The settlement, announced March 3, requires Airborne to offer refunds to every consumer who purchased the brand from May 2001 through November 2007 if they still have receipts. Those without receipts are still eligible for refunds for as many as six packages based on average retail prices of $2.75 to $10.50. The settlement ends a 2006 lawsuit brought in U.S. District Court for the Central District of California.
Taking out ads
As part of the settlement, Airborne Health will buy ads in Better Homes & Gardens, Parade, People, Newsweek and several other magazines and newspapers with instructions for seeking refunds.
Airborne didn't admit wrongdoing as part of the settlement. The company couldn't immediately be reached for comment, and a spokeswoman for Ten United, Pittsburgh, which handles public relations and advertising for the brand, didn't immediately return a call for comment.
Still pending are investigations launched last year by the Federal Trade Commission and 24 state attorneys general into Airborne's marketing.
ABC's "Good Morning America" reported in February 2006 that the "clinical trial" supporting Airborne's claims was conducted by two people without benefit of a clinic or scientists. Later, the brand removed any reference to colds from its packaging. AirborneHealth.com currently bills the brand as "the best-selling herbal health formula that boosts your immune system to help your body combat germs." The company had projected sales of $300 million for its most recently concluded fiscal year ended March 31.
Airborne has been a remarkable bootstrap marketing tale, built heavily by word-of-mouth buzz and public relations around its "Created by a school teacher!" story. The product's founders, former second-grade teacher Victoria Knight McDowell and her screenwriter husband, Thomas Rider McDowell, owed much of their success to appearances on shows such as "Oprah Winfrey," "Dr. Phil" and "Live With Regis and Kelly."
'Run-of-the-mill vitamin pill'
"Airborne is basically an overpriced, run-of-the-mill vitamin pill that's been cleverly, but deceptively, marketed," David Schardt, a senior nutritionist for the Center for Science in the Public Interest, said in a statement. The advocacy group provided legal assistance to plaintiffs' attorneys in the class action.
Summit Partners, a Boston-based private-equity firm that took a controlling stake in Airborne in 2005, quietly shopped the business in late 2006, according to people familiar with the matter, but to no avail.