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Skechers Ain't That Great for Your Body, FTC Finds

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Remember a few years back when so-called toning shoes were all the fashion fitness rage? All sorts of brands came out with sneakers and flip flops that made some highly dubious claims about the weight loss and shaping results of its shoes, simply by stepping foot in them.  

Well now, customers who bought into one company’s sketchy product line are getting a refund. In a settlement finalized today with the Federal Trade Commission and 42 states with class action lawsuits, Skechers (SKX) will pay out $40 million to consumers who purchased its Shape-ups, Tone-ups, Toners, and Resistance Runner footwear.  

The FTC found Sketchers falsely advertised the strengthening potential of the gluteal, leg, and abdominal muscles -- promising the lower body parts of celebrity spokesmodels like Kim Kardashian and Brooke Burke -- but also made promises about heart health benefits.

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

Some of the company’s “cherry-picked results” also came in the form of endorsements from the medical community. Sketchers not only paid chiropractor Dr. Steven Gautreau to conduct a study that trumpeted the shoes’ health benefits, the company had access to him via his wife, a Sketchers marketing executive.

Customers who shelled out the between $50 and $100 a pop for a pair of any toning shoes mentioned in the suit have eight months to file a claim for, at least, a partial refund. A link to the filing application on the FTC website can be found here.

In a statement released today, Skechers “denies the allegations and believes its advertising was appropriate, but has decided to settle these claims in order to avoid protracted legal proceedings.”

"While we vigorously deny the allegations made in these legal proceedings and looked forward to vindicating these claims in court, Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country," said Skechers CFO David Weinberg.

This settlement comes on the heels of a $25 million case involving Reebok. Last September, the footwear giant agreed to compensate consumers who purchased its EasyTone walking shoes and RunTone running shoes.
POSITION:  No positions in stocks mentioned.