Staying compliant when making direct-to-consumer (DtC) sales of wine is no small task. From license requirements to tax calculations, there are numerous steps to check on with any given DtC order.
In recent months, though, one common compliance rule has come to the fore for several state alcohol enforcement agencies: time-of-sale age verifications. Arizona and Michigan have, in particular, demonstrated their firm intention to ensuring that wineries selling DtC are checking the age of their purchasers at the time of sale. Both states have been active in sending out notices to DtC licensees asking for proof that age checks have been happening. As states crack down on those shipping DtC, with a focus on age verifications, we decided to provide a quick review of what this rule is, and how you, the DtC shipper, can ensure your compliance with it.
What Are Age Verifications?
Arguably the most important regulation of alcohol in the United States is that it is illegal to provide alcohol to anyone under the age of 21. In every state, minors are prohibited from purchasing, possessing, or consuming any beverage alcohol. This restriction applies to every sale, regardless of where or how the sale occurs.
In a standard on-premises sale — at a bar, a grocery store, or a tasting room — checking the purchaser’s ID is a fairly straightforward process. But for DtC sellers making sales over the internet, who may never have face to face contact with the customer, ensuring that a sale is never made to anyone under 21 presents especial challenges.
At a base level, all states that permit DtC shipments require the delivery to be made to someone over the age of 21. The package may not be left at the recipient’s door: the recipient must be present at the delivery, they must show their valid ID proving they are of age, and they must sign for the package.
But to ensure that, from the onset, they are not selling alcohol to anyone under 21, everyone selling DtC should make conducting age checks at the time of sale their standard practice. Such age checks are a specific condition of being a DtC licensee in good standing in several states; but even in other states, it is an industry best practice to always do at-sale age checks. (Wine Institute provides such guidance on their website.)
The standard ways for verifying the purchaser’s age are either receiving a facsimile of the purchaser’s valid ID (say an emailed scanned ID), or by using a third-party service to verify the purchaser’s age. The main third-party services for age verifications are LexisNexis and IDology. Both services use public data to corroborate that the purchaser’s name and address matches with someone over the age of 21.
The states that specifically mandate age checks for DtC sellers are Arizona, Georgia, Indiana, Kansas, Michigan, Ohio, and South Dakota (Pennsylvania will begin requiring age verifications after December 30, 2018; as will Oklahoma, when it opens to DtC sales in October). These states generally proscribe specific methods for checking ages, such as requiring use of only authorized services (but at least require “good faith efforts”).
However, even in the states that don’t specifically require time-of-sale age checks, it remains illegal to sell or provide alcohol to minors; anyone who does so, even inadvertently, can be charged. It is therefore highly recommended that everyone selling DtC makes time-of-sale age checks standard practice for sales to all states, and not just those that specifically require them.
How Do I Manage Age Verifications in ShipCompliant?
If you are a ShipCompliant user, it is possible to set up automatic age verifications within your account.
We must note, ShipCompliant does not itself conduct age verifications. However, we contract with both IDology and LexisNexis to provide direct access to these services for our users. ShipCompliant users, thus, can access either IDology or LexisNexis without requiring a separate account for either service outside of ShipCompliant.
After you have enabled age checks in your ShipCompliant account, we will process them through your choice of either LexisNexis or IDology for $0.45 or $0.50 per lookup, respectively. This charge will be added to your monthly ShipCompliant fee, though for our average user, the charge is often much less than purchasing a separate subscription to either service. (Such subscriptions typically run to several-thousand dollars per year.)
To set up age verifications in your account, go to “Account Settings” and navigate to the “Age Check Settings” section. There you can enable age checks and edit your age check settings, including selecting your preferred service and for which states you want age checks to happen. You may select to do age checks only in those states that specifically require them; however, as stated above, we highly recommend adding all states to which you are selling.
Once enabled, age verifications will happen when you enter orders into your account going to the states that you have selected.
You may also review when we have submitted an age verification on your behalf in the Analytics section of your account. They can be found by navigating to “Analytics,” then to “Reports,” and opening the “Compliance” tab. The reports will provide some documentation on your history of age verifications. However, these reports only indicate that we have sent requests for age checks to a third-party service, and will not state what the results of the age check were.
If you have received a notice from a state requiring the results of your age checks, you may need to contact the third-party service directly for the required documentation. And as ever, it is necessary to consult with your personal counsel if you are under an audit by a state.
If you have any questions about setting up, conducting, and receiving reports on age verifications in your ShipCompliant account, please reach out to firstname.lastname@example.org.