Imagine the scenario: it’s a week before your son’s high school graduation. You come home early from work one day—before your son gets home from school—and you find a package on your front doorstep. Not remembering buying something on your favorite app, you bring it inside and open it up, surprised to find a few bottles of vodka. Imagine your surprise when you learn the order was placed by your 17-year-old son.
Leaving aside how much trouble your son will be in, who else can a parent hold accountable for a box of vodka showing up on your doorstep with nobody signing for it?
If this were a transaction made at the local liquor store, we would all know exactly what to do, and the local police would be very interested to field the complaint and take action against the liquor store that isn’t checking I.D. But who do you call when it’s an e-commerce company and the box isn’t marked as containing alcohol?
The sobering truth is that direct-to-consumer (DTC) shipping of alcohol is causing real problems – and the problem has captured the attention of regulators and parents alike. It’s time for the industry to take notice.
Underage Consumers Using Online Delivery Systems
For some time, many online retailers have been illegally flooding states with alcohol purchased outside the usual regulatory structures. This has made it easier for underage consumers to access the product, has cost states millions of dollars in lost tax revenue and introduced risks into the system that we haven’t seen since Prohibition.
No state has the resources to do the systematic auditing required to know if underage consumers are extensively using online systems to acquire alcohol as laid out in the scenario above, but anecdotal evidence does exist of product being delivered to underage individuals. And, there is no question that unaccountable online marketplaces make it possible for teenagers, college students and young people to illegally access alcoholic beverages. And by shipping products from one state to another without paying the kinds of taxes that retailers and wholesalers pay in their states, individual states are losing money to out of state players.
Unknown Deliveries
What people may not be thinking about (yet) is the risk consumers are taking with product of questionable provenance. When you buy a bottle of your favorite product from your local retailer, you buy it knowing it went from the company that made it, through to a licensed wholesaler and onto the shelf of a licensed retailer. You can trust what’s in the bottle.
But when bottles are flowing around the country in unmarked boxes, we don’t know if the liquid in the bottle is in fact what the label says it is. Are you getting your favorite gin, or an inferior brand poured into a bottle? Or worse, is the seller cutting the product with a dangerous diluent? These are questions consumers haven’t had to ask since Prohibition.
Illegal Shipments are a Real Problem
You might be thinking: how big of a problem is this? Well, the Texas Alcohol Beverage Commission (ABC), after examining regulatory data, found a total of 304,481 unreported or illegal wine shipments into Texas in the last three months of 2022 alone.
In 2020, the Tennessee ABC elected to send numerous cease and desist letters to unlicensed businesses shipping to consumers and had to request FedEx and UPS to stop illegal alcohol shipments to Tennessee residents from an online retailer after discovering it was responsible for 240 separate illegal shipments in one year.
In 2023, Massachusetts’ ABC chief investigator reported his organization found 96% of e-commerce platforms would accept orders and payments from a 15-year old consumer. There are multiple other states with similar stories. Twenty-four years ago Congress passed the 21st Amendment Enforcement Act, allowing state attorneys general to bring civil action in federal court against out-of-state entities to enforce violations against the illegal transportation of alcohol.
Several states have acted under this law, with more to follow. Every state should be aware of this and do what they can to shut down illegal interstate shipping of alcohol products.
