The company based in Ottawa delivers the technological framework that supports millions of online stores around the world. The anticipated policy change would ban the sale of all vape products on the platform in the United States, irrespective of whether they have obtained authorization from the US Food and Drug Administration (FDA).
A spokesperson for Shopify stated that the company has consistently taken action against unlawful activities on its platform.
“We have consistently prohibited illegal activity and take appropriate action when we become aware of merchants violating our policies,” the spokesperson stated.
The company stated that enforcement decisions are influenced by legal requirements and changing regulatory frameworks, rather than by the pressure of any individual group.
The enforcement action arises as authorities escalate their initiatives to dismantle the framework enabling unlawful vape transactions. Numerous products being targeted are produced in China and sold in the United States without obtaining the necessary regulatory approvals.
Despite being illegal to import or sell, these products continue to be readily accessible via online retailers, vape shops, convenience stores, and gas stations.
Industry analysts suggest that Shopify’s decision may greatly impact online vape sales and intensify challenges for merchants in the sector.
The FDA has approved a restricted selection of e-cigarette products for legal sale in the United States, with the majority being tobacco-flavoured. Major tobacco companies have contended that the limited approval process has unintentionally contributed to the expansion of the illicit market.
The anticipated Shopify ban is expected to have a minimal effect on licensed manufacturers, as authorized vape sales are typically focused in physical retail locations rather than online platforms.
The regulatory pressure is increasingly influencing the payments sector.
Mastercard has recently issued a warning to financial institutions that process transactions for merchants selling unlicensed vape products, indicating that such activities may breach the company’s standards.
In guidance provided to its network partners, Mastercard emphasized that financial institutions hold the responsibility for ensuring that merchants adhere to relevant laws and regulations.
The company advised implementing more rigorous oversight of merchant inventories, invoices, and transactions to detect any potentially illegal vape sales.
Mastercard has also cautioned that retailers and payment processors involved in facilitating illegal vape transactions may be subject to investigations and potential financial penalties.
“Our network maintains a strict policy against any unlawful activity,” the company stated.
The recent actions highlight increasing initiatives by US authorities to limit access to illegal vape products and enhance regulation of online sales channels and payment systems that support the industry.
