Judge denies Fitbit's request to dismiss securities class action suit on heart rate monitoring technology

By Heather Mack
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A California federal judge will hear out allegations that Fitbit’s heart rate monitoring technology is inaccurate – which have warranted class action suits both for potential danger to users and misrepresentation to investors.

Last week, judge Susan Illston denied the fitness wearable company’s request to dismiss the allegations of a federal securities class action, which claim Fitbit was deceptive about the reliability of its PurePulse heart-rate monitoring technology. The PurePulse technology was announced in 2014, and touted as providing continuous, automatic heart rate tracking via wristworn devices. Fitbit then offered two new products, the Charge HR and Surge, featuring the PurePulse technology, which resulted in rapid revenue growth and was ultimately tied to the company’s initial public offering.

In an amended complaint, the plaintiffs allege that the sales of the new devices with the PurePulse technology were the main drivers of revenue growth, and, as a result of “false and misleading statements about the accuracy of Fitbit’s heart rate-tracking, Fitbit securities were offered and traded at inflated prices.”

“Driven by sales of these products with PurePulse Technology, Fitbit’s revenues reached $1.858 billion in 2015, compared with $745.4 million in 2014,” the complaint states. “Plaintiffs allege that because the heart rate monitoring was the key feature of Fitbit’s most important products, its accuracy was crucial to Fitbit’s business success.”

The suit, filed in the northern district court of California, builds on a previous class action suit filed in January 2016 that allege the technology was inaccurate to a dangerous degree.  Following that suit, Fitbit’s stock price fell 45.8 percent, according to the investor complaint.

The denial to dismiss the allegations doesn't mean a decision has been made, but that investors had demonstrated adequate facts to support their case.

Fitbit declined to comment on the decision.