Breathometer, the Mark Cuban-backed digital health startup that makes a smartphone-connected oral health sensor, has settled a suit with the Federal Trade Commission over its first product, a smartphone-connected breathalyzer. According to the terms of the settlement, Breathometer will have to offer a full refund to customers who bought the device.
The FTC says that it discovered serious accuracy problems with the breathalyzer device. Because it was advertised as a law enforcement-grade device and because consumers were encouraged to use it to determine whether or not they were safe to drive, the Commission took accuracy problems pretty seriously.
“People relied on the defendant’s products to decide whether it was safe to get behind the wheel,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Overstating the accuracy of the devices was deceptive — and dangerous.”
In addition to the initial accuracy problems, the FTC was further concerned by Breathometer's response after it became aware of them in 2014. The company first tried to fix the problem by updating the app to overestimate results, and then, when the problem couldn't be solved, discontinued the device but without telling customers or retailers why, FTC Senior Attorney Lesley Fair wrote in a blog post about the decision. It wasn't until October 2016 that the app was updated to permanently disable the breathalyzer.
Breathometer has been moving away from the Breathalyzer space for a while now, focusing on Mint, its oral health sensor. In a note to users on Breathometer's website, investor and "Shark Tank" shark Kevin O'Leary said the company chose to settle to focus on its digital health mission.
"We feel it is important to clarify that this settlement does not undermine our achievements in creating quality consumer health devices," O'Leary wrote. "We proactively stopped manufacturing Original and Breeze in 2015 prior to the FTC’s inquiry. We stand behind our current product, Mint, and its quality and pioneering technology."
Mint measures measures volatile sulfur compounds in the breath, which are produced by anaerobic bacteria in the mouth. According to the company, these bacteria are correlated with poor oral hygiene and oral health, such as gum disease and bad breath. They recently secured an agreement to sell Mint in a bundle with Philips Sonicare electric toothbrushes.
In the rest of his post, O'Leary sought to distance the company from its past and cement its image as a more serious, mature company.
"When Breathometer was founded in 2012, our goal was to harness cutting-edge technology to deliver meaningful information about your body to you, immediately," he wrote. "Since then, we’ve evolved from a SharkTank sensation to a more mature company with a dedicated and talented leadership team with decades of collective experience in the medical device industry. We are firmly united in our effort to deliver best-in-class connected products that help everyday consumers monitor their body in meaningful ways."
In an interview with TechCrunch, Breathometer CEO Charles Michael Yim blamed the company's manufacturer for the accuracy errors, and said they will work with a better partner for Mint.
Breathometer experienced a boom in popularity after a good turn on investment reality TV show Shark Tank and ultimately did more than $5 million in sales -- which means the company could lose as much as $5 million in refunds if customers choose to take them up on the offer. In practice, the action is likely to cost the company much less.
As for the FTC, the agency shared several lessons that other companies should take from Breathometer's dangerous misstep. Fair wrote that companies should be extra careful with claims that effect safety; should make sure to test products outside of the lab, in the same conditions consumers use them; and should make sure their testing matches up with their advertising claims. Finally, companies should respond more quickly and appropriately to a problem.
"According to the FTC, the defendants’ failure to take appropriate action after learning that the device posed a public health and safety risk caused or was likely to cause substantial injury to consumers," she wrote. "That includes people who relied on the device in deciding to drive after drinking – and the rest of us on the road."