The ACCC has commenced proceedings against Reebok for alleged breaches of the Australian Consumer Law.
According to the ACCC, since September 2011 Reebok Australia have made representations that wearing their “EasyTone” shoes would increase the strength and muscle tone of calves, thighs and buttocks of the wearer, more than a normal pair of walking shoes. The ACCC alleges that these representations are false and/or misleading and is seeking injunctions, corrective advertising and pecuniary penalties. A directions hearing is set for February in 2014.
Reebok advertised the EasyTone shoes both in Australia and overseas, and used celebrities such as Miranda Kerr and Kim Kardashian to promote the product. It claimed the shoes toned buttock muscles by 28%, thighs by 11% and calves by 11%, more than other walking shoes.
The ACCC’s allegations follow on from a US$25 million settlement with the Federal Trade Commission (FTC) in September 2011 in relation to similar claims about the shoes in the US. One of the ACCC’s allegations is that Reebok Australia was aware of this settlement. However, interestingly, the FTC media release in relation to the case states that:
“The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The consent decree is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated.”
Therefore no actual finding was made that Reebok had breached any US laws.
The facts of the case against Reebok by the ACCC are very similar to another case in the US against Skechers, which made similar claims about their “Shape Ups” range of footwear. In that case Skechers agreed to pay $40 million to settle the FTC’s allegations. Consumers who purchased the shoes were eligible for a refund, with the FTC sending out cheques in July 2013. So far in Australia, we haven’t seen this type of direct recourse for affected consumers. Although the ACCC has the power to seek a remedy for a group of consumers they haven’t yet exercised this power.
ACCC Commissioner Rod Sims has said that “businesses have a responsibility to ensure that accurate information is given to consumers, particularly where consumers may pay a premium to purchase products that are promoted as delivering particular benefits.”
The proceedings against Reebok follow on from a raft of ACCC prosecutions against businesses for misleading credence claims this year. So far the ACCC has focussed on the food and beverage industry, but this case could be a sign of things to come for other industries in 2014.