Sometimes legal settlements reveal more than just boring dollar amounts. Last week, GlaxoSmithKline agreed to plead guilty to the illegal marketing of the prescription antidepressant Wellbutrin and pay $3 billion in criminal and civil fines. This settlement followed a 9-year investigation into the company’s marketing practices by the federal government. In the process, documents associated with the case revealed that TV physician Dr. Drew was among the “consultants” paid to do this illegal advertising. So what did Glaxo do, and why was it so bad? And why would a trusted name in science forsake his neutral and beneficial advice in the name of a pharmaceutical company’s profits (hint: it has to do with money)? Find out after the break.Google+
A proposed settlement between Facebook and a class of litigants has the social networking company paying $10 million to charity. The issue at hand was whether Facebook violated California law by using its users’ names and profile pictures to advertise products without paying them and without giving them any way to opt out. With its “sponsored stories”, users’ “likes” of products were unwittingly posted across their friends’ news feeds. Companies would pay way more for these stories than a traditional advertisement, with Mark Zuckerberg saying they were the “Holy Grail of advertising”, akin to a word of mouth personal recommendation. So, if you clicked “like” on a page about bananas, you’d be shown on your friends’ feeds as “John Doe likes bananas, go buy one here”. Or, in the case of Nick Bergas, your face would be endorsing a 55-gallon drum of personal lubricant. His story accentuates the main legal problem at issue here: what if you don’t care about a product you’re shown endorsing? Worse, what if you don’t want to be shown endorsing anything at all?Google+
While you were gawking at the new kind-of-better-in-some-ways-I-guess Macbook Pro at this week’s Apple Worldwide Developers Conference, Apple’s law team was quietly paying out a settlement to a Australian government regulators. Apple shipped their newest 4G-compatible iPhones and -Pads to Australia, where ravenous consumers quickly snatched them up. There was one catch: the electronics did not actually work with any LTE networks in the country. Luckily, the Australian Competition and Consumer Commission was ready to slap Apple around with a lawsuit, alleging that Apple knowingly advertised this whole 4G business despite being well aware that the technology wouldn’t work. Sensing an uphill court battle, Apple quickly settled the case (if I had to guess, I’d say it was a pretty clever tactic to hide the negative press among all the buzz for their WWDC event). The outcome: Apple must pay a fine of $2.25 million to the Australian government, and will also probably have to pick up the tab for $300,000 worth of legal fees. Though they aren’t required to, Apple is also offering refunds to customers who felt cheated. What a nice company.Google+
If you believe wearing a specific shoe without committing to some aerobic or at least extra exercise is somehow going to transform your body from flab to fab, then I’ve got some snake oil to sell you. Nevertheless, shoe company Skechers (sic) made just that very claim with their line of “workout” sneakers called “Shape-Ups”. According to the marketing for the shoe, buying this particular brand will by virtue of wearing it work out and “tone” your legs, leading to fat loss and muscularity and all-around healthiness that you will not otherwise attain without the discomfort and strain of actually working out or being all-around healthy. The company conducted some tests and studies (by well-paid scientists-for-hire) that seemed to support this concept, and produced celebrity endorsements by the likes of quarterback Joe Montana and socialite Kim Kardashian, who claimed that the shoe was so beneficial that she abandoned her personal trainer altogether, relying entirely on the shoe as a sort of workout God-figure. Surprise surprise, the shoe did not live up to its expectations, and the Federal Trade Commission subsequently sued Skechers to stop spreading nonsense. Today, the company will pay about $50 million, some of which is in fines and most of which will go to reimbursing dissatisfied customers. And, of course, the company will have to change its marketing significantly when it reintroduces the shoe next year.Google+
Nutella, the hazelnut spread considered by some to be the immortality-inducing ambrosia of myth, was alleged in a class action lawsuit to not be as healthy as advertised. How anyone can believe that a product akin to a peanut-butter-chocolate lovechild is healthy is beyond me, but nevertheless, the company that makes it, Ferrero, now must pay out $4 per container in trust to anyone who bought their product over a four-year period. If you bought a jar of Nutella between Jan. 1, 2008 and Feb. 3, 2012, you’re entitled to recompense for up to five jars, or $20. A fund of $2.5 million will be set up by Ferrero to pay out these claims.
In addition to the monetary penalty, Ferrero agreed to change its advertising to remove any suggestions that Nutella is healthy. What used to say “An example of a tasty yet balanced breakfast” will now say “Turn a balanced breakfast into a tasty one.” Astute readers will note that these two phrases are not very different at all. The key distinction, though, is that the former slogan implied that Nutella is both tasty and balanced, while the new one only implies that Nutella adds some taste to an otherwise bland albeit healthy breakfast. Ignoring the fact that many Nutella aficionados eat it by the spoon as meal in itself, this new advertising will actually make little impact on the perception of Nutella as healthy. I don’t think Ferrero was actually fooling anybody with their previous slogan for the 100 calorie-per-tablespoon spread.
To find out how to file a claim on your own jar of fraudulently-advertised hazelnut butter, visit the official Nutella class action settlement website.