Claims about its probiotic spoonable yoghurt, Activia, will also be modified with both products to more prominently display the scientific names of the probiotic strains they contain.
The company has set up a $35m fund from which it will pay compensation to consumers at up to $100 per person.
Dannon spokesperson, Michael Neuwirth, said his company would rather settle out of court than face the “distraction” and cost of an elongated suit.
The settlement is one of the biggest of its kind in the food industry. It follows a class action filed in January 2008 in which Dannon stood accused of spending $100m promoting clinical benefits of Activia and DanActive that its own tests had disproved.
There are three levels of claimant with increasingly strict demands of proof of purchase that entitle consumers, who bought the products between 2006 and 2007, to up to $100 each in compensation.
At the time of the original filing last year, attorney Timothy Blood, from the law firm Coughlin Stoia Geller Rudman & Robbins, which brought the action, said Dannon had purposely deceived consumers about the products.
He said: “Deceptive advertising has enabled Dannon to sell hundreds of millions of dollars worth of ordinary yogurt at inflated prices to responsible, health conscious consumers.”
Despite the settlement, Dannon is sticking by the veracity of its claims.
Asked about the impact of the settlement on the reputation of the products in the eyes of consumers, Neuwirth said: “our brands are performing well which is testament to the satisfaction of consumers.”
Dannon also announced that it is currently in discussions about its claims with the Federal Trade Commission (FTC), which is currently reviewing similar claims.
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