Juul Labs Inc. said sales-software changes it designed to stop underage shoppers from buying its e-cigarettes at the cash register were successful in a company study, nearly eliminating such purchases.
The company plans to present a poster at the 7th Annual Vermont Center on Behavior & Health Conference Thursday touting the success of the new standards in a test run this year. Juul said retailers that adopted them cut down sharply on underage sales. Within two years, the company has said, it wants all stores that sell its products to use them.
However, some retailers have said making changes to their sales software for a single product would be cumbersome, and that they have concerns about how Juul plans to use transaction data.
The maker of the best-selling e-cigarette in the United States, Juul has faced criticism from regulators, public-health advocates and parents amid a surge in vaping by teens. The San Francisco-based company has tried to quell the controversy by pulling its advertising, ceasing many political activities and changing its chief executive.
In August, the company introduced new standards it said would help make sure its products weren’t sold to kids. The Retail Access Control Standards program, or RACS, is a set of conditions Juul developed for retailers to incorporate into their point-of-sales systems, that lock a store’s system when a Juul product is scanned until the cashier enters a valid ID to verify the customer’s age.
It also limits the number of products a person can buy at once, in order to reduce illegal third-party sales to minors.
During a test in May and June, the company sent secret shoppers to 171 Juul retailers. In 2,219 compliance checks, stores failed to verify a customer’s age or prevent bulk purchases 734 times. But in 1,771 checks after adopting the RACS system, retailers failed to meet those standards just 11 times.
The effort is part of broader push by Juul to curb smoking among young people, even as critics say its flavored tobacco products are clearly designed to attract teens. Last year, Juul shut down its social-media accounts and stopped selling some flavored nicotine pods in stores in the United States, in part because the company anticipated a sales restriction from the Food and Drug Administration.
A single company requiring the use of custom point-of-sale software is unusual. Juul has committed $100 million to convincing retailers to become RACS-compliant, though some store owners have expressed concern about the implementation of Juul’s standards and their efficacy.
Others are wary of whether Juul could use any data it gathers to sell directly to customers, which it already does through its website, said Lyle Beckwith, senior vice president of government relations at the National Association of Convenience Stores.
“Juul Labs does not collect or have access to any customer’s personal identifying information via RACS compliant point of sale systems,” said company spokeswoman Lindsay Andrews.
At stores using the system, clerks must verify that the shopper is presenting actual identification. Juul’s program is designed to reject fake, expired, or otherwise invalid IDs, according to the company’s conference poster, as well as prevent bulk purchases or back-to-back transactions by people trying to get around the limits. If a bad ID is scanned, the system is designed to lock.
In the company’s study, the two times clerks failed to verify a customer’s ID, they scanned their own ID on behalf of the customer. Eight times, technical issues failed to prevent bulk purchases.
Juul’s plans to make merchants adopt its standards by May 2021 are unrealistic, said Gray Taylor, the executive director of Conexxus, a trade group focused on technology issues for convenience stores and gas stations.
“We want Juul to be successful,” said Taylor. “But there are some problems with how they proposed it.”
The company is planning to roll out the change in the middle of another major retail technology transition — the continuing shift to chip-based credit cards. Top providers of point-of-sale technology are focused on that issue, said Taylor, and are unlikely to want to devote resources to integrating Juul’s systems at the same time.
Bloomberg News attempted to contact the technology companies Juul has listed as partners for its RACS system on its website, and all of them either declined to comment or didn’t respond to inquiries.