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NY attorney general sues websites selling cigarettes

NEW YORK (Reuters) - New York's attorney general on Thursday said he sued six websites for illegally selling cigarettes online to New Yorkers, potentially costing the state hundreds of millions of dollars of tax revenue.

Websites that sell cigarettes rarely charge taxes and almost always undercut the prices charged in retail stores. New York state has some of the country's highest cigarette taxes.

The state boosted the levy on cigarettes last year to $4.35 a pack from $2.75, which increased the per-pack price to $9 to $12 at stores in New York City.

"These vendors not only broke the law prohibiting the sale of tobacco online, but also endangered our children by making cigarettes easier and cheaper to purchase," New York state Attorney General Eric Schneiderman said in a statement.

Name-brand cigarette makers also get a big boost from illegal online sales, Schneiderman said. "Big Tobacco benefits the most from online cigarette sales because they can sell their high-demand, high-priced premium brands cheaply, as these sales are made tax-free."

New York's public health law bars vendors who are not licensed from selling cigarettes by mail and since 2003, New York City Mayor Michael Bloomberg has also tried to stop the practice, according to Eric Proshansky, an attorney in the city's Law Department.

The city's pending lawsuits include one against about 15 Native American sellers of cigarettes, who maintain their shops are exempt because they are located on reservations and thereby enjoy the tribes' sovereign immunity.

The city has also sued wholesalers of cigarettes to reservation stores, Proshansky said, including one seller located in the state of Washington.

Schneiderman said that dodging the cigarette tax helps smokers avoid quitting.

"If all smokers paid the average retail price for cigarettes, there would be between 51,026 and 76,539 fewer adult smokers in New York," he said, citing state data.

The six websites sued were: Totally Tickled Limited, Inc for discountcigarettesdomestic.com; Kentucky Smokes and David White; Anton Limited for INeedSmoke.com and Kyle Williams; Cigarettes-online.biz and John Sparkle; Best Products Solution Limited for http://cigoutlet.net; Best Products Solution Limited for Smokin4free.com; and Best Products Solution Limited for cigoutlet.biz.