U.S. e-cigarette maker Juul Labs has agreed to pay nearly $440 million in settlement to end a two-year investigation by more than 30 state governments and avoid trial over allegations of marketing e-cigarettes to minors and even punished.
However, regulators believe Juul Labs promotes e-cigarette products with high nicotine content to minors, exacerbating the phenomenon of American youth vaping addiction. The business’ legal troubles are far from over.
【Pay for settlement】
Connecticut Attorney General William Tong issued a settlement agreement with Juul Labs on behalf of prosecutors in 33 states and Puerto Rico on the 6th. These local governments will jointly launch an investigation into the company’s early advertising and marketing methods in 2020.
The investigation found that the company advertised the “benefits” of its e-cigarettes as an alternative to traditional tobacco, and also conducted marketing campaigns specifically aimed at teenage consumers, such as new product launch parties, free product distribution events, advertisements and social media posts. The text uses young models.
The settlement stipulates that Juul Labs will pay a total of $438.5 million to the involved state and territory governments over six to 10 years, about a quarter of the company’s $1.9 billion in U.S. sales last year. One, of which at least $16 million is paid to Connecticut. The money will be used for local government action and education to prevent the spread of e-cigarettes.
In addition to the settlement money, the agreement imposes many restrictions on Juul Labs’ future advertising and marketing model, including the prohibition of making comic advertisements, hiring “Internet celebrities” to promote products, not advertising on outdoor billboards, public transportation, and only in More than 85% of the audience is advertised in adult media.
The two sides have only reached an “in-principle agreement”, and the states will finalize the details of the text of the agreement within a few weeks.
William Tong told a news conference that the settlement would “go a long way toward curbing the prevalence of vaping among young people”, but “I cannot claim to end youth vaping.” “This phenomenon is still an epidemic, it’s still a big problem. But we’ve made a big price for companies that were once market leaders and big offenders in terms of their behavior.”
【Lawsuits continue】
While the settlement relieves Juul Labs from a major current threat of lawsuits, the legal troubles the vaping company has fallen into are far from over. It previously reached settlements in Arizona, Louisiana, North Carolina, Washington, but still faces nine separate lawsuits from other state governments. Separately, there have been at least hundreds of individual lawsuits on behalf of teenage consumers accusing Juul Labs of making e-cigarettes addictive.
After the launch of e-cigarette products by Juul Labs in 2015, the consumption of e-cigarettes by teenagers in the United States increased rapidly, so that the US Food and Drug Administration declared that the abuse of e-cigarettes by minors in the United States constituted an “epidemic”. Medical experts have warned that the phenomenon could lead to nicotine addiction among America’s younger generation.
After receiving the attention of public opinion and regulatory authorities, Juul Labs has significantly scaled back its marketing activities since 2019, withdrew all advertising in the U.S. market, and stopped selling fruit and candy-flavored e-cigarette products targeted at underage consumers. The company still has about a third of the U.S. e-cigarette retail market, but that’s down sharply from the 75 percent it held a few years ago.
The biggest blow came in June this year, when the U.S. Food and Drug Administration ordered a total ban on the sale of Juul Labs’ vaping products, citing “insufficient data on the health effects of the products.” The company appealed to the court to overturn the ban, and the FDA then restarted the scientific evaluation of the technology used in its products.
In a statement, Juul Labs said it believed it would be approved to resume marketing activities once the FDA completes its evaluation “in accordance with the law without political interference.”
