WASHINGTON — The Federal Trade Commission said Wednesday that Skechers USA Inc. has agreed to pay $45 million to settle charges that it violated federal laws by making deceptive claims to consumers in advertisements for its toning shoes.
This story first appeared in the May 17, 2012 issue of WWD. Subscribe Today.
The settlement was part of a broader agreement resolving a multistate investigation involving attorneys general from 44 states and the District of Columbia, the FTC said. In addition to $40 million paid to the FTC, Skechers agreed to pay $5 million to the states and D.C. as a separate settlement but part of the broader agreement revealed by the FTC Wednesday. It will also pay $5 million in class-action attorneys’ fees, bringing the total cost to $50 million.
The FTC charged Skechers with making the deceptive advertising claims with its Shape-ups, Resistance Runner, Toner and Tone-ups shoes.
Consumers who purchased the named toning products will be eligible for refunds directly from the FTC.
The settlement bars Skechers from making advertising claims about strengthening, weight loss or any other health or fitness-related benefits, or from misrepresenting tests, studies or research in relation to toning shoes.
Advertising for toning products has come under intense scrutiny by the FTC. The settlement with Skechers follows on the heels of a similar $25 million settlement that Reebok International Ltd. made with the agency last year, after the FTC also charged it with making false advertising claims on its toning products.
Skechers denied the allegations Wednesday but said it settled to “avoid protracted legal proceedings.”
The Manhattan, Calif.-based footwear firm disclosed in its annual report filed with the Securities and Exchange Commission that it had been involved in several legal proceedings brought by the FTC, multiple states’ attorneys general and consumer class action lawyers.
“While we vigorously deny the allegations made in these legal proceedings and looked forward to vindicating these claims in court, Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country,” said David Weinberg, the company’s chief financial officer. “This settlement will dispose once and for all of the regulatory and class action proceedings. While we believe we could have prevailed in each of these cases, to do so would have imposed an unreasonable burden on the company regardless of the outcome.”
“The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. Vladeck noted that Skechers “went beyond” claims of stronger and more toned muscles and included claims of weight loss and cardiovascular health.
Shape-ups fitness shoes retail for $100 a pair, while prices for the other shoes named in the complaint retailed on average from $60 to $100 a pair.