Brand Health Check: How Reebok was ree-buked

In the corporate world, trust is the key to building relationships between companies and consumers. As with any human relationship, a company caught lying will be deemed to have broken that trust and the price can be heavy.

Brands develop relationships with consumers because those consumers believe they will deliver on their promises.

Because we all want “better legs and better butts” that slogan was sure to raise expectations. Breaking a promise will always have a cost.

This may be difficult to measure because it will not only be reflected in sales numbers.

Psychological satisfaction is an element to reckon with as well, and some consumers may feel the promised results were achieved and their trust had been satisfied.

Reebok doesn’t agree with the FTC ruling, but has settled to avoid a protracted legal battle and has changed its advertising and put in place a refund process.

Dumont’s deal

• Given Reebok disagrees with the FTC findings, it needs to leverage the “overwhelmingly enthusiastic” feedback to support its claim.

• A refund system for the disillusioned is de rigueur.

As penalties increase, the negative consequences to a company’s reputation can also increase. This case will likely have a significant effect on Reebok’s future advertising claims and how it substantiates them.

Going forward, Reebok may limit or eliminate claims that a product can improve muscle tone, strength or activation, and therefore avoid the order’s substantiation requirements.

Although the FTC order only applies to footwear and apparel that purports to improve or increase muscle tone, it could be broadly interpreted to cover many products.

Even if a product is not covered by the order, Reebok would be well served to have the levels of substantiation identified in the order, particularly if the claim expressly, or by implication, communicates a health benefit. It was unusual for the FTC to obtain monetary relief in a substantiation case, so the $25 million in refunds puts this case in a league of its own.

Grymes’ gems

• Closely watch the FTC as it announces new cases. It has been particularly aggressive in evaluating health and fitness-related claims.

• Before running a claim, evaluate the message it could communicate, expressly or by implication.

• Consider how the substantiation relates to the product and its claims. Also consider how your research, test results and other information relate to the totality of the evidence.