Reebok Settlement May Signal Changes in FTC Enforcement Strategies: FTC Seeks Consumer Restitution, But Moves Away From Two Clinical Study Substantiation

The FTC's recent settlement with Reebok International Ltd. over advertising claims for its EasyTone and RunTone shoes may be intended to send a clear message to advertisers – the FTC is serious about its requirement for substantiation and may even require consumer restitution for the failure to obtain competent and reliable evidence supporting advertising claims.  Message delivered – ensuring that advertisers have substantiation for advertising claims (especially health-related advertising claims) is a priority for the FTC.  Unfortunately, the FTC confuses, rather than clarifies, what it considers "competent and reliable evidence."

On September 28, 2011, the FTC announced that "[i]n its ongoing effort to stem overhyped advertising claims," it has agreed to resolve charges with Reebok that it deceptively advertised its "toning shoes" as providing "extra tone and strength to the leg and buttock muscles."  Federal Trade Commission v. Reebok International Ltd., Case No. 1:11-cv-02046-DCN, (N.D. Ohio, September 28, 2011).  The settlement pertains to Reebok's sale of its EasyTone walking shoes and RunTone running shoes.  According to the FTC complaint, Reebok is alleged to have made unsupported claims that walking in the EasyTone shoes and running in its RunTone running shoes strengthen and tone key leg and buttock muscles more than regular shoes.  The FTC alleged that Reebok falsely claimed that walking in EasyTone footwear had been shown to lead to 28 percent more strength and tone in the buttock muscles, 11 percent more strength and tone in the hamstring muscles and 11 percent more strength and tone in the calf muscles when compared to regular walking shoes.

Under the settlement, Reebok agreed to stop (1) making claims that toning shoes and other toning apparel are effective in strengthening muscles, or that using the footwear will result in a specific percentage or amount of muscle toning or strengthening, unless the claims are true and backed by scientific evidence; (2) making any health or fitness-related efficacy claims for toning shoes and other toning apparel unless the claims are true and backed by scientific evidence; or (3) misrepresenting any tests, studies or research results regarding toning shoes and other toning apparel.  In addition, Reebok agreed to pay $25 million as part of the settlement agreement.

The Reebok settlement is interesting for two reasons:

First, there is consumer restitution and the FTC has shown a willingness to work with (or is actively working with) the class action plaintiffs' bar.

The FTC required Reebok to provide $25 million to the U.S. Treasury as "disgorgement."  The FTC allowed the money to be used for "consumer redress," which would be provided by the FTC or "conducted through prompt, court-approved resolution of one or more private class action lawsuits against" Reebok (with the FTC's active participation).  While the $25 million settlement seems significant (and it is), it is small relative to the allegations in the complaint that "toning shoes sales in the United States increased from $17 million in 2008 to approximately $145 million in 2009 [and] . . . peaked in 2010 with sales close to $1 billion."  Reebok acknowledged as much on its website, stating "$25 million was the number that the FTC and Reebok settled on after negotiating. $25 million does not bear a direct correlation to Reebok’s product sales in the toning category."  Frequently Asked Questions regarding the EasyTone FTC Settlement (http://corporate.reebok.com/en/about_reebok/FAQ%20 FTC.asp).  It will be interesting to see how this settlement plays out; especially since it appears to be in combination with a class action that requires court approval.

Second, the FTC seems to be retreating (somewhat) from the "competent and reliable evidence" standard that it recently announced in both the Nestlé and Dannon settlements.  In the Matter of Nestlé HealthCare Nutrition, Inc., FTC File No. 092 3087 (July 14, 2010); In the Matter of The Dannon Company, Inc., FTC File No. 0823158(December 15, 2010).

In July 2010, the FTC announced a settlement with Nestlé S.A. after it was alleged that Nestlé HealthCare Nutrition, Inc. made deceptive claims that BOOST Kid Essentials prevents upper respiratory tract infections in children, protects against colds and flu by strengthening the immune system, and reduces absences from daycare or school due to illness.  In December 2010, the FTC announced that The Dannon Company has agreed to settle charges of deceptive advertising and drop claims that allegedly exaggerated the health benefits of its Activia yogurt and DanActive dairy drink, and by claiming that one daily serving of Activia relieves irregularity, and that DanActive helps people avoid catching colds or the flu.

As part of the Nestlé and Dannon settlements, the FTC defined the "competent and reliable evidence" for health-related claims, as requiring "two adequate and well-controlled human clinical studies of the product, or of an equivalent product, conducted by different researchers, independently of each other, that conform to acceptable design and protocol and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true."  In contrast, as part of the Reebok settlement, the FTC defined "competent and reliable evidence" as "one Adequate and Well-Controlled Human Clinical Study of Covered Product that conforms to acceptable design and protocols, the result of which, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true."  The FTC further defined "Adequate and Well-Controlled Human Clinical Study" as "a clinical study that is randomized, controlled, blinded to the maximum extent practicable, of at least six weeks duration, uses an appropriate measurement tool or tools (e.g., a dynamometer if measuring strength), and is conducted by persons qualified by training and experience to conduct and measure compliance with such a study."

The above definition of "competent and reliable evidence" is even more noteworthy, given the fact that Reebok did have substantiation (including a study) for its advertising claims.  Reebok states on its website that "[it] tested in labs and on consumers. [It] conducted sway tests, pressure tests, EMG tests and wear tests."  In fact, Reebok provided substantiation in support of the advertising claims (including a study it commissioned in 2008) when the National Advertising Division reviewed the advertising claims.  Reebok International, Ltd. (EasyTone Women's Footwear), NAD Case Report 5263 (December 13, 2010).  The NAD found the study to be insufficient because the test involved only five subjects and the researcher concluded only that the test results suggested the shoe design may potentially produce toning, and that the evidence was insufficient to support Reebok's quantified and general strengthening and toning claims.

We will be paying attention to the Reebok settlement and future FTC settlements to see how the FTC's competent and reliable evidence standard further evolves, but (as of now) it appears that the standard has changed (again).  In the meantime, the Reebok settlement is only further evidence that the FTC is getting tougher on consumer claims and is demanding that advertisers have the required substantiation.