OH MY POD: Keurig will pay $1.5 million penalty over K-Cups – after claims of false information about its coffee pods

According to THE SUN, Keurig has been hit with a $1.5 million civil penalty by the Securities and Exchange Commission (SEC) for misleading statements about the recyclability of its popular K-Cups. The fine addresses the company’s false claims that K-Cup pods were recyclable, despite evidence to the contrary.

Misleading Claims and SEC Findings

Between fiscal years 2019 and 2020, Keurig asserted that testing with recycling centers confirmed that K-Cups could be effectively recycled. However, the SEC revealed that two major US recycling companies had raised significant concerns about the actual recyclability of the pods and had no plans to accept them for recycling.

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During this period, K-Cup pods represented a substantial portion of Keurig’s coffee system sales. Many consumers chose the pods due to their environmental claims. John T. Dugan, associate director of the SEC’s Boston regional office, emphasized, “Public companies must ensure that the reports they file with the SEC are complete and accurate. When a company addresses an issue in its annual report, they must provide the full picture so investors can make informed decisions.”

Although Keurig did not admit to or deny the SEC’s findings, it agreed to a cease-and-desist order and to pay the $1.5 million penalty.

Class Action Settlement and Environmental Impact

This fine follows a separate $10 million settlement related to the same issue. Plaintiff Kathleen Smith’s class action lawsuit argued that K-Cups, despite their marketing claims, predominantly ended up in landfills. A 2020 study highlighted that 9 billion K-Cups were disposed of in landfills in the US in 2014.

Consumers who bought K-Cups between June 8, 2016, and August 8, 2022, could claim compensation from the settlement, receiving between $6 and $36 with proof of purchase. Those without receipts were eligible for up to $5 per household.

Keurig’s Sustainable Future

In response to the backlash, Keurig announced a shift towards sustainability in April with the introduction of K Rounds—compact coffee pucks designed to replace plastic pods. These will be compatible with the new Keurig Alta machine, which brews without using plastic pods.

CEO Bob Gamgort stated, “Today, we are applying all our expertise to create a revolutionary new system that will redefine how consumers will brew coffee for decades to come.” The K Rounds will come in various sizes, including options for espresso shots, regular, double shots, and larger pods for cold coffee, although their release date remains uncertain.

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Additional Settlements

In related news, Americans are eligible for a one-time payment from a $14 million tax filing settlement. Buzzfeed readers may also be entitled to a portion of a $9 million settlement.