FTC fines sneaker makers over ads

The Fair Trade Commission (FTC) yesterday fined nine shoe makers a total of 1.1 billion won ($1.05 million) for misleading consumers with advertisements that exaggerated the health effects of their products and were not backed by any scientific evidence.

The nine brands from in and outside Korea are Reebok, Sketchers, FitFlop, New Balance, Asics, Fila, Lecaf, Ellesse and Prospecs.

As Koreans are highly interested in staying fit, these fitness sneakers were hit items, accounting for about 30 percent of the local shoe market as of 2011, according to FTC data. The total shoe market was estimated to be worth about 700 billion won at the time.

Reebok, a brand owned by Adidas, claimed that its EasyTone sneakers doubled the effect of weight loss. The company was fined the highest, 399 million won. Heavy fines were also given to foreign brands Sketchers and FitFlop, at 217 million won each, and New Balance, which has to pay 108 million won. Japanese brand Asics is only received a warning. The fines will be paid by the Korean branches of these companies.

Among local brands, Lecaf received the biggest penalty of 81 million won, followed by Fila’s 44 million and Ellesse’s 4 million won. Prospecs was given a warning. Among the makes of shoes that benefitted from false advertising are Fila’s Eon, made famous by Big Bang, and Prospecs’s W, promoted by Kim Yu-na.

The fines varied depending on each company’s annual sales in Korea, and the variety of media and time period over which the commercials were displayed. The FTC stopped most of the commercials from airing in 2011.

The FTC sent a warning to the headquarters of the three biggest non-Korean offenders - Reebok, New Balance and FitFlop - for causing Korean distributors to air misleading commercials containing unverifiable data. It is the first time that the Korean government has punished foreign companies for misleading consumers.

In the commercials, each of the athletic-wear companies claimed that their shoes would boost weight loss if a person exercised while wearing them.

“Reebok EasyTone. Proven to tone your hamstrings, calves and butt up to 28 percent more compared to regular sneakers,” said Reebok’s television commercial, which aired from 2009 through 2011. “Shape up your legs beautifully just by walking in Easytone,” read the Korean text that then appeared on the screen.

The Korean commercial for New Balance’s Truebalance sneakers said, “A pair of walking shoes changes your body. It is a fact that sounds like a lie. Simply walking in Truebalance has a workout effect on your legs and butt.”

The FTC’s investigation, opened in 2011, found that the numbers in the commercials were exaggerated, and that scientific evidence provided to the FTC by the companies had no direct correlation to weight loss.

The investigation explained that only five to 12 people participated in testing the function by walking for two and a half minutes.

In Reebok’s case, the same advertisement was aired worldwide in many languages, triggering lawsuits in the United States, Canada and Australia.

BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]