Skechers Fined $40M for Bogus Weight Loss Claims

[JRNYMAN]

I don't know who is more stupid: Skechers for blatantly and factually claiming that just wearing their Shape-ups would make you lose weight or the idiots who actually bought them and then were angry they didn't. So angry in fact, they filed a class action suit against the company and actually won! They had a little help from competitors Reebok and Nike who got the ball rolling and hired the right lawyers to get the action suit approved. Here's the story...


A class-action lawsuit filed against Skechers USA Inc. over claims that just wearing their shoes would provide the benefit of exercise was settled today — opening the door to payments to consumers who purchased them.

Skechers Shape-ups XF
© Chicago Tribune/MCT /Landov Skechers
051313_RM_300

The sneakers at issue in the case — Skechers' Shape-ups, Resistance Runner, Shape-ups Toners/Trainers, and Tone-ups — were sold between August 2008 and August 2012. Those who have submitted claims in the case — more than 500,000 consumers — will be eligible to receive refunds up to $84 per pair of Resistance Runners, $80 for Shape-ups, $54 for Podded Sole Shoes, and $40 for Tone-Ups.

It has taken a while for the case to get to this point. The Federal Trade Commission a year ago reached an agreement with Skechers, which admits no wrongdoing in the matter, to repay consumers and dial down its claims.

Skechers ran a series of advertisements, including one with Kim Kardashian and Brooke Burke that run during the 2011 Super Bowl, that boasted all someone had to do to kickstart their weigh-loss would be to lace up a pair of these shoes.

The FTC said Skechers crossed a lot of lines beyond just suggesting the sneakers would help tone and tighten muscles, but also pitching the shoes as a weight-loss tool.

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

Absent any scientific evidence to prove its case, Skecher agreed to stop making the claims about its shoes, including saying they can aid in:

strengthening
weight loss
blood circulation
aerobic conditioning
improving muscle tone

The claims so irked consumers and consumer advocates that more than 40 state attorneys general, the federal government and several groups of consumers all sued the company. The cases eventually were all consolidated, resulting in the just-finalized settlement.

Skechers isn't the only company to run into a similar jam with a similar product. In the fall of 2011, Reebok International Ltd. agreed to pay $25 million to settle allegations that it misled consumers in ads about its EasyTone and RunTone shoes.

http://money.msn.com/saving-money-tips/ ... 4b6132ed8a

Reebok's claims were largely focused on the idea that wearing its shoes would accelerate the process of toning and strengthening the legs and buttocks.

[Memorex]

My company is the claims administrator for this case. A few things surprised me on this. Number one, the FTC does not require proof of purchase if the total payment would be under $200. Guess how many claims we received that were right at that limit?

Second - it amazes me how many older women bought these shoes. A lot of Florida and East coast women. And pair after pair.

Third - We got so busy with this that I had to man phones for a few days. I learned something, and I don't mean to offend anyone. I think everyone should have to man phones at some point to remind themselves that there are actually states called Kentucky and West Virginia and that people actually live there. Again - don't mean to offend. My dad was born in Kentucky and my family is all over West Virginia. But my God! I actually got a call from a lady and we got to chatting and it turns out she knew a lot of my family there. She went on and on about how I needed to watch the Hatfields and McCoys mini series that was about to come out at that time. I did and thoroughly enjoyed it.

Fourth - It boggles my mind how many claims we got on all different cases where people are claiming they had to have back or knee surgery and yet they do not opt out and file a couple hundred dollar claim instead of filing suit separately. This is actually happening a lot in another one of our cases concerning the Ab Circle Pro. A lot of people got hurt and they are going to end up with about $35 just because they go along with the suit.

We got hundreds of thousands of claims on both of these. We've already identified a ton of fraud. Things like 100 claims from the same person with slight variations on the name and address. But for Joe blow that files a claim for $150, we'd have no way of knowing.

But to your point - I always thought that if it was legal, I could compile a list of all our claimants and use it to market some product to them, cause there are an awful lot of suckers out there. The best one ever (to me) is the guy that had people send him $2,000 so he could teach them how to protect themselves from nefarious individuals. Now that's smart.

[scarygirl]

Are you a lawyer?

My company is the claims administrator for this case. A few things surprised me on this. Number one, the FTC does not require proof of purchase if the total payment would be under $200. Guess how many claims we received that were right at that limit?

Second - it amazes me how many older women bought these shoes. A lot of Florida and East coast women. And pair after pair.

Third - We got so busy with this that I had to man phones for a few days. I learned something, and I don't mean to offend anyone. I think everyone should have to man phones at some point to remind themselves that there are actually states called Kentucky and West Virginia and that people actually live there. Again - don't mean to offend. My dad was born in Kentucky and my family is all over West Virginia. But my God! I actually got a call from a lady and we got to chatting and it turns out she knew a lot of my family there. She went on and on about how I needed to watch the Hatfields and McCoys mini series that was about to come out at that time. I did and thoroughly enjoyed it.

Fourth - It boggles my mind how many claims we got on all different cases where people are claiming they had to have back or knee surgery and yet they do not opt out and file a couple hundred dollar claim instead of filing suit separately. This is actually happening a lot in another one of our cases concerning the Ab Circle Pro. A lot of people got hurt and they are going to end up with about $35 just because they go along with the suit.

We got hundreds of thousands of claims on both of these. We've already identified a ton of fraud. Things like 100 claims from the same person with slight variations on the name and address. But for Joe blow that files a claim for $150, we'd have no way of knowing.

But to your point - I always thought that if it was legal, I could compile a list of all our claimants and use it to market some product to them, cause there are an awful lot of suckers out there. The best one ever (to me) is the guy that had people send him $2,000 so he could teach them how to protect themselves from nefarious individuals. Now that's smart.

[yulog]

My company is the claims administrator for this case. A few things surprised me on this. Number one, the FTC does not require proof of purchase if the total payment would be under $200. Guess how many claims we received that were right at that limit?

Second - it amazes me how many older women bought these shoes. A lot of Florida and East coast women. And pair after pair.

Third - We got so busy with this that I had to man phones for a few days. I learned something, and I don't mean to offend anyone. I think everyone should have to man phones at some point to remind themselves that there are actually states called Kentucky and West Virginia and that people actually live there. Again - don't mean to offend. My dad was born in Kentucky and my family is all over West Virginia. But my God! I actually got a call from a lady and we got to chatting and it turns out she knew a lot of my family there. She went on and on about how I needed to watch the Hatfields and McCoys mini series that was about to come out at that time. I did and thoroughly enjoyed it.

Fourth - It boggles my mind how many claims we got on all different cases where people are claiming they had to have back or knee surgery and yet they do not opt out and file a couple hundred dollar claim instead of filing suit separately. This is actually happening a lot in another one of our cases concerning the Ab Circle Pro. A lot of people got hurt and they are going to end up with about $35 just because they go along with the suit.

We got hundreds of thousands of claims on both of these. We've already identified a ton of fraud. Things like 100 claims from the same person with slight variations on the name and address. But for Joe blow that files a claim for $150, we'd have no way of knowing.

But to your point - I always thought that if it was legal, I could compile a list of all our claimants and use it to market some product to them, cause there are an awful lot of suckers out there. The best one ever (to me) is the guy that had people send him $2,000 so he could teach them how to protect themselves from nefarious individuals. Now that's smart.

Everett, don't get any ideas

[Memorex]

Not a lawyer. I'm Director of Data Services. I manage the data team that loads, analyzes, and reports the data for our Class Action and Corporate Bankruptcy divisions. I'm also a developer - though in MS Access and SQL, not .net, etc. And then I'm also Business Requirements guy for our web based stuff. We do have several lawyers on staff, but our function is not that of lawyers. We are more like the lawyers bitches.

As an example of the programming, I just built a document review tool to use in the Ab Circle Pro case where you see the PDF of the claim on one side of the screen and data fields on the other. We were able to process 140,000 physical claims (have these people not heard of the internet) in about half the time as our web based app. So I'll do quick hit programming like that to other much larger applications.

And then on the side now I am building a website and company and working on developing ideas for several others. Which is why my mug is always in front of a computer and why I am working at 1:30 in the morning, and am most nights.

[Memorex]

By the way - my comment about $35 for the Ab Circle Pro claims was just an exaggeration (slightly). Nothing has been decided yet. Thought I should throw that out in case someone here filed a claim.

[JRNYMAN]

Yeah.... when you think about how many $150 claims it takes to add up to $40M, it's pretty staggering how many claims you guys are processing.

I agree completely with what you said about manning the phones. You can never appreciate the human factor until you actually sit and talk to people who are in need of something from the company you represent. It might be technical support, product support, order processor, claims rep. etc., doing that job brings it all full circle.
Back at the rollout of XP, I did a 6 month gig with HP doing 3rd tier tech support. It was rare that I actually had to take calls since at the level I was working, it was usually me doing the calling to people/businesses who's issue(s) weren't/couldn't be solved by first or second tier. Anyway, at the rollout of XP, HP anticipated a heavy call volume from people who had purchased an HP computer within the previous year and qualified for the free upgrade from 98 to XP. So, when those folks started the upgrade process, sure as shit, the call center got bombarded. There were times when I'd look up at the scrolling LED boards which displayed the queue's for the various HP products we supported and the Pavilion queue would sometimes be well over 200 people on hold waiting to talk to someone. Those were the times when the management teams would have to jump on the phones and almost literally throw yourself to the wolves. HP's tech support lines at the time weren't toll-free and sometimes you'd get a person who had been on hold for an hour or more! Wow... So, the first thing we'd do is diffuse the situation before we could even begin to address the issue they were having. I always made it a point to remind the people on my team that the people who are calling are frustrated, often feel defeated by whatever it is they're calling about and genuinely need our help and understanding with a side of sympathy and a big glass of encouragement. I'll wrap this novel up with a quick story that brings it all in to perspective.
One of the options people could choose when they have a component that's defective, is to have the part shipped to them and they could do the swap themselves - if they were comfy with it - which was the absolute fastest way to get a hardware issue resolved since we'd overnight the part to them. Included in the packaging with the part was a toll-free number they could call and a tech would help them with the swap. One day, I got one of those calls... from an 83 yr. old lady who's CD-ROM was DOA. I was really skeptical about the situation turning out successfully but by God, she followed my directions and she made the swap and had it up and running. And though it was the lengthiest call I ever took, I made a friend and learned a lot about just who our end users were.

My company is the claims administrator for this case. A few things surprised me on this. Number one, the FTC does not require proof of purchase if the total payment would be under $200. Guess how many claims we received that were right at that limit?

Second - it amazes me how many older women bought these shoes. A lot of Florida and East coast women. And pair after pair.

Third - We got so busy with this that I had to man phones for a few days. I learned something, and I don't mean to offend anyone. I think everyone should have to man phones at some point to remind themselves that there are actually states called Kentucky and West Virginia and that people actually live there. Again - don't mean to offend. My dad was born in Kentucky and my family is all over West Virginia. But my God! I actually got a call from a lady and we got to chatting and it turns out she knew a lot of my family there. She went on and on about how I needed to watch the Hatfields and McCoys mini series that was about to come out at that time. I did and thoroughly enjoyed it.

Fourth - It boggles my mind how many claims we got on all different cases where people are claiming they had to have back or knee surgery and yet they do not opt out and file a couple hundred dollar claim instead of filing suit separately. This is actually happening a lot in another one of our cases concerning the Ab Circle Pro. A lot of people got hurt and they are going to end up with about $35 just because they go along with the suit.

We got hundreds of thousands of claims on both of these. We've already identified a ton of fraud. Things like 100 claims from the same person with slight variations on the name and address. But for Joe blow that files a claim for $150, we'd have no way of knowing.

But to your point - I always thought that if it was legal, I could compile a list of all our claimants and use it to market some product to them, cause there are an awful lot of suckers out there. The best one ever (to me) is the guy that had people send him $2,000 so he could teach them how to protect themselves from nefarious individuals. Now that's smart.

[Michigan Girl]

I did not realize those ugly things claimed they would help you lose weight, I was only aware of the thigh and calf toning claim.
But really, one can do that with a good pair of stiletto's and they are far prettier and worth the $$$$$.

Seriously, Anyone who is silly enough to purchase anything that makes silly weight loss/get in shape quick promises deserves to lose their money. A pair of Nike's, Reebok's or an elliptical trainer will help you lose weight too, but your ass has to make them move, you know? So now millions of people who bought the things and never put them on are going to get paid...yay!!