A challenge to a cigar company’s “buy one, get one” promotions ended with a $2.5 million settlement recently approved by an Oregon federal court.

J. Podawiltz accused Swisher International and Plaid Pantry of misleading consumers by making offers such as “5 for the price of 3,” “3 for the price of 2,” “buy 1 get 1 free” and “buy 4 get 1 free.” The purported deals were false and only served to encourage consumers to buy more products, the plaintiff alleged. For example, the advertising implied that consumers could purchase three individual Swisher cigarillos for less than the price of a 5-pack, when that was not the case.

To settle the suit, the defendants agreed to provide up to $2.5 million in vouchers for class members—those who took advantage of the promotions by making a Swisher purchase between August 25, 2015, and February 7, 2019. They are eligible to collect up to five $1 vouchers to be used for future purchases of Swisher products. The vouchers will expire after two years.

If money remains in the $2.5 million fund one year after the first voucher distribution, the defendants will pay the difference as a cy pres donation split evenly between the National Consumer Law Center and the Oregon State Bar.

The defendants, neither of which admitted any liability or wrongdoing in the deal, also agreed to pay attorneys’ fees, costs and expenses of $695,000, as well as an incentive award for Podawiltz of $7,500.

To read the order granting preliminary approval of the settlement agreement in Podawiltz v. Swisher International, Inc., click here.

Why it matters: By granting preliminary approval for the multimillion-dollar settlement agreement, the court reminded advertisers to be careful about the pricing for “buy one get one” promotions.