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 deceptively marketed its products and intentionally targeted children and teenagers, who are most vulnerable to nicotine addiction.
The mammoth settlement comes as the company continues its fight for survival with the US Food and Drug Administration. In June, the FDA made the dramatic move of denying marketing authorization for all Juul products, effectively forcing the e-cigarette maker off the US market. Juul quickly won administrative stays, though, and the FDA announced in July that it would re-review Juul’s products. In the meantime, the company is allowed to continue selling its products, but its ultimate fate remains precarious.
The legal settlement and regulatory uncertainty are the latest fallout from Juul’s alleged role in fueling a nationwide “epidemic” of youth vaping, which peaked in 2019. Juul became notorious for appealing to children and teens as vaping among middle and high school students skyrocketed.
According to a lawsuit filed by Massachusetts’ attorney general in 2020, Juul began marketing campaigns in 2015 and 2016 that relied on teenage influencers on social media and “cool” models. The company even bought banner and video advertisements 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 Congressional hearing in July 2019, 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 teachers present, school administrator knowledge, or parental consent. During the presentation, the Juul representative allegedly said Juul’s e-cigarettes were “totally safe” and called Juul’s device the “iPhone of vapes.”
As Ars has previously reported, Juul’s dollar sales rose 783 percent between 2017 and 2018, reaching $942.6 million, according to a Wells Fargo analysis of Nielsen data at the time. Meanwhile, the percentage of middle schoolers 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. And in that time frame, e-cigarette use among high schooler students increased from 1.5 percent to 27.5 percent. Those figures have since declined.
Amid growing alarm over teen vaping, the backlash against Juul was swift. By late 2019, Juul had fired its CEO, halted US ads, and stopped selling some of its youth-friendly flavors, including Mango, Fruit, Creme (crème brûlée), and Cucumber. But lawsuits mounted, regulatory trouble brewed, and its market share began slipping. Last year, Juul agreed to pay the state of North Carolina $40 million over claims it targeted youth. In June of this year, tobacco giant Altria—formerly known as Philip Morris Companies—said that its 35 percent stake in Juul, which it bought in 2018 for $12.8 billion, was now valued at just $450 million. Even with this week’s large settlement, Juul still faces a considerable amount of legal challenges.
In a statement Tuesday, Juul wrote:
This settlement with 34 states and territories is a significant part of our ongoing commitment to resolve issues from the past. The terms of the agreement are aligned with our current business practices which we started to implement after our company-wide reset in the Fall of 2019. With today’s announcement, we have settled with 37 states and Puerto Rico, and appreciate efforts by Attorneys General to deploy resources to combat underage use.
In addition to the payment, which will be divided up among the states and used in various ways to address youth addiction, the settlement also bars Juul from several activities, such as marketing products to youth, depicting people younger than 35 in any marketing, using cartoons, using paid social media influencers, or advertising in outlets that have an audience that is less than 85 percent adults.
In a statement announcing the settlement, Connecticut Attorney General William Tong celebrated the agreement while blasting Juul.
“Juul’s cynically calculated advertising campaigns created a new generation of nicotine addicts. They relentlessly marketed vaping products to underage youth, manipulated their chemical composition to be palatable to inexperienced users, employed an inadequate age verification process, and misled consumers about the nicotine content and addictiveness of its products. The full public health ramifications of this misconduct are yet unknown,” Tong said. “Through this settlement, we have secured hundreds of millions of dollars to help reduce nicotine use and forced JUUL to accept a series of strict injunctive terms to end youth marketing and crack down on underage sales.”