Case Scenario: FITBIT FORCE RECALL: DID FITBIT REACT QUICKLY ENOUGH?

It's every business owner's nightmare. Your company launches a new product, the reviews are good, sales take off, and then, out of nowhere, people using your product start getting sick. The question quickly becomes: what to do? It's the type of question that tests a company's ethical culture and its moral fiber. In Fitbit's case, some observers feel the company met the challenge by putting its customer's health concerns first. Others feel Fitbit could have reacted more swiftly and decisively. Here's what happened. Fitbit was launched in 2007. The company makes wearable activity trackers that measure data such as number of steps walked, quality of sleep, and other personal metrics. Fitbit has grown quickly and is the clear leader in the wearable activity tracker industry. Its market share is around 50 percent, well ahead of Jawbone and nike, its main competitors in the industry. Since its launch in 2007, Fitbit has produced a string of progressively better products, including the Fitbit Ultra, the Fitbit One, the Fitbit Zip, and the Fitbit Flex. On October 10, 2013, the company introduced the Fitbit Force, its newest product. The Fitbit Force tracks a number of statistics in real time, including steps taken, distance traveled, calories burned, stairs climbed, and active minutes throughout the day. It also tracks sleep quality at night. Initial reviews were both positive and enthusiastic. Shortly after the Force went on sale, Fitbit started getting reports that a small fraction of users were experiencing skin irritations while wearing the device (the Force is worn around the user's wrist). Symptoms ranged from red, itchy skin to painful blisters that would ooze or bleed. Some users sought medical attention, and were typically prescribed prednisone (used to treat allergic reactions) and antibiotics.

On January 14, 2014, Fitbit issued a statement indicating that it was looking into reports of users experiencing skin irritations as a result of wearing the Force. It suggested that the irritations were possibly a result of an allergic reaction to nickel, an element of the stainless steel used in the device. Fitbit offered an immediate refund or replacement with a different Fitbit device to anyone affected. It concluded the statement by saying: "We are sorry that even a few customers have experienced these problems and assure you that we are looking at ways to modify the product so that anyone can wear the Fitbit Force comfortably." Reports of problems continued, with no definitive resolution of why the Force was causing skin irritations. On February 20, 2014, Fitbit issued a statement saying that it was halting sales of the Fitbit Force, and issued a voluntary recall of the device. The same day, Fitbit co-founder and CeO James Pak issued another statement. The statement said, in part: "Recently, some Force users have reported skin irritation. While only 1.7% of Force users have reported any type of skin irritation, we care about every one of our customers. On behalf of the entire Fitbit team, I want to apologize to anyone affected." The statement went on to provide a bullet-point list of what the company knew about the causes of the irritations. The most likely cause, according to an independent lab, was allergic contact dermatitis. Allergic contact dermatitis is a catch-all term for red or inflamed skin brought on by allergies or irritants.

On March 12, 2014, the Consumer Products Safety Commission (CPSC) took action. It announced a recall of the one million Fitbit Force units sold in the United States and the 28,000 sold in Canada. It also made it illegal to sell the Fitbit Force. As a result, anyone who had the Force for sale on Craigslist, eBay, or a similar site had to take it down. The CPSC reported that it had received about 9,000 complaints of the wristband causing skin irritations and about 250 reports of blistering. The reaction to how Fitbit handled the Fitbit Force situation has been mixed. Some have praised Fitbit for showing concern for its customers and for relatively quickly issuing a voluntary recall. For example, a March 2, 2014, editorial in Entrepreneur magazine was titled "How Fitbit, Like Tylenol Before It, Handled a Recall the Right Way." Others have been critical, feeling that Fitbit should have reacted more swiftly. Some Force users also feel that Fitbit hasn't come completely clean on the exact causes of the skin irritations. They'd like to know whether there will be any long-term adverse health consequences caused by the irritations. An example is a man who lives in Bozeman, Montana, and bought a Fitbit Force for his girlfriend. His reaction, as reported on ABC news's health blog, was as follows: "The bigger issue is dealing with the unknown. Is this a carcinogen reaction? Will it affect her immune system? I'm sick over this," he wrote in an e-mail. "A gift that was meant to promote health has turned into a nightmare."

Questions for Critical Thinking

1. What does the Fitbit Force incident tell you about Fitbit's ethical culture?

2. On a scale of 1-10 (10 is high), how well do you think Fitbit handled the Fitbit Force situation? After reading this feature, if you were shopping for a wearable fitness tracker, would you be more inclined or less inclined to buy a Fitbit product and why?

3. To what degree, if any, do you think the Fitbit Force incident will negatively affect consumer confidence in wearable technologies in general?

4. What lessons can start-up firms learn, both positive and negative, from the Fitbit Force story?