Last week, Vermont Vapor, Inc. (“Vermont Vapor”) announced that the Vermont Attorney General’s Office is seeking $50,000 in penalties in connection with Vermont Vapor’s e-cig marketing practices.
How can e-cig manufacturers and related marketing affiliates avoid problems with regulators?
Attorney General Investigation of E-Cig Marketing Practices
In December 2016, the Vermont Attorney General’s Office delivered a civil investigative demand (CID) to Vermont Vapor, which included substantial document requests and a number of questions related to Vermont Vapor’s e-cig marketing practices.
On January 31, 2017, in response to the AG’s investigation and increased regulation of the e-cigarette industry, Vermont Vapor announced that it will be closing its business and that the company’s owner plans to move out of the State. The very next day, the Vermont Attorney General’s Office delivered a proposed settlement agreement to Vermont Vapor that, among other things, would require the e-cig manufacturer to:
- Pay $50,000 in civil penalties to the State of Vermont;
- Admit to various alleged violations of the Vermont Consumer Protection Act;
- Cease and desist from:
- Making unsubstantiated testimonials and smoking cessation, health and safety claims;
- Providing free e-liquid samples; and
- Featuring certain “vaping Santa Claus,” “vaping Easter Bunny” and “vaping skeleton” yard inflatables at its retail location.
- Agree to liquidated damages of $10,000 for each future violation of the settlement agreement.
Vermont Vapor has denied all wrongdoing and reiterated that it has chosen to close down rather than entertain the AG’s investigation and settlement proposal.
In an unusual twist, Vermont Vapor appears to have been involved in a separate trademark dispute in 2015 with an Assistant Attorney General for the State of Delaware after she started a competing online e-cigarette business (in her personal capacity) named “Vermont Vapors.” The Vermont Vapors website and social media pages have since been removed.
E-Cig Marketing Compliance: Don’t Blow It Off
As the above-referenced case illustrates, lawmakers and regulators across the country are cracking down on e-cig marketing. In this rapidly developing regulatory landscape, e-cigarette manufacturers, retailers and related marketing affiliates are at risk of regulatory action and other adverse legal consequences, which can prove fatal for a business. As such, businesses and individuals operating in the e-cigarette space should be sure to speak with an experienced marketing attorney before commencing any e-cigarette marketing campaign.