Skechers to Pay $40M for Unfounded Claims

by Nate Wooley | May 14, 2013 10:54 am

SkechersLogo Skechers to Pay $40M for Unfounded Claims[1]Skechers (NYSE:SKX[2]) has reached a settlement over its unfounded marketing claims for some of its shoes.

According to MSN[3], the shoes — Skecher’s Shape-ups, Resistance Runner, Shape-ups Toners/Trainers and Tone-ups — were pitched as being so good that they exercised for the owner. Now Skechers is paying $40 million to settle a class-action lawsuit regarding its advertising for the shoes.

This is the second settlement Skechers has made regarding Shape-ups, which were sold from 2008 to 2012. Earlier, the company reached an agreement with the Federal Trade Commission over ads for the shoes.

“Skechers’ unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health,” said David Vladeck, formerly of the FTC. “The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims.”

In the settlement, more than 500,000 people who joined the suit will each receive a refund for their shoes. In addition, Skechers has agreed — while not admitting wrongdoing — to stop claiming that its shoes provide assistance with various health issues.

SKX stock was trading lower by more than 1% early Tuesday.

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Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2010/08/SkechersLogo.jpg
  2. SKX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SKX
  3. According to MSN: http://money.msn.com/saving-money-tips/post.aspx?post=cd57f949-11bd-4f7d-b98a-c84b6132ed8a
  4. Mountain Dew Drops Lil Wayne From Endorsement Deal: http://investorplace.com/2013/05/mountain-dew-drops-lil-wayne-from-endorsement-deal/
  5. Coca-Cola Promises No Ads Targeting Kids: http://investorplace.com/2013/05/coca-cola-promises-no-ads-targeting-kids/
  6. McDonald’s Apologizes for Big Mac Crisis Ads: http://investorplace.com/2013/04/mcdonalds-apologizes-for-big-mac-crisis-ad/

Source URL: http://investorplace.com/2013/05/skechers-to-pay-40m-for-unfounded-claims/
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