Procter and Gamble Settle Suit Claims On Puffed-Up Packaging
Company will change packaging on some Olay products.
Procter and Gamble (NYSE:PG) is set to revamp its packaging of its Olay skincare products, part of a settlement with California prosecutors. The company has come under accusation from authorities for misleading consumers by selling face cream jars with the size of packaging much larger than the size of its content.
The company has been slapped with civil penalties and charges worth over $850,000. The total includes $194,000 in civil penalties and around $12,000 for costs associated with legal costs that P&G has to pay to each of the district attorney offices in the counties of Yolo, Riverside, Fresno, and Shasta.
The civil lawsuit came into being after an investigation was initiated in 2012, according to a spokesperson of an attorney from California’s Riverside County, one out of four counties that had handled the case. Packages were inspected by federal authorities, which lead to allegations that P&G was violating the state’s ‘slack fill’ law, which has prohibited the use of oversized packaging to give the impression that the products in the package are larger.
In the U.S., different varieties of Olay facial moisturizer are sold in different types of box sizes at different prices, with great discrepancies. For example, a 1.7-ounce jar of a higher branded moisturizer Olay Regenerist Luminous costs around $35 at retail level but comes with a box that is almost twice the size of the one that contains 2 ounces jar of Olay Active Hydrating Cream that costs almost $10 at retail level.
A spokesperson for the world's largest consumer goods producer stated that the company had no intention to miss represent the size of its products and it already has made changes in its Olay packaging, and at the same time, told that it has been completely in compliant with all state regulations. Nevertheless, P&G decided to settle the matter, which was filed in the Yolo County Superior Court, through monetary compensation to leave the matter behind it now.
P&G is not alone too. State attorneys are coming down hard on companies that are selling items, from perfumes and clothing to snacks and food, around the country, inviting lawsuits against them, with the same allegations that the companies are leaving out too much space for no reason whatsoever. It has become a serious issue with customers complaining about the quantity of goods that they receive against the amount that is being advertised in televisions and other media channels.
P&G stock price ended the day at $81.74, a gain of more than 2%.