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The difference between an advertiser’s claim and a fact is fertile breeding ground for class action suits. Here are some instances where brands and the companies that owned them had to cough up huge amounts for making statements that were proved false.
In 2010, Danone was ordered to pay up to $45 million for promoting its brand of Activia and DanActive yogurt brands as “clinically” and “scientifically” proven to regulate digestion and boost immune systems. A Los Angeles caterer had said that buying the product had had no salutary effect and sued the company, after which the suit expanded to include others.
The judgement said the company had to remove many words from the packaging to stop misleading customers.
Danone said it was paying up to avoid the cost and distraction of litigation, and maintained that it did nothing wrong.
In 2004, Hyundai said it would pay over $85 million to settle a class-action lawsuit filed after it misrepresented by as much as 10 per cent the horsepower of Hyundai and Kia cars exported to the US. Company officials said it was an oversight and blamed it on “mistakes and disorganisation” within Hyundai. About 1.3 million cars were affected.
Athletic footwear and apparel brand New Balance was ordered to pay $2.3 million in a class action suit against false advertising claims.
It had advertised that its TrueBalance and Rock&Tone lines “activated” some muscles and called its shoes a “hidden beauty secret,” saying they would help the wearer burn 8 per cent more calories than the usual sneakers.
Wrigley’s had to pay $6 million for claiming that its Eclipse chewing gum killed germs that caused bad breath. Like Danone, this brand too refuted any wrongdoing and said it was agreeing to make the payment to prevent further distraction. Of course, the amount being paid out to each plaintiff in these class action suits won’t resemble the millions the defendants have been ordered to pay.
A suit against social networking site Classmates.com resulted in about 700,000 plaintiffs getting $3.93 each. The case began when a user filed a suit saying Classmates.com had misled users into upgrading to a paid account saying an old friend was trying to contact them. About 60 million users were contacted by the site, and about 3 million fell for the ruse, paying between $10 and $40.
Classmates.com agreed to pay $9.5 million.
Compiled by Sravanthi Challapalli
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