Disgraced e-cigarette maker Juul has agreed to pay $438.5 million to 33 states and Puerto Rico to settle an investigation into whether the vaping giant has deceptively marketed its products and deliberately targeted children and teens, who are the most are vulnerable to nicotine addiction.
The gigantic settlement comes as the company continues its battle for survival with the US Food and Drug Administration. In June, the FDA took the dramatic step of denying marketing authorization to all Juul products, effectively forcing the e-cigarette maker off the US market. However, Juul quickly won administrative suspensions, and the FDA announced in July that it would review Juul’s products. Meanwhile, the company may continue to sell its products, but the ultimate fate remains precarious.
The legal settlement and regulatory uncertainty are the latest consequences of Juul’s alleged role in fueling a nationwide “epidemic” of vaping among young people, which peaked in 2019. Juul became notorious for appealing to children and teens when it was launched. vaping skyrocketed among middle and high school students.
According to a lawsuit filed by the Massachusetts Attorney General in 2020, Juul began marketing campaigns in 2015 and 2016 based on teenage social media influencers and “cool” models. The company even bought banner and video ads on sites such as Cartoon Network and Nickelodeon’s Nick.com and Nickjr.com, the lawsuit said.
In May 2019, a study published in JAMA Pediatrics estimated that in 2018, 45 percent of Juul’s Twitter followers were people between the ages of 13 and 17. In a July 2019 congressional hearing, a New York City high school student and his mother testified that in 2017 a Juul employee gave a live presentation at the teen’s school without a teacher’s presence, knowledge of the school administrator, or permission from the parents. During the presentation, the Juul representative reportedly said Juul’s e-cigarettes were “completely safe” and called Juul’s device the “iPhone of vapes”.
As Ars previously reported, Juul’s dollar revenue increased 783 percent to $942.6 million between 2017 and 2018, according to a Wells Fargo analysis of Nielsen data at the time. Meanwhile, the percentage of high school students reporting recent e-cigarette use has risen from 0.6 percent in 2011 to 10.5 percent in 2019, according to the Centers for Disease Control and Prevention. And during that period, e-cigarette use among high school students rose from 1.5 percent to 27.5 percent. Those numbers have since dropped.
Recoil
Amid growing alarm about teen vaping, backlash against Juul was swift. By the end of 2019, Juul had ousted its CEO, retired US advertising and stopped selling some of its youth-friendly flavors, including Mango, Fruit, Creme (or crème brûlée), and Cucumber. But lawsuits piled up, regulatory issues arose, and market share began to decline. Last year, Juul agreed to pay the state of North Carolina $40 million for claims it targeted young people. In June of this year, tobacco giant Altria — formerly known as Philip Morris Companies — said its 35 percent stake in Juul, which it bought for $12.8 billion in 2018, is now valued at just $450 million. Even with this week’s major settlement, Juul still faces a significant number of legal challenges.
In a statement on Sept. 6, Juul wrote:
This arrangement of 34 states and territories is an important part of our ongoing commitment to resolve past problems. The terms of the agreement are in line with our current business practices that we have begun to implement following our company-wide reset in Fall 2019. With today’s announcement, we have reached a settlement with 37 states and Puerto Rico, and appreciate the efforts of the Attorney General to deploy resources to counter use by minors.
In addition to the payment, which will be distributed among the states and used in various ways to address juvenile addiction, the settlement also bans Juul from various activities, such as marketing products to young people, portraying people under the age of 35 in any marketing, using cartoons, the use of paid social media influencers or advertising in stores with an audience that is less than 85 percent adults.
In a statement announcing the settlement, Connecticut Attorney General William Tong celebrated the agreement while taunting Juul.
“Juul’s cynically calculated advertising campaigns created a new generation of nicotine addicts. They relentlessly marketed vaping products to underage youth, manipulated their chemistry to be palatable to inexperienced users, employed an inadequate age verification process, and misled consumers about the nicotine content and addictiveness of their products. The full public health implications of this misconduct are not yet known,” Tong said. “Through this settlement, we have secured hundreds of millions of dollars to help reduce nicotine use and have forced JUUL to accept a series of strict bans against a end youth marketing and crack down on the sale of minors.”
This story originally appeared on Ars Technica.
