The Utah Department of Commerce and Attorney General Sean D. Reyes announced a $438.5 million agreement between JUUL Labs and 34 states and territories. This agreement resolves a two-year, bipartisan investigation into the e-cigarette manufacturer’s marketing and sales practices.
The states are in the process of finalizing and executing the settlement documents, a process that takes approximately 3-4 weeks. Over the next six years, Utah is expected to get at least $8.6 million from the settlement.
“Deceptive marketing tactics are never tolerated, but JUUL’s were especially despicable,” said Department of Commerce executive director Margaret Busse. “This settlement represents a big win for Utah in the fight against those who purposely market dangerous products to youth. JUUL will be held responsible for marketing addictive products to underage individuals.”
In addition to the financial terms, the settlement would force JUUL to comply with a series of strict injunctive terms severely limiting their marketing and sales practices. The Utah Department of Commerce’s Division of Consumer Protection is tasked with enforcing laws concerning deceptive acts by suppliers.
For years, JUUL was a main manufacturer of vaping products. This multistate investigation revealed that JUUL achieved this position by willfully engaging in an advertising campaign that appealed to youth, even though its e-cigarettes are both illegal for them to purchase and are unhealthy for youth to use. The investigation found that JUUL marketed to underage users through launch parties, advertisements with trendy models, social media posts and free samples. It marketed a technology-focused, sleek design that could be easily concealed and sold its product in flavors known to attract underage users. JUUL also manipulated the chemical composition of its product to make the vapor less harsh on the throats of young and inexperienced users. To preserve its young customer base, JUUL knowingly used ineffective age verification techniques.
The investigation revealed JUUL’s original packaging did not clearly disclose it contained nicotine and implied the concentration of it was lower than it actually was. Consumers were misled that consuming one JUUL pod was the equivalent of smoking one pack of combustible cigarettes. The company also misrepresented its product as a smoking cessation device, a claim not approved by the FDA.
As part of the settlement, JUUL has agreed to refrain from:
● Youth marketing
● Funding education programs
● Depicting persons under age 35 in any marketing
● Use of cartoons
● Paid product placement
● Sale of brand name merchandise
● Sale of flavors not approved by FDA
● Allowing access to websites without age verification on landing page
● Representations about nicotine not approved by FDA
● Misleading representations about nicotine content
● Sponsorships/naming rights
● Advertising in outlets unless 85 percent audience is adult
● Advertising on billboards
● Public transportation advertising
● Social media advertising (other than testimonials by individuals over the age of 35, with no health claims)
● Use of paid influencers
● Direct-to-consumer ads unless age-verified, and
● Free samples
The agreement also includes sales and distribution restrictions, including where the product may be displayed/accessed in stores, online sales limits, retail sales limits, age verification on all sales, and a retail compliance check protocol.
Alabama, Arkansas, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Wisconsin, and Wyoming have all signed on to the agreement. Connecticut, Texas, and Oregon led the investigation.