The Reebok settlement: What the FTC order means for advertisers and retailers

The FTC’s settlement with Reebok requires the company to get their ad claims in shape and works out a $25 million refund program for people who bought EasyTone and RunTone shoes and apparel. Of course, the terms of the lawsuit apply only to Reebok, but experienced advertisers understand the benefits of mining FTC orders for compliance nuggets applicable to their business.

What if you sell Reebok shoes or apparel or represent companies that do? You’ll definitely want to read the order for provisions relating to retailers.

So what’s in the Reebok settlement? Strong injunctive provisions for a starter. Under Part I of the order, the company will need competent and reliable scientific evidence to support future claims that a product will strengthen muscles or result in a quantified percentage or amount of toning or strengthening. The order defines “competent and reliable scientific evidence” in this context to mean “at least one Adequate and Well-Controlled Human Clinical Study of the Covered Product that conforms to acceptable designs and protocols, the results 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."

Another interesting aspect: The order makes it clear that it covers claims made directly or by implication, “including through the use of a product name, endorsement, depiction, or illustration.”

What about other health or fitness-related claims for covered products? The order requires Reebok to have competent and reliable evidence to back up those claims, too. For those — covered by Part II of the order and including representations about “muscle tone and/or muscle activation” — that means “tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.”

Part III makes it illegal for Reebok to misrepresent “the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.”

What about the refund program? Reebok will be paying $25 million, which will go toward consumer refunds. The order adds that “consumer redress that otherwise would be conducted” by the FTC “may be instead conducted through prompt, court-approved resolution of one or more private class action lawsuits” against Reebok. The order makes it clear that key parts of any class action resolution submitted for court approval — for example, the class action notice, claim form, settlement claim procedures, and privacy and security practice — have to be OKed by the FTC.

In addition to reporting and compliance requirements common in FTC law enforcement actions, the order requires Reebok to send a letter to retailers that sell the products in question. The letter — which is attached to the order — directs retailers to:

1)  remove promotional materials on display that include claims about improving or increasing muscle tone, muscle strength, muscle activation, or posture;

2)  cover over those claims on product boxes with stickers Reebok will provide;

3)  remove package inserts with those claims; and

4)  remove hangtags on shoes and remove or sticker over hangtags on apparel if they make those claims.

If you have clients that sell Reebok products, they'll get the letter soon.
 

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