Federal Trade Commission, Plaintiff v. Skechers U.S.A., Inc., d/b/a Skechers, Defendant.
(United States District Court for the Northern District of Ohio)
The Federal Trade Commission (“FTC”) announced that sneaker manufacturer Skechers has agreed to pay $40 million to purchasers of its Shape-Ups, Resistance Runner, Toners, and Tone-ups shoes. The settlement represents the culmination of a larger, multi-state investigation led by the Tennessee and Ohio Attorneys General Offices and which included attorneys general from virtually every state across the country. California-based Skechers was accused of violating federal law through allegedly deceptive advertising claims, including falsely representing that clinical studies backed up assertions of improved health and other benefits. The suit claims that consumers substantially suffered as a result of the deceptive ads and that Skechers “has been unjustly enriched as a result of its unlawful acts or practices. Absent injunctive relief by this Court, Defendant is likely to continue to injure consumers, reap unjust enrichment, and harm the public interest.”
Skechers transformed itself into the “toning” shoe market leader in 2009 with the introduction of Shape-Ups. The company’s advertising campaign featured celebrities such as Kim Kardashian and former NFL Quarterback Joe Montana boasting the benefit of toned lower bodies and improved cardiovascular health just by walking in the shoe. Sales of Shape-Ups soared to over $145 million in 2009 to over $1 billion in 2010. Skechers’ ads flooded the airwaves and print media and claimed to not only improve posture and overall caloric burn, but other claims included lowered body fat, improved circulation, and relief from joint and muscle pain and stiffness.
The FTC, in its complaint, not only refuted the benefits claimed by Skechers, but also rebuked the alleged clinical trials the company claimed supported the assertions in their ads. Among the statistics Skechers included were claims that Shape-up wearers:
A. lost an average of 2.78 pounds in eight weeks, compared to .30 pounds for the control group that wore standard fitness shoes; and
B. reduced their body fat by an average of 1.31 % in eight weeks, compared to 0.57% for the control group that wore standard fitness shoes
The FTC refuted the statistics and the validity of the clinical trials they were based upon in finding that “the data relied upon during the study were altered and incomplete: some participants wearing the Shape-ups footwear gained weight and/or increased their body fat percentage, but were falsely reported as having lost weight and/or reduced their body fat percentage.” In addition the FTC claimed that some data went missing or uncollected and that, in at least a handful of instances, the subjects of the study were the “wives of two of the study's co-authors, the parents of one of the study's co-authors, and employees of and/or persons associated with Dr. Gautreau.”
According to the FTC Act, 15 USC § 45(a), the law states the following:
(1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.
(2) The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, savings and loan institutions described in section 57a (f)(3) of this title, Federal credit unions described in section 57a (f)(4) of this title, common carriers subject to the Acts to regulate commerce, air carriers and foreign air carriers subject to part A of subtitle VII of title 49, and persons, partnerships, or corporations insofar as they are subject to the Packers and Stockyards Act, 1921, as amended [7 U.S.C. 181 et seq.], except as provided in section 406(b) of said Act [7 U.S.C. 227 (b)], from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.
This week’s settlement bars Skechers from advertising claims about strengthening, weight loss, and any other health-related benefits regarding their shoes “unless they are true and backed by scientific evidence.” David Vladeck, Director of the FTC’s Bureau of Consumer Protection stated “Skechers’ unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health. The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims.”