Skechers U.S.A. Inc. (SKX:US) agreed to pay $45 million to resolve U.S. and state allegations it deceived customers into believing its Shape-ups athletic shoes will help them lose weight and strengthen their buttocks and legs.
Skechers, based in Manhattan Beach, California, also made false claims in advertising for its Resistance Runner, Tone-ups and Toners shoes, the U.S. Federal Trade Commission said today in a statement.
“Skechers’ unfounded claims went beyond stronger and more toned muscles,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection, in the statement. “The company even made claims about weight loss and cardiovascular health.”
The agency has been critical of how companies have marketed toning shoes. In September, Reebok International Ltd. agreed to pay $25 million after FTC accused the company of making false advertising claims about its version of the shoes.
Skechers “vigorously” denies the allegations, said David Weinberg, the Company’s chief financial officer, in a statement.
“Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country,” Weinberg said.
Skechers fell 33 cents, or 1.8 percent, at 11:52 a.m. in New York.
The settlement relates to investigations that involved the FTC, along with attorneys general from 44 states and the District of Columbia, according to the agency.
The FTC will receive $40 million from Skechers while the states will get $5 million, most of which will be refunded to customers, Vladeck told reporters today at a Washington news conference. The company also will pay $5 million in attorneys’ fees, according to a Skechers statement.
Skechers advertisements challenged by the FTC include one for Shape-ups that told consumers they could “get in shape without setting foot in a gym,” according to the statement. The agency alleged that the company made unsupported claims that the shoes would provide more weight loss and muscle toning than regular fitness shoes.
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