Payments platform firms and several service station operators have issued formal warnings to their U.S. partners and store operators, advising them not to sell unauthorised vaping products or face significant penalties, according to notices reviewed by the publication.
The notices reflect an escalation in enforcement activity targeting an expanding black-market in vaping products, which some estimates value at roughly $9 billion or more in annual sales. A coalition of state and city law enforcement officials has intensified pressure on shippers, e-commerce platforms and payment networks to choke off distribution channels for illegal vapes.
That coalition is supported by attorneys general from multiple states, including California, Illinois and Arizona, as well as authorities in the city of New York, the District of Columbia and Puerto Rico. In recent weeks this coordinated effort has helped prompt at least one e-commerce platform to ban vape sales altogether.
Mastercard has warned its own partners that it would investigate merchants if they were found to be facilitating transactions for unauthorised vaping products. Notices seen by the publication indicate that card networks have begun issuing compliance violation notices industry-wide.
In an undated communication to its gas station operators, BP said it had learned that Mastercard had begun issuing compliance violation notices to merchants for processing transactions involving illegal electronic nicotine delivery system products. That communication also said selling such unauthorised products would breach a store’s agreement with BP.
Marathon Petroleum and Valero dispatched similar alerts to their retail operators. Those notices cautioned that card networks or similar firms could impose mid-six-figure fines for a single violation, or could revoke card-processing services altogether. Valero’s notice carries a date of June 17.
CardConnect, a payments technology unit and subsidiary of a larger payments company, advised partners that vape sales must adhere to all applicable laws or face "corrective action." That notice said CardConnect would distribute a message to merchants using its services advising them not to offer vaping products that lack authorisation from the U.S. Food and Drug Administration.
The FDA has authorised only 45 vaping products to be marketed legally. Despite that limited number of authorised products, a wide range of unauthorised brands continue to be sold nationwide, both online and in person at locations such as convenience stores and bodegas.
The payments company, BP, Marathon and Valero did not immediately provide responses to requests for comment. The notices and industry responses emerged as U.S. markets observed a public holiday on Friday.
Context and mechanics of enforcement
The notices combine contractual compliance language with references to card-network enforcement, signaling that merchants face exposure on multiple fronts: contractual breaches with fuel retailers and direct enforcement or investigations by card networks. The warnings outline potential consequences ranging from substantial fines to the loss of card-processing capabilities.
Merchants who continue to sell unauthorised vaping products may therefore encounter enforcement both from payment processors and from their commercial partners in the fuel retail channel, increasing operational and legal risk for retailers that rely on card payments and fuel branding agreements.