Dannon loses over $45 million for Deceiving Consumers
In a competitive market, sellers sometimes compete unfairly to gain an advantage in the market. However, when such companies like Dannon tries to cheat the system, the government steps in as law enforcer. The government tries establish a maintain a fair competitive market by various sanctions.
According to abcnews.com, "For two years Dannon hs been touting Activia and DanActive yogurt products as "clinically" and "scientifically" proven to regulate digestion and boost immune systems.
Despite the claims, Dannon must pay consumers up to $45 million in damages under the terms of a class action settlement, reached in Federal Court. The agreement also calls for Dannon to change its health claims for Activia and DanActive.
"This is victory for just about anyone who benefits from accuracy in food labelling" lawyer John Climaco told ABC News.
Both yogurt sells at a 30% percent premium over the other brands because they claim special bacterial ingredients that the company advertised as clinically proven to help strengthen immune systems and regulate digestion.
According to Timothy Blood,the lawyer of the complainant" 'Deceptive advertising has enabled Dannon to sell hundreds of millions worth of ordinary yogurt at inflated prices to responsible, health-conscious consumers".
What are your thoughts about this article? Why do you think it took two whole years for these "false" yogurts to be found out? Do you think that $45 million law suit is justified for such a flaw? Are the regulators doing a good job on a whole at ensuring that quality products enter the competitive market?
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I agree that false advertising is wrong and does give the company an unfair advantage. They know that people respond to authority figures and if people in authority positions such as doctors and clinicians say that this yogurt is better for one than other yogurts, then people will believe it and buy the product. I think that this happens more often than people realize, and it may have just been found out becuse we are trusting. We believe that if they are allowed to say that on T.V. or in magazines, it must be true. Nobody would let them use false advertisements. Also, it may have been found out two years ago, but is just now getting to court.
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I think this article well illustrates how difficult it is to enforce laws and regulate illegal actions on the large scale. Why is dong the fair-honest thing so much more difficult then it was for Dannon to tell the lies it did? That's a huge problem that leads to faulty economies, is the lack of self regulation, and the lack of government regulation, and the fact that it takes two years to enforce. (EA)
ReplyDeleteThis was caught two years ago, and is just being settled now. I'm slightly confused by what the article said, but it seems as if the labelling got past the FDA, which is troubling. Health claims have to be approved before they are put on packaging (though I suppose there are different categories, and I don't know where "special bacteria ingredients" fall into play).
ReplyDeleteI think that some products, especially food, need to be more closely looked at by the FDA and other government branches. When competition is very high in a market, firms will try to do whatever they can to get an edge and steal some potential buyers. Some of the information provided by the firms can be misleading and sometimes all the details are not explained. $45 million is a big price to pay, but i think that the penalty should be greater for advertising false information (especially when it comes to food). The bigger the price to pay, the few the firms will lie about their products. (A)
ReplyDeleteI do not understand the premise for the lawsuit, did they have reason to belive that the yogurt was infact not scientifically and clinically tested at all? or whether the yogurt was inconclusive in its results, or results twisted.i could understand that kind of payment for a flat lie, but a twist not so much, any biologist can tell you the positive to an increased flow of positive bacteria to the gullet. Advertising on that point should not be unlawful, unless they outright lied that it was clinically tested.
ReplyDeleteI think the lawsuit is actually justified because it is false advertising. Companies should not be able to deceive people like this. An example would be Toyota, who advertises their Prius as the ultimate green machine. However, when you compare the TOTAL emissions when taking into account the designing, assembly, and concepting of the car, the Prius has a larger carbon footprint than a Hummer H2. This is because of the complicated battery.
ReplyDeletehttp://www.autotropolis.com/buying-guides/green-cars-guide/emissions-showdown-toyota-prius-vs-hummer-h2.html
Essentially, companies need to be held accountable, but people also need to be more aware of clever marketing as well.
I agree that false advertising is very wrong. In fact, the other day I bought what was said to be 100 percent cranberry juice at Target, but when I got back to my dorm and read the nutrition label on the back, it said it contained way more sugar then that of any real cranberry juice. I was able to return it, but the people that had been buying those two Dannon products for the past years weren't. They wasted that extra bit of money on these products because they thought they were getting health benefits from them. This is why I think the 45 million dollars is a justifiable amount, because that is making up for the extra couple of bucks people spent on Activia and DanActive for the supposed health benefits over the two year span, driving consumers away from the cheaper regular yogurt. Activia and DanActive turned out to be that regular yogurt, except with a higher price-tag. (E, A)
ReplyDeleteIt is unfortunate that we put so much trust into companies that advertise their product as healthy for us. Especially when they are being back up by doctors. How are we not suppposed to trust the words of a licensed medical professional? It is sad that selling a product is worth more than rightfully earning the trust of your customers. I know that Dannon is not the first company to abuse the trust of their customers, and the will not be the last.
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