Skechers USA has agreed to pay $45 million to U.S. customers and another $5 million to attorneys to settle once and for all the claims lodged by U.S. consumers for misleading advertising of its Shape-up range of toning shoes. The company stresses that it disagrees with the allegations of misconduct, and that is still committed to its toning technology, but has agreed to this onetime settlement to avoid costly and protracted legal proceedings in numerous state courts and at the federal level.
Under the deal, the company will be able to continue advertising the fact that wearing rocker-bottom shoes like its Shape-ups can lead to increased muscle activation and calorie burn, improved posture, and reduced back pain. However, it will not be permitted to misrepresent the results of any tests, studies or other research about toning shoes.
Skechers is making the settlement with the U.S. Federal Trade Commission in reaction to numerous charges. As it turned out, the FTC challenged Skechers, among other things, for its failure to disclose that Dr. Steven Gautreau, a chiropractor who publicly recommended Shape-up shoes based on an allegedly “independent” clinical study, was married to a marketing executive of Skechers, and that he got paid for the study.
Michael Greenberg, president of Skechers, noted that his company had received enthusiastic feedback from “literally thousands of customers” who had tried its toning shoes. The company also noted that shoes employing toning technology have been sold in the U.S. for more than 15 years, and that their properties have been outlined in at least 19 clinical reports.
Pointedly, the FTC suggested that national advertisers such as Skechers need to “shape up your substantiation or tone down your claims.” The settlement comes nearly eight months after Reebok agreed to a $25 million penalty to settle all outstanding claims regarding its own EasyTone shoes. Proceeding in a similar way, U.S. consumers who purchased Skechers' Shape-ups, Shape-up Toners, Resistance Runners or other padded sole footwear will be allowed to file claims for reimbursement of between $27 and $84 for each pair they bought. If, however, at least 10,000 people opt out of the class action settlement, Skechers has the right to cancel the settlement.
Skechers first introduced its toning shoes in the spring of 2008, after Ryn of South Korea and other firms began selling similar footwear. Others followed suit. With its low prices and massive advertising, Skechers quickly became the leader of a category that generated estimated sales of $1 billion in U.S. stores in 2010. The market was reportedly cut in half last year, and it went further down after the FTC laid charges against Reebok last September and Skechers in January.