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Colgate Palmolive Ordered To Pay $2 Million To Discontinue Anti-Bacterial Soap

|Includes: Colgate-Palmolive Co. (CL)

'Consumer products company' misled customers to think that it's anti-bacterial soap eliminates most common germs.

Colgate Palmolive (NYSE:CL) has agreed to pay $2 million to resolve the litigation that it allegedly misled consumers to think that its Softsoap liquid hand wash has the potential to kill most germs, based on documents filed by the New Hampshire federal court.

The two parties agreed after nearly a couple of years of negotiations and will cover the fees of the attorney and the incentives for five named plaintiffs, with the other portion of the money going to the Children's Health Funda, which is a charity that serves medically challenged children.

Company spokesperson said that it denies the view given by the plaintiffs, but in order to start afresh from the litigation that has bruised the company, it has decided to settle to avoid the cost of uncertainty and also the larger cost that it had to pay if it dragged the case on for long.

The case featured the liquid soap that Colgate manufactured between 1992 and 2011, which had an active ingredient that the company claimed to have eliminated about 99% of the germs. The plaintiffs, however, disagree and point out that triclosan, an active ingredient of the soap, did not actually provided the protection and stated that this case is currently going through a scientific review by the US FDA, while throwing cold water over Colgate's claims.

The reason why the case got dragged for so long is because the FDA did not had the data available in the mid 90's, when it was first initiated, but subsequent studies showed that the time and temperature in which the soap is used to kill of the bacteria does not work efficiently.

Therefore, customers were duped into thinking that the soap had the high value high germ killing and had to pay high prices for it. While the settlement does not go directly to the customer, the company was affected but the outcome and will benefit from the injunction that has been imitated against Coalgate Palmolive.

Following the case, Colgate announced that it would no longer use the triclosan that they had used, while also being barred from the courts from issuing statements that believe its claims once the scientific research is not out.

Colgate Palmolive's stock price ended the day at $67.17, a gain of 1l.17% from the previous day, but that is probably because the ruling statement was issued late when the verdict was delivered more than two weeks ago.