CardConnect, a payment technology provider and subsidiary of Fiserv, issued a notice to its merchant partners indicating that vape sales must comply with all relevant laws to avoid corrective action. This action aligns with a broader push by law enforcement officials to address the illegal vape market.

CardConnect stated it would distribute a warning message to all merchants utilizing its services, cautioning against the sale of vapes not authorized by the U.S. Food and Drug Administration (FDA). The FDA has authorized 45 vaping products for legal marketing.

A coalition of state and city law enforcement officials in the U.S. is exerting pressure on shippers, e-commerce platforms, and payment networks to curb the illegal vape market. This coalition includes attorneys general from California, Illinois, and Arizona, as well as authorities from New York City, the District of Columbia, and Puerto Rico. Unauthorized vape brands are sold illegally nationwide, both online and in physical locations such as convenience stores and bodegas.

Gas station operators Marathon Petroleum and Valero also issued warnings regarding potential consequences for selling unauthorized vape products. Both companies notified that Mastercard or similar firms could impose mid-six-figure fines for a single violation or rescind card processing services. Valero's notice was issued on June 17. Some estimates indicate the annual sales of the illegal vape market reach $9 billion or more.

Why It Matters

The warnings from CardConnect and other companies reflect a coordinated effort to enforce regulations within the vaping industry, primarily focusing on products lacking FDA authorization. This enforcement comes as a coalition of law enforcement agencies targets various parts of the supply chain including payment processors. The potential financial penalties, including six-figure fines and loss of card processing services, could impact businesses that sell unauthorized vape products. The extent of the illegal market, estimated at $9 billion or more annually, indicates the scale of the issue being addressed by these measures.