Two separate class action suits have been filed against the fitness tracking device manufacturer Fitbit since the beginning of the new year. Fitbit is an American company headquartered in San Francisco, CA. It creates wearable devices that measure health and fitness data. This data includes steps, walks, floors climbed, calories burned, heart rate, and sleep quality. Fitbit reported revenue of $365 million in the third quarter of 2015. It was projected to generate $598 in the fourth quarter. Growth came from its products becoming one of the most popular holiday gift items.
The first lawsuit was filed on January 5th by plaintiffs in California, Colorado, and Wisconsin. The suit, which was filed in a U.S. District Court in San Francisco, alleges that the heart rate tracking in two of Fitbit’s products, the Charge HR and the Surge, is inaccurate by a significant margin. The Fitbit Charge HR tracks users steps, sleep, stairs climbed, an approximation of distance traveled, and heart-rate. It does this using a 3 axis accelerometer that tracks forward movement as well as upward movement. The Fitbit Surge is another product that is marketed towards users who are very into fitness. In addition to tracking pace, distance, and elevation using a GPS device, the Surge includes a heart-rate monitor.
The plaintiffs claim that the products do not actually count every heart-beat. This would be contrary to what Fitbit’s advertisements suggests. The lawsuit seeks injunctive relief as well as actual damage payments to compensate users for their “economic injuries” from Fitbit’s heart-rate claims. Fitbit said in a statement that it doesn’t believe the case has merit and it stands by its technology:
“[We] strongly disagree with the statements made in the complaint and plan to vigorously defend the lawsuit…PurePulse [Fitbit’s proprietary heart rate tech] provides better overall heart rate tracking than cardio machines at the gym, as it tracks your heart rate continuously even while you’re not at the gym or working out. But it’s also important to note that [although] Fitbit trackers are designed to provide meaningful data to our users to help them reach their health and fitness goals, [they] are not intended to be scientific or medical devices.”
The second class action suit was filed by investors less than a week after the first suit. This suit was filed by investors in the Northern District of California for alleged fraud and U.S. securities law violation by Fitbit. The class includes all those who purchased shares of Fitbit since June 18, 2015. As well as those who purchased up until when the suit was filed the week before. (Fitbit’s stock fell 5.8% the day after the first suit was announced). The investors believe that Fitbit’s false advertising prior to the lawsuit created an inflated stock price. Thus inducing investors to “overpay” for their stock.