By Timothy S. Donahue

Top Takeaways:

• Enforcement push: 13 state attorneys general urge payment giants to block illicit vape transactions
• Market scope: Officials claim unauthorized products account for more than 80% of U.S. vape sales
• Escalation: Letter links illicit trade to youth use, e-commerce gaps and organized crime

A coalition of 13 state attorneys general is urging financial heavyweights to play a more active role in cracking down on illicit e-cigarette sales—marking a new front in enforcement efforts that extends beyond manufacturers and retailers.

In a joint letter dated April 14, the attorneys general called on Visa, Mastercard, American Express, and Discover to “immediately assist in stopping sales of illicit e-cigarette products” by cutting off payment access for merchants engaged in those transactions.

The letter was sent to top legal officers at the companies, including Visa General Counsel Julie Rottenberg, Mastercard General Counsel Tiffany Hall, American Express Chief Legal Officer Lauren Seeger and Capital One General Counsel Matthew Cooper.

The signatories—spanning states including Iowa, Alabama, Georgia, Kentucky, and South Carolina—argue that payment networks are central to the distribution of unauthorized vape products and must play a more aggressive enforcement role.

“Illicit e-cigarette products now account for almost all of the U.S. e-cigarette market, generating over $11 billion in annual retail sales and making up more than 80% of all e-cigarette sales nationwide,” the attorneys general wrote.

That estimate reflects a growing concern among regulators that the U.S. vape market is dominated by products that have not been authorized by the U.S. Food and Drug Administration.

According to the letter, the FDA has authorized only 41 e-cigarette products for legal sale, while “thousands of unauthorized brands continue to use your platforms to facilitate illegal transactions.”

The attorneys general framed the issue across five primary risk areas: public health, youth exposure, widespread retail availability, online sales, and transnational criminal activity.

Regarding public health, the letter emphasizes that unauthorized products bypass the FDA’s premarket review process, so their nicotine and chemical profiles have not been evaluated under the statutory “appropriate for the protection of public health” standard.

Youth use remains a central concern. “Many illicit e-cigarette brands are deliberately designed, packaged, and marketed with colors and flavors that appeal to children,” the attorneys general wrote, adding that such products are often accompanied by “dubious consumer-facing representations.”

The scale of retail distribution is also highlighted. The letter estimates that illicit vape products are sold at more than 100,000 locations nationwide, including convenience stores, vape shops, and gas stations, creating what officials call a “false veneer of legality” within mainstream commerce.

That estimate is partly based on field research cited in the letter, including a 2025 Center for Rapid Surveillance survey that found widespread availability of unauthorized products, such as Geek Bar, across multiple retail channels.

E-commerce presents an additional challenge. The attorneys general said illicit products are “sold openly via e-commerce platforms that frequently lack robust age-verification protocols,” with shipments often routed through major carriers including USPS, UPS and FedEx and “deliberately mislabeled to bypass federal shipping regulations” under the Prevent All Cigarette Trafficking (PACT) Act.

The most serious allegation links the illicit vape trade to organized crime. “Federal investigations have identified clear links between this illicit supply chain and Chinese money laundering networks, Mexican drug cartels, and other criminal organizations,” the letter states.

Against that backdrop, the attorneys general argue that payment processors are uniquely positioned to intervene. “Distributing those products relies on financial institutions and payment networks to process billions of dollars in retail sales,” they wrote, adding that such transactions violate card-network rules governing illegal activity, high-risk merchants and brand protection.

The letter urges payment platforms to strengthen “Know Your Customer” practices, monitor merchant activity more closely, and use enforcement tools to terminate accounts linked to illicit vape sales. “Once on notice… payment platforms must deny access to their services and take affirmative steps to identify, investigate, and remove merchants engaged in the unlawful sale of illicit e-cigarettes,” the attorneys general wrote.

The push draws on historical precedent. The letter references a 2005 collaboration among state attorneys general, federal authorities, and payment networks to target illegal online cigarette sales—an effort that ultimately contributed to the passage of the PACT Act.

Now, officials are signaling a similar approach to the vape category. “The scale of this problem, the harm to public health, and the involvement of organized criminal networks make prompt and decisive action imperative,” the attorneys general wrote.