Skechers to pay $50M over 'toning' shoe 0
Skechers USA Inc has agreed to pay $50 million to settle charges that it made unfounded claims when it advertised that its “toning shoes” would enable users to get stronger and lose weight.
The Federal Trade Commission said on Wednesday the shoe maker was deceptive in the marketing of its Shape-ups, Resistance Runner, Toners and Tone-ups shoes. The FTC will receive $40 million from Skechers and return most of it to consumers who bought the company’s toning shoes.
Skechers will pay an additional $5 million to 43 states and the District of Columbia and another $5 million to class action attorneys, the Manhattan Beach, California, company said in a statement.
“Skechers’ unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.
Skechers’ shares were down 1.9 percent at $17.93 in midday trading on the New York Stock Exchange but recovered slightly in the early afternoon.
Skechers denied that the advertising was deceptive, saying that peer-reviewed journals had found fitness benefits from toning shoes.
“We settled to avoid the cost and distraction of protracted legal battles so we could get back to doing what we do best,” David Weinberg, the company’s chief financial officer, said in a statement.
Thick, round-soled toning shoes were the fastest-growing category in footwear until 2010, when demand began to wane. Skechers has been trying to clear out excess inventory of toning shoes, which is weighing on its earnings.
The FTC settlement with Skechers follows a September 2011 agreement with Reebok International Ltd in which Reebok said it would pay $25 million to resolve similar charges. Reebok is owned by Adidas.
The shoes are designed to be slightly unstable, and manufacturers say the instability requires the wearer to work harder, thus strengthening muscles.
Consumers who bought Skechers should go to www.ftc.gov/skechers to learn about a possible refund.