Fans of Rice Krispies and Cocoa Krispies might soon be entitled for more than just delicious cereal.
Recently, Kellogg Company agreed to settle its class-action lawsuit regarding false advertisements it made regarding its Krispies products. In 2009, the company claimed both cereals boosted children's immune systems, however, the corporation did not have competent clinical evidence to support these claims. Kellogg has stood by its marketing, however, it did not allow a court to decide the result.
As a result, customers who purchased the items between June 1, 2009 and March 1, 2010 are entitled to place a claim for damages, expected to be between $5 to $15. In all, Kellogg expects to pay out roughly $2.5 million to customers, and will donate the same amount to a charity.
The class-action lawsuit filed against Kellogg highlights the importance of companies using truthful, well planned marketing campaigns, lest they enter into legal battles. Furthermore, the instance showcases the necessity for companies to have business insurance, as unexpected costs, such as legal fees and pay outs, can arise. For smaller companies, these costs can be crippling.