Los Angeles Business Journal

Skechers to Pay $45 Million in Deceptive Advertising Case

By Deborah Crowe Wednesday, May 16, 2012

Skechers USA Inc. on Wednesday said that it agreed to pay about $45 million to settle charges by federal and state regulators that the company made overhyped advertising claims that its Shape-ups shoes would help people lose weight and tone muscles faster.

The Manhattan Beach shoe company employed celebrities such as Kim Kardashian to endorse the shoe – which feature a curved "rocker" bottom – as a fitness tool that would accelerate exercise results.

Consumers who bought the shoes will be eligible for at least partial refunds from the fund. They’ll have about eight months to file a claim. The settlement with the Federal Trade Commission and states bars Skechers from misrepresenting any tests, studies or research on its shoes in the future. The company said in a statement that it disputes the charges, but settled in order to avoid protracted legal proceedings.

Skechers will provide $40 million for customer refunds in the federal case and $5 million to the states.

“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, in a statement. “The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims.”

Shares were down 46 cents, or 2.5 percent, to $17.82 in midday trading on the New York Stock Exchange.