Disgraceful electronic cigarette machine Juul has agreed to pay $438.5 million to 33 states and Puerto Rico to settle investigations into whether the e-cigarette giant deceptively marketed its products and knowingly targeted children and teens most vulnerable to nicotine addiction.
This huge solution comes as the company continues its battle for survival with the U.S. Food and Drug Administration. In June, the FDA took a major step by denying marketing authorization for all Juul products, effectively forcing e-cigarette makers out of the U.S. market. Juul quickly won administrative clearance, though, and the FDA announced in July that it would re-examine Juul’s products. Meanwhile, the company has been allowed to continue selling its products, but its ultimate fate remains in jeopardy.
The legal settlement and regulatory uncertainty are the latest fallout from Juul’s alleged contribution to a nationwide “epidemic” of teen vaping that peaked in 2019. Juul is notorious for appealing to children and teens as the number of middle and high school students vaping soars.
Juul started marketing campaigns in 2015 and 2016 that relied on teen influencers and “cool” models on social media, according to a lawsuit filed by the Massachusetts attorney general in 2020. The company even bought banner and video ads on sites like 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% of Juul’s Twitter followers were between the ages of 13 and 17. At a congressional hearing in July 2019, a New York City high school student and his mother testified that in 2017, a Juul employee charged the teen’s teen’s teen’s home without the presence of a teacher, the knowledge of school administrators, or parental consent. The school conducted a live demonstration. During the demonstration, a Juul representative allegedly called Juul’s e-cigarettes “completely safe” and called Juul’s devices “e-cigarette iPhones.”
As Ars previously reported, Juul’s dollar sales rose 783% between 2017 and 2018 to $942.6 million, according to a Wells Fargo analysis of Nielsen data at the time. Meanwhile, the percentage of middle school students reporting recent e-cigarette use increased from 0.6 percent in 2011 to 10.5 percent in 2019, according to the Centers for Disease Control and Prevention. E-cigarette use among high school students increased from 1.5% to 27.5% during this period. Since then, those numbers have declined.
rebound
The backlash against Juul came quickly amid growing concerns about teen vaping. By the end of 2019, Juul had ousted its CEO, stopped advertising in the U.S., and stopped selling some youth-friendly flavors, including mango, fruit, creme (or crème brûlée) and cucumber. But lawsuits and regulatory troubles continued, and its market share began to decline. Last year, Juul agreed to pay North Carolina $40 million because it claimed it was targeting young people. In June, tobacco giant Altria, formerly Philip Morris, said its 35% stake in Juul, which it bought for $12.8 billion in 2018, is now worth just $450 million. Even with this week’s big settlement, Juul still faces plenty of legal challenges.
In a statement on September 6, Juul wrote:
This settlement with 34 states and territories is an important part of our commitment to addressing past issues. The terms of this agreement are consistent with our current business practices that began following a company-wide reset in the fall of 2019. According to today’s announcement, we have reached settlements with 37 states and Puerto Rico and thank the Attorney General for deploying resources to combat the use of minors.
In addition to payments that will be distributed among the states and used in various ways to address teen addiction, the settlement also prohibits Juul from engaging in activities such as marketing products to young people, portraying people under the age of 35 in any marketing activities, Use cartoons, use paid social media influencers, or place ads in locations with an audience of less than 85% adults.
In a statement announcing the settlement, Connecticut Attorney General William Tong celebrated the agreement while slamming Juul.
“Juul’s cynical advertising campaigns created a new generation of nicotine addicts. They relentlessly marketed vaping products to minors, manipulated their chemistry to make them palatable to inexperienced users, employed inadequate age verification procedures, and misled Consumers are concerned about the nicotine content and addictiveness of their products. The full impact of this misconduct on public health is unclear,” Tong said. “Through this settlement, we receive hundreds of millions of dollars to help reduce nicotine use and force JUUL to accept a set of strict injunction terms to end teen marketing and crack down on underage sales.”
This story originally appeared in Ars Technica.
