Skechers USA Inc. will pay $40 million to settle charges by the Federal Trade Commission that the footwear company made unfounded claims that its Shape-ups shoes would help people lose weight and strengthen their butt, leg and stomach muscles. Kardashian, Burke and other celebrities endorsed the shoes in Skechers ads.
Wednesday's settlement also involves the company's Resistance Runner, Toners, and Tone-ups shoes and claims of deceptive advertising for those shoes as well.
Consumers who bought the shoes would be eligible for refunds, though it's not clear how much money they'll get. The FTC says that will depend on how many claims are received in the eight-month filing period. Buyers can go to the FTC website to file a claim.
Most of the $40 million federal settlement would be returned to consumers, but a small amount of the settlement would be used to administer the payouts.
The settlement is related to a broader agreement also announced Wednesday that resolves a multi-state investigation led by the attorneys general from Tennessee and Ohio and involving more than 40 states. The company will provide an additional $5 million to the states, and pay $5 million in class-action attorney fees.
"The FTC's message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims," said David Vladeck, director of the agency's consumer protection bureau. For millions of consumers, he said, "the only thing that got a workout was their wallet."
The commission settled similar charges with Reebok last year over its EasyTone walking shoes and RunTone running shoes. That $25 million agreement also provided customer refunds.
Skechers denied the allegations but said it settled to avoid long litigation.
"Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country," said David Weinberg, the company's chief financial officer. "While we believe we could have prevailed in each of these cases, to do so would have imposed an unreasonable burden on the company."
The company, based in Manhattan Beach, Calif., said it has received overwhelmingly enthusiastic feedback about the shoes from thousands of customers.
Skechers billed its Shape-ups as a fitness tool designed to promote weight loss and tone muscles with the shoe's curved "rocker" or rolling bottom — saying it provides natural instability and causes the consumer to "use more energy with every step." Shape-ups cost about $100 and are sold at retailers nationwide.
Ads for the Resistance Runner shoes claimed people who wear them could increase "muscle activation" by up to 85 per cent for posture-related muscles and 71 per cent for one of the muscles in the buttocks, said the FTC.
The commission says Skechers falsely represented that clinical studies backed up the company's claims about its toning shoes. The FTC's Vladeck said the studies had defects, such as one that said people lost weight wearing the toning shoes, when in fact they gained weight.
The settlement bars Skechers from misrepresenting any tests, studies or research on its shoes in the future.