Sometimes the best alternative to litigating a defense is a settlement and good PR strategy. The Federal Trade Commission (FTC) reached a settlement with Skechers USA Inc. for $45 million with regard deceptive claims to consumers in advertisement. The claimed violations were prohibited by federal law under the Federal Trade Commission Act and 15 U.S.C §§45 and 52 [see the complaint here]. Skecher’s advertising for its Shape-ups, Resistance Runner, Toner and Tone-ups shoes made unsubstantiated claims of their toning and fitness related capability.
The FTC will disburse refunds for all purchasers who elect to collect, rather than collecting from Skechers directly. The settlement bars Skechers from misrepresenting any tests, studies, or research results regarding toning shoes including the shoes for strengthening, weight loss, health or fitness-related benefits. Unless Skechers, or your brand, can make advertising claims based on scientific tests, it cannot claim health or fitness related benefits.
“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.”
All brands, especially a reputable one like Skechers, have a legal responsibility to its consumers to make truthful and valid claims in advertising. Counsel for a brand should be well aware of all marketing material, and tiered approval systems should be in place in every organization. Not only is there the brands reputation at stake, but financial penalties and future lost earnings are damaging to the future of the company. The FTC website provides valuable information for consumers and brands, failure to adhere to these legal standards can leave your brand in need of a shape-up.