The Kellogg Company will pay $5m to consumers misled by children’s immunity claims for its Rice Krispies breakfast cereal, after agreeing terms in an amalgamated class action in a California court.
As happened when it settled with the Federal Trade Commission over the same claims back in June, 2010, Kellogg’s stood by its claims, but said settlement was the preferred course of action to avoid a protracted legal action.
It originally agreed to remove the vitamin/antioxidant-based claims from the Rice Krispies products at the end of 2009 after the claims were challenged by Oregon state authorities, but that was followed by the FTC action, which itself spurred a number of class actions, which have been settled here.
Kellogg’s has agreed to pay between $5 and $15 to consumers up to an amount of $2.5m, as well as donate Kellogg products to charity worth an additional $2.5m.
The settlement follows another in November, 2010, over attention-boosting claims for Frosted Mini-Wheats that led to a $10.5m settlement. Those claims, like the immunity claims, were found to be wanting for product-specific scientific backing by the FTC.
Kellogg’s had to fight a PR storm at the time it launched the Rice Krispies immunity claims as not only did parent groups express outrage that sugar-laden cereals should make such claims, but it coincided with the outbreak of the H1N1 Bird flu outbreak. Critics said the 100-year-old, $13bn food giant was being opportunistic but Kellogg’s said its launch had preceded the Bird flu pandemic.
While standing its ground on the fortification-based claims claims and the Bird flu issue, Kellogg’s simultaneously agreed to stop making the immunity claims, destroy two million cereal boxes that bore the statements, and donate 500,000 boxes to food banks.
Claim making scrutiny
While the FTC issued a stern warning in June that saw Kellogg's claim-making for Rice Krispies and other products come under strict scrutiny, observers wondered at the time why the FTC did not go further in punishing Kellogg’s – perhaps with a fine.
“What is utterly befuddling about this action is that Kellogg’s have hit the Daily Double with this – immunity and misleading claims aimed at children – and still the FTC won’t fine them just because they are Kellogg’s,” said New York-based food and drug attorney, Marc Ullman.
That settlement was an expansion of the earlier Frosted Mini-Wheats cognitive benefit settlement, which meant it could not fine Kellogg’s, the FTC told NutraIngredients-USA.com at the time.
Instead FTC commissioner Julie Brill, and chairman Jon Leibowitz issued a letter accusing Kellogg’s of irresponsibly conceiving and engaging in the multi-million dollar immunity campaign at the very same time it was settling the Frosted Mini-Wheats claim.
“What is particularly disconcerting to us is that at the same time that Kellogg was making promises to the Commission regarding Frosted Mini-Wheats, the company was preparing to make problematic claims about Rice Krispies,” wrote Brill and Leibowitz in their letter.
“We hope that the Commission action announced today communicates to industry that it has an obligation to be honest with the public, and that the FTC will act swiftly to challenge questionable health claims about children’s food products.”