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Los Angeles-area company to pay $40 million for unfounded claims

When advertising a new product, one of the toughest jobs of a marketer is to make the product stand out from the crowd. The line between hype and truthful advertising can be a thin one.

According to the Federal Trade Commission, it was a line crossed by a Manhattan Beach, California shoe company, and the resulting business litigation requires it to pay a $40 million settlement based on charges of deceptive trade practices.

In its advertising, the company claimed wearing its shoes would help people lose weight and get in shape better than they would having done the same activity wearing conventional shoes. The company had also paid celebrities endorse their product.

Often, when advertising is questioned, it is because a promise about the product has been made without adequate proof to substantiate the claims that have been made. In this case, the company said that it did provide proof regarding its claims, citing clinical trials to substantiate their claims.

In the clinical trial data used to substantiate their claims, the FTC took issue with the shoe company's interpretation of the data. In its investigation, the FTC determined the research was biased and the results cited by the company were selectively chosen.

Consumers who purchased specified shoes from the company will be eligible for a refund from the $40 million. Any money remaining will revert back to the government.

When businesses are accused of fraudulent practices, it is important that an experienced business attorney can help guide them through any litigation that might ensue.

Source: NBC Southern California, "Customers Eligible for Refunds for Sneakers That Promised Weight Loss," Brett Barrouquere, May 15, 2013

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