Skechers accused of dastardly deception
Will a shoe give you a hot body? Skechers makes the connection -- and pays the price.
The government is coming down hard on Skechers (SKX), citing the deceptive nature of the company's ads, which all but promised that if you wear its shoes, you'll develop a figure like Kim Kardashian's or Brooke Burke's.
You'd think Americans would have enough common sense to know that a shoe cannot replace exercise and a good diet. We have been pummeled with ads that have precariously ridden the line of deception, apparently just staying on the safe side, for our entire lives. So, thanks Uncle Sam, but I don't need to be told that Skechers' claim of a tush-toning shoe is nonsense.
Still, the authorities think this is a big deal, and Skechers will pay $40 million to settle charges by the Federal Trade Commission over the company's ridiculous claims that its Shape Up shoes can have such a drastic effect on your figure.
Of course the claims are ridiculous, just like the claim that a Snickers bar will turn Betty White into an athlete. It's ridiculous to claim that a sports drink can help you win a marathon. It's ridiculous to suggest that an underarm deodorant will help men get girls in a bar.
We all know that ads exaggerate to enormous degrees, and we are able to see through the fluff. As citizens of corporate America, we have been trained from birth to see through ads. Skechers is really no different.
"The FTC's message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims," said David Vladeck, director of the agency's consumer protection bureau. For millions of consumers, he said, "the only thing that got a workout was their wallet."
It wasn't just the Shape Ups that went under the hammer, either. The Resistance Runner, Toners, and Tine-Ups were also the subject of exaggerated claims by Skechers, says the agency.
Were Skechers to be completely honest, it would have to say: "The Shape Up. It's a comfortable shoe that you may or may not like."
Similarly, Snickers would say, "It's peanuts, it's chocolate, it's a lot of sugar."
And those sports drinks would say, "Water is better for you, but this tastes mildly fruity".
It is great to know that the FTC is coming down hard on companies not being completely honest in their ads, but let's not stop at Skechers. OK, so the FTC says Skechers falsely represented that clinical studies backed up the company's claims about its toning shoes, but have you ever seen a toothpaste ad? The ones that feature a graph with a line going up but no numbers on either side? Up line = good. We accept that because we know that there is such a thing as "nonsensical advertisement science."
That is what Skechers employed. It is far from the first, and it won't be the last.
Skechers closed down more than 2% Wednesday at $17.85. The stock has been on fire this year, gaining more than 47%.
More from Benzinga
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
After Tuesday's rally, expect a big raid no matter the news. That's probably the safest way to play it ahead of the Fed.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.