Juul to pay US$462 million in massive settlement for improper marketing to youth

Electronic cigarette-maker Juul Labs Inc. has agreed to pay US$462 million to settle claims by six US states after it was proven that it unlawfully marketed its products to young people, according to Reuters. 

The deal requires Juul to adhere to state laws that protect the privacy right of minors and that prevent false advertising and unfair competition. 

"The terms of the agreement, like prior settlements, provide financial resources to further combat underage use and develop cessation programs and reflect our current business practices, which were implemented as part of our company-wide reset in the fall of 2019," said Juul in a statement. 

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Juul added that with this settlement, it is nearing total resolution of the company’s historical legal challenges and securing certainty for its future. "We have now settled with 47 states and territories, providing over $1 billion to participating states. This is in addition to our global resolution of the U.S. private litigation that covers more than 5,000 cases brought by approximately 10,000 plaintiffs.

This comes after a group of people filed a class action lawsuit against JUUL claiming that they paid more for JUUL products than they would have paid if they had been given accurate information about JUUL products’ addictiveness and safety, according to Juul's official settlement website. 

The plaintiffs also claimed that JUUL products were unlawfully marketed to minors.

"According to plaintiffs, the product was intentionally designed to avoid the “stigma” surrounding combustible cigarettes and capture not only existing combustible cigarette smokers and smokeless tobacco users who were addicted to nicotine, but also vastly expand the market by capturing and addicting individuals – specifically including youth users – who had not previously used tobacco or electronic nicotine delivery systems (ENDS) products," court documents read. 

It added that Juul did this by creating a "highly addictive" product that produced "high 'buzz' levels with lower throat harshness and discomfort than prior tobacco or existing ENDS products". Eventually, this let to them achieving market dominance in the ENDS market as well as expanded the pipeline of new nicotine addicts through "product design to maximize addiction, mass deception and targeting of youth."

States involved in the deal include Colorado, New York, Illinois, Massachusetts and New Mexico. California will see the largest share of the payout at US$175.8 million, according to The LA Times. 

The new amount comes months after Juul agreed to pay US$440 million over six to 10 years in September last year to settle an ongoing investigation by 33 states into how it marketed its vaping products to younger people. The settlement amounted to about 25% of Juul’s US sales of US$1.9 billion in 2021, according to media reports.

The news comes just months after Juul Labs cut about 400 jobs in November last year amidst lawsuits, government bans and competition. The layoffs were reportedly part of a cost-saving plan by the company.

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