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Massachusetts Sues Four Online Wine Retailers for Illegal Sales and Shipping

Following sting operation, state alleges retailers and shipping companies delivered alcohol to minors without checking ID.

Nick Fauchald, Dana Nigro
Posted: June 9, 2004

Massachusetts Attorney General Tom Reilly is suing four online retailers for selling alcoholic beverages to minors and violating the state's liquor laws. His move comes only two weeks after the U.S. Supreme Court decided to hear two cases that could shape the future of direct-to-consumer wine shipments, and forces opposed to online alcohol sales are seeking to use the Massachusetts lawsuits to bolster their arguments.

During a sting operation organized by Reilly and the state Alcohol Beverages Control Commission (ABCC) and conducted in 2002 and 2004, five underage volunteers purchased wine, beer and spirits via the Internet using their own credit cards and Massachusetts shipping addresses, the lawsuits allege.

The suits name four out-of-state retailers: Sherry-Lehmann Wines and Spirits in New York; WineGlobe in San Mateo, Calif.; Queen Anne Wine and Spirits Emporium in Teaneck, N.J.; and Clubs of America in Lakemore, Ill. None were licensed to sell alcoholic beverages in Massachusetts. The state, like nearly half the states in the country, bans interstate shipments of alcohol directly to consumers.

Reilly also sent evidence to the ABCC that three online retailers that were licensed in Massachusetts had illegally sold to minors. The three retailers are Geerlings & Wade in Canton, Mass.; Wine.com in San Francisco; and The Wine Messenger in New Rochelle, N.Y. In addition, he forwarded evidence that three shipping companies -- UPS, FedEx and DHL -- had illegally delivered the alcohol and not verified the ages of the recipients. No suits have been filed against these retailers and shipping companies, but the ABCC will hold administrative hearings to determine further action.

"I have seen for myself … how destructive underage drinking can be to our children and our families and communities in Massachusetts," Reilly said. "This is a serious problem, and making alcohol available online to young people -- the segment of our population that is by far the most Internet savvy -- only makes that problem worse."

The retailers named in the lawsuits said they were caught off-guard by the news. Tony Rekhi, CEO of WineGlobe, said his company doesn't ship to Massachusetts or any of the other restricted states. "They must have used someone else's credit card or shipping address," he said.

Kevin Roche, who owns Queen Anne Wine and Spirits, said groups against Internet sales are simply building up ammunition for the upcoming Supreme Court hearings on direct-to-consumer shipping. "This is all part of the big battle that's going to take place six months from now," he said. "Our desire to sell to minors is absolutely nil."

Sherry-Lehmann president Michael Yurch declined to comment until the store's legal counsel could finish reviewing the papers sent by Massachusetts. Executives at Clubs of America could not immediately be reached for comment.

Both Rekhi and Roche said the blame and responsibility should be placed on the shipping companies. "The shipping companies are supposed to obtain an adult signature before handing over the packages," Rekhi said.

Roche said the shipping companies need to do a better job enforcing their signature-upon-delivery policies. "If we're going to ship anywhere, the people handling the shipments need to be qualified and trained to check IDs," he said. "If the federal government is going to get into it, then they should make it mandatory to have that kind of service. I'd have no problem paying more for that."

Spokespeople for Federal Express and UPS stressed that they deliver alcohol only in states where it is permitted, and their company policies require their drivers to request valid photo ID to verify the recipient's age before delivering a package that contains alcohol. If ID is not provided, the package must be returned to the shipping center. However, they noted, their policies state that it is the responsibility of the senders to label the packages as containing alcohol using the companies' designated signature-required labels. (DHL has not yet responded to a request for comment.)

"The complaints explicitly state that none of the three alleged packages delivered by UPS contained markings indicating that the package contained alcoholic beverages," said UPS spokeswoman Christine McManus. She said customers that violate the policies are warned that their service could be terminated upon another violation. "We don't inspect the contents of every package," McManus added, "but if it's a known shipper like wineries, we're going to put the proper procedures in place."

A FedEx spokesman, Ryan Furby, said the company has requested details from the attorney general about the alleged delivery of the packages. "We'll work with the regulatory agencies to address any possible issues," he said, adding that the company "strives to provide the most responsible wine-shipping service in the industry."

No wine producers were involved in the suits, which winery industry groups considered encouraging, as they have been pushing to educate their members on how to comply with state shipping laws. "Our position on it would be that any shipments into Massachusetts from out-of-state sources were illegal," said Steve Gross, state relations manager for the Wine Institute, which represents California wineries. "We don't condone anyone making illegal shipments whether to adults or to someone underage."

Gross added that while wineries have benefited from a broad education effort on shipping, the same is not true for alcohol retailers. "I think there's a lot of retailers who simply don't know what the rules are, because their own organizations have chosen not to make public what the regulations are for them."

In all, the sting operation targeted 10 retailers. Two companies refused to ship to Massachusetts, and a third cancelled the order after the courier called the recipient and asked for proof of identification.

The individual counts, as alleged in the suits, are as follows:

  • In April 2002, a 19-year-old ordered two bottles of wine -- Antinori Tormaresca Red 2000 ($10) and Madfish Bay Chardonnay Western Australia 2000 ($15) from Sherry-Lehmann's Web site. A UPS employee delivered the package directly to the minor and asked for a signature, but didn't ask the minor to verify his age. A similar order placed in March 2004 was left at the door of a 20-year-old Northeastern University student by UPS. Neither package contained any markings that indicated the their contents or that the recipient must be 21 years of age or older.

  • In April 2004, a 20-year-old Merrimack College student ordered five bottles of liquor from the Queen Anne Web site. A FedEx employee delivered the package to his residence and obtained the student's signature but didn't ask for age verification, even though the package contained a label indicating its contents and requiring that the person signing for it be at least 21 years old. In May 2004, the same student ordered seven more bottles of liquor, which again was delivered by a FedEx employee, who obtained the recipient's signature. The package containing the second order didn't bear any label indicating its contents or the need for an adult signature.

  • In April 2002, a 19-year-old Middleton resident ordered a bottle of vodka from WineGlobe's Web site, which was delivered by UPS to a business adjacent to the minor's residence and later was handed over to the minor. The package contained a label that read "adult signature required," but the label gave no indication of its contents. In March 2004, a 20-year-old Wilbraham resident ordered two bottles of tequila from WineGlobe, which was left on the resident's front porch by a FedEx employee in his absence. The package contained no markings regarding its contents or a request for an adult signature.

  • In April 2004, a 20-year-old Merrimack College student ordered 12 bottles of beer from Clubs of America. A DHL driver left the unmarked package at the student's residence. In May 2004, a 19-year-old student from Stonehill College ordered 12 bottles of beer from the same Web site. In this instance, the student was asked to verify that she was at least 21, which she did by indicating her age as "22" on an online form. The beer, in an unmarked package, was left at the student's address by FedEx; no signature was requested.

    In the other instances, none of the minors were required to verify their age during the online ordering process. However, each retailer's Web site does include a disclaimer that it is illegal for minors to purchase alcohol.

    The Wine and Spirits Wholesalers of America (WSWA), a trade group that is opposed to direct shipping, took the sting operation as an opportunity to argue against any system that allows alcohol sales via the Internet, phone or mail. A statement issued by the group argued that Massachusetts' findings indicate that direct shipping is not safe and that winery-endorsed safeguards intended to prevent shipments to minors do not work.

    "The problem is that when you don't have a face-to-face transaction, whether it's a licensee in the state or an out-of-state seller, you are asking for trouble," said WSWA general counsel Craig Wolfe. He continued, "This is an Internet-savvy group of people growing up in this country. They are not going to have any problem ordering online when they can click and lie about their age."

    Wolfe argued that the sting operation showed that delivery companies are not enforcing ID checks in the instances where they were given instructions to do so. "You can not make carriers policemen," he said. "Trying to instill in them law-enforcement capability does not work."

    But the argument that shipping safeguards have failed is a false one, counters Gross, because it is not legal to ship into Massachusetts and therefore no system of control has been set up. He said that in states that have a legal framework for direct shipping, packages are marked appropriately, the drivers are trained, and the shipping companies and wineries are filing the state-required reports. Wineries that don't follow the safeguards are kicked out of the shipping program offered by the carriers.

    "I don't think you can said with a broad brush that, because four companies chose to break the law, you should not create a legal framework that can avoid this kind of stuff," said Gross. "If people are choosing to break the law, that's where the regulator folks come in and that's their role."

    # # #

    Read recent news on this subject:

  • May 24, 2004
    U.S. Supreme Court to Address Wine-Shipping Controversy

  • March 15, 2004
    Attorneys Ask U.S. Supreme Court to Rule on Interstate Wine-Shipping

    For a complete overview and past news on the issue of wine shipments, check out our package on The Direct Shipping Battle.

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