Can Age Verification Standards Save The eCigarette Business?

Now that San Francisco is on the verge of banning eCigarettes, the question naturally turns to whether other municipalities and states will follow suit. Will that happen? “Likely not wide scale. However, this will immediately initiate a more constructive conversation,” said Scott Hardy, vice president of BankCard USA, in a new PYMNTS interview (the company owns AgeChecker.Net age verification software).

But the pending ban does highlight the need for a national standard regarding the minimum age to buy such products, he said. “Not having a set of guideline or rules” at the federal level “creates a lot of confusion and disruption.” And that, in turn, makes it more difficult for merchants of those age-restricted products — well, the good actors that want to operate in full compliance of laws and regulation, and stay a step ahead of political and parental pressure.

The PYMNTS interview with Hardy served not only as a look into one of the most important recent breaking news events for the still-growing vape and eCigarette industry, but a check on how that looming ban could impact the evolving and increasingly vital online age verification space. “The main problem is the lack of direction at the federal level,” he said.

The ban in San Francisco was, at last check, awaiting the signature of the city’s mayor before it became law. While the law is reportedly geared toward all eCigarette firms, a Bloomberg report noted the legislation “has to feel personal” for San Francisco-based Juul Labs Inc. It is said to be the largest target for critics of vaping, who, according to the report, “say it’s hooking kids on nicotine.”

New Program

The news comes as Juul Labs had announced a program earlier this year to track its devices and figure out how they get into the hands of minors, according to reports in April. The Track & Trace program involves the serial numbers on the bottom of the devices used for vaping a nicotine product. As of the time of the report, the company had recently gained the ability to track the serial numbers from the making of the Juul device all the way to where it was sold.

The news also comes amid an effort by certain retailers, states and even federal lawmakers to raise from 18 to 21 the minimum age for consumers to buy tobacco and nicotine products — an effort that in the view of Hardy and other experts has serious legs, given the widely accepted knowledge of the health hazards of such products, along with other factors.

Among those other factors? Making it much more difficult for what Hardy and others have called “bad actors” to ruin things for those merchants who want to do things the right way — and not just the bare minimum, which can include ineffective age verification pop-up boxes. The failures of those bad actors — that is, every underage consumer who gets past their willfully weak age verification defenses — can cast a shadow on the actions of the good actors just by default. And that can have serious impacts down the road not only for legitimate sales of eCigarettes and related products (including online), but for other age-restricted products sold via the web or mobile devices.

Indeed, Hardy said BankCard USA requires sellers of such products to use up-to-date age verification techniques if they want process payments through the company. Some merchants balk and end up leaving — Hardy estimated that segment to be “5 percent or less.”

ZIP Code Restrictions

As for any bans, whether in San Francisco or elsewhere, the AgeChecker.Net technology enables the restriction of sales by ZIP code or geography. That helps those merchants who want to be good actors, but who may be reluctant to make the proper moves without a nudge from others. “Generally speaking, merchants don’t want to do things that are not required, or add costs or put themselves at a disadvantage,” he said.

That’s why Hardy and others are calling for a federal standard, which would put everyone “on an even playing field.” There is no good estimate of how long that might take, though the wheels are certainly in motion, and this pending ban in San Francisco promises to add fuel to those efforts. Until then, some merchants will decide to go the extra step and prepare themselves for the future, while others will continue with the status quo.