Juul Seeks $439 Million in Compensation for Marketing to Kids

Juul Seeks $439 Million in Compensation for Marketing to Kids

Juul Labs Inc. has reached an agreement in principle to pay $438.5 million to 33 states to complete a two-year bilateral investigation into the marketing and sales practices of an e-cigarette maker, specifically allegations that it sold addictive nicotine products to children.

The agreement, which also includes Puerto Rico, will force Juul to comply with a series of “strict injunctions severely restricting their marketing and sales practices,” Connecticut Attorney General William Tong, who negotiated with Texas and Oregon, said Tuesday. statement.

Under the agreement, Juul will refrain from any youth marketing, paid product placement, advertising on public transportation, funding educational programs, portraying persons under the age of 35 in advertisements, or using cartoons in advertisements, among other marketing activities, the statement said. Juul also agreed not to advertise on billboards or use paid influencers to promote products.

“Juul’s cynically calculated advertising campaigns have spawned a new generation of nicotine addicts,” Tong said in a statement. “They relentlessly marketed vaping products to underage youth, manipulated their chemistry to make them acceptable to inexperienced users, used the wrong age verification process, and misled consumers about nicotine content and addictive products.”

Juul said in a statement that the settlement is “a significant part of our ongoing commitment to addressing past issues,” adding that the terms of the deal are already in line with its current business practices.

“We remain focused on the future as we work to fulfill our mission of eliminating cigarettes for adult smokers – the number one cause of preventable death – while combating underage smoking,” the company said.

FDA action

The agreement follows some earlier deals with individual states. In April, Juul reached a $22.5 million settlement with the state of Washington over allegations of unlawful assault on underage consumers. In 2021, North Carolina entered into a $40 million deal with Juul on how the company sells products to underage users. Separate lawsuits from New York and California are still pending.

The FDA banned Juul products from US shelves in June, citing a lack of evidence to demonstrate their overall safety. The regulator also noted “Juul’s disproportionate role in the growth of youth vaping.”

Juul won a court order temporarily blocking the decision, and the agency separately lifted the ban, allowing the company to continue selling products for the time being. The ban would wipe out a significant portion of Juul’s revenue, and the company was Considering options, including new funding and potential bankruptcy if that happens.

Texas Attorney General Ken Paxton said in a statement that his state would receive nearly $43 million in the deal.

“My commitment to protecting consumers from deceptive business practices is unwavering, and any company that misleads Texans, especially our youth, will be held accountable for their actions,” Paxton said.

Suits for personal injury

According to the statement, a multi-state investigation found that Juul had become a dominant player in the vaping market with a youth-targeted ad campaign.

“The investigation found that Juul was ruthlessly selling underage users parties, ads featuring young and trendy looking models, social media posts and free samples, even in the face of e-cigarettes,” the statement said.

Juul is still facing more than 2,500 personal injury claims and hundreds more from local governments and school districts seeking to hold the company accountable for underage vaping. Experts estimate that Juul could potentially face hundreds of millions of dollars in damages from these lawsuits.

The first trial in these cases involving the San Francisco Unified School District is scheduled for November.

Copyright 2022 Bloomberg.

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