BUSINESS

Red Bull Settles False Advertising Lawsuit For $13M

10/09/2014 10:13 EDT | Updated 12/09/2014 05:59 EST
It turns out a can of sugar-laden energy drink may not spontaneously make you sprout wings after all.

According to court documents filed in New York Federal Court, Europe-based energy drink company Red Bull has agreed to pay out up to $13 million US in compensation to settle a class-action suit launched by an upset customer who says the company uses false advertising to promote its product.

"The defendant's prodigious advertising marketing and promotional spending has been used to mislead customers into believing that Red Bull is a superior product worthy of a premium price and has the ability to 'give you wings' and provide energy and vitality," reads the complaint brought forward by New York resident Benjamin Careathers, who has been drinking the product since 2002.

Although it contains many ingredients that the company claims are stimulants, the active ingredient is caffeine. The company makes those claims despite mounting evidence that its eponymous product contains no more stimulation than could be found from any other source of caffeine. A 250-ml can of Red Bull contains about 80 mg of caffeine. That's less than other caffeine fixes, including coffee, a 207-ml cup of which can contain as much as 150 mg of caffeine.

"Even a 12-ounce [356-ml] serving of Starbucks coffee costs $1.85 and would contain fair more caffeine than a regular serving of Red Bull," which has a suggested retail price of no less than $2.19 a can, the complaint reads.

"Despite the lack of any reported scientific support for a claim that Red Bull provides more benefit to consumers than a caffeine tablet or cup of coffee, defendants continue to market the product as a superior source of energy worthy of a premium price," another court filing alleges.

Company defends product

Nonetheless, the company maintains its product does what it says it does, telling beverage industry website Bevnet, in an emailed statement, that "Red Bull settled the lawsuit to avoid the cost and distraction of litigation. However, Red Bull maintains that its marketing and labelling have always been truthful and accurate, and denies any and all wrongdoing or liability."

The settlement includes a cash payout of up to $10 to anyone who has purchased a Red Bull product in the last decade. Instead of cash, recipients can choose to receive their payout in two Red Bull products worth up to $15 combined, with the company handling the shipping costs.

Red Bull has also agreed to pay up to $4.75 million in legal costs associated with the settlement, which will not come out of the payout funds. But the payout will be capped at $13 million, which means the more people apply to be included in the settlement, the less each will be paid out.

The company has set up a website, where Red Bull users can fill out a form to be included in the settlement. No proof of payment is necessary, but it appears as though only U.S. residents can qualify.

The suit alleges that since launching in North America more than a decade ago, Red Bull has spent more than $2 billion on marketing its product in the U.S., including $364 million in a single year, 2009. 

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