Big Tobacco Must Pay: Get $2,300 in Tax-Free Payments Per Month-Fiction!

Summary of eRumor:

Big tobacco must pay individuals, even non-smokers, up to $2,300 per month because of a lawsuit over deceptive advertising practices that was settled in 1998.

The Truth:

Unfortunately, there’s no merit to claims that big tobacco must pay individuals thousands of dollars per month to settle a deceptive advertising case from the 1990s — no payments are made directly to individuals under the settlement.

The rumor started with a solicitation appearing at the investment website MoneyMorning.com. The site claims that big tobacco must pay $206 billion over the course of 25 years to satisfy a Master Settlement Agreement (MSA) for a deceptive advertising case brought against tobacco’s “big four” companies in the late ’90s. The kicker, the site claims, is that the MSA stipulates that “there is no end date,” and “big tobacco is legally obligated to pay out this cash forever”:

In fact, we estimate they’ve been paying out about $686 million a month.

And it may surprise you to learn that you could personally claim a tax-free portion of this settlement!

Even if you’ve never smoked. And neither has anybody in your family.

In a separate post, MoneyMorning.com went on to claim that individuals could earn up to $2,300 per month in tax-free payments from the Master Settlement Agreement:

Could You Collect Tax-Free Cash Thanks to Big Tobacco? You could begin collecting $2,300 a month thanks to “Master Settlement Payments,” courtesy of Big Tobacco.

This twist has enormous implications for retirees, future retirees, and anyone searching for more income. Because of the Master Settlement Agreement, Big Tobacco must distribute cash to 46 states and five U.S. territories forever.

And thanks to a special clause in this deal, Americans have the chance to claim 100% tax-free income from it.

Unfortunately, MoneyMorning.com has mischaracterized the MSA. The idea that big tobacco must pay individuals, even those who never smoked, is flat wrong. The Mitchell Hamlin School of Law issued an advisory in response to a deluge of inquires it’s received over the big tobacco must pay rumor, and “no states provide for direct MSA payments to individuals to pay for medical costs resulting from tobacco use”:

The Master Settlement Agreement (MSA) is an accord reached in November 1998 between the state Attorneys General of 46 states, five U.S. territories, the District of Columbia and the five largest tobacco companies in America concerning the advertising, marketing and promotion of tobacco products. In addition to requiring the tobacco industry to pay the settling states approximately $10 billion annually for the indefinite future, the MSA also set standards for, and imposed restrictions on, the sale and marketing of cigarettes by participating cigarette manufacturers.

In reality, states generally allocate revenues from the MSA to finance programs and policies that aren’t related at all to tobacco use, the Government Accountability Office reports:

The MSA imposes no requirements on how states spend their MSA payments; states are free to use the funds for any purpose. As a result, the receipt of millions of MSA dollars has presented states with a unique opportunity to finance programs in a variety of policy areas. Although the MSA does not require states to spend settlement payments on tobacco control programs, many antismoking and health care observers are concerned that states are not using enough of the MSA payments to enhance their tobacco prevention and control efforts.

So, again, claims that big tobacco must pay individuals under terms of the 1998 settlement agreement are false. Companies making those claims should be considered disreputable, and consumers should avoid providing those companies with their personal information.

A real example of the eRumor as it has appeared on the Internet:

Collected on: 06/12/2017
Big Tobacco Must pay
Claims that big tobacco must pay individuals, even those who never smoked, thousands of dollars per month are false.