Whether online or off, companies must be truthful when making marketing claims. Being honest, however, is not enough. Companies must also have objective evidence to back up claims made for products. A recent FTC enforcement action involving Skechers is a lesson for other companies in this regard.
Those Funky Shape Up Shoes
Skechers has always fancied itself a company providing cutting edge products. The line of “Shape Up” shoes certainly added to this idea. When the shoes came out, there were ads placed to and fro across the web promoting them. It often seemed like you couldn’t visit a page on any site without seeing a celebrity hocking the shoes. In each, there was the suggestion that the shoes provided health benefits in the form of shapely legs and, perhaps, weight loss.
Well, it turns out there was a problem.
Skechers new offerings didn’t actually help you shape up your legs or lose weight. In fact, they were just weird looking shoes. The health claims may have made for a great marketing campaign, but the complete lack of truth in the claims soon started resulting in consumer complaints. These complaints spurred the Federal Trade Commission into action.
The “FTC” enforces consumer laws. One of its pet peeves is when companies pursue deceptive claims in their advertisements. In the case of Skechers, the lack of backing for the claims was such that the FTC brought down the hammer on the company. It was forced to kill the marketing campaign and was also required to offer up to $40 million dollars in refunds to consumers unhappy with the shoes.
Now, let’s think this through for a moment. Not only is Skechers receiving a heaping of bad publicity, but it is essentially being forced to swallow refunds on the entire product line. A pair of these shoes appears to cost roughly $80 on average. If we divide $40 million by $80 per pair, we find that Skechers has agreed to take refunds on 500,000 pairs of Shape Ups.
Oh, that has to hurt.
What lesson can you take from this for your own online business? Avoid being deceptive in your advertisements. It is as simple as that.
If the FTC starts receiving complaints regarding claims you are making that simply aren’t true, you can expect the agency to investigate your business. That is usually the last thing you want to go through given that it will tie up your time, run up attorney’s fees and most likely end up with your business receiving a healthy fine. Perhaps even worse, you will develop a negative reputation with your customer base. Nothing kills a business faster than that.
When selling your products or services to potential buyers, make sure to highly the positive characteristics and benefits. Just don’t claim anything that is patently false.
Richard A. Chapo, Esq.