Juul Labs Inc., the industry leader and maker of the popular e-cigarette that is a big part of the vaping trend among young people, is currently being investigated by the Federal Trade Commission for whether they “used influencers and other marketing to appeal to minors”, according to a report in the Wall Street Journal this week. The investigation was not previously public and the FTC may seek “financial damages” from Juul of which Altria owns 35 percent.
The FTC declined FOX Business' request for comment.
Beyond that, in more difficult news for Juul as a company, the Associated Press reported on Friday that two more attorneys general (from Illinois and the District of Columbia) are now – along with the attorneys general in Colorado, Connecticut, and Massachusetts – all investigating Juul in terms of its marketing and “underage use of its products”. Additionally, a North Carolina attorney general is currently suing Juul "to limit the company’s sales and marketing in the state". Juul “controls roughly three-quarters of the U.S. retail market for e-cigarettes,” per the AP.
The WSJ stated, “Juul’s first marketing campaign in 2015, called ‘Vaporized,’ pitched the brand as a cool lifestyle accessory with images of people in their 20s and 30s, which critics say made the brand attractive to teens.” Eventually, this campaign appeared to pay off with big results for the industry as well as for Juul, as “vaping among teens jumped 78% from 2017 to 2018, federal data show”.
A Juul Labs spokesperson told FOX Business, without commenting on the FTC reports: "Without commenting on any specific investigation, our paid influencer program, which was never formalized, was a small, short-lived pilot that ended in 2018. We worked with fewer than 10 adults on Juul-related content, and they were all smokers or former smokers over the age of 30. Juul spent less than $10,000 on influencers."
Beyond that, the Juul spokesperson added: "Without commenting on any specific investigation, we fully cooperate and are transparent with any government agency or regulator who have interest in our category. We have never marketed to youth. Our earliest marketing campaign in 2015 was intended for adults in the 25-34-year-old demographic and lasted for six months. If one views the sales and revenue data, there is no evidence that it drove use, youth or otherwise. Nonetheless, we regret that the campaign was executed in a way that was perceived as appealing to minors. To avoid any misconceptions, we changed our approach to advertising in a way that offers no room for misinterpretation about the mission of our company or our intended customers. Today, our marketing efforts exclusively feature adult smokers aged 35+ who offer their personal experiences about switching to Juul products – all conveyed in a style, tone and message that is a direct appeal to current adult smokers. We have exited social media entirely and request that social media platforms delete inappropriate third party posts and listings. We have no higher priority than to prevent youth usage of our products. Our product is intended for current adult smokers and our marketing specifically is designed to help achieve that goal."
It has been a challenging week for Juul, CEO Kevin Burns appeared on CBS to address claims that his vaping products are linked to lung illness. He said the company is cooperating and is in "close contact" with the CDC as they examine the issue.