Vibram Co. the company that makes Five Fingers running shoes, has agreed to settle a lawsuit: business ethics Assignment, ATC, Malaysia

University Angkasa Training Centre(ATC)
Subject business ethics Assignment

Question 3
Vibram Co. the company that makes Five Fingers running shoes, has agreed to settle a lawsuit that alleged the company made false and unsubstantiated claims about the health benefits of its glove-like footwear. According to the court filings, Vibram settled to put the matter to rest and avoid any additional legal expenses.

Valerie Bezdek had brought the class action suit against Vibram. She filed her
complaint in court and alleged that Vibram deceived consumers by advertising that the footwear could reduce foot injuries and strengthen foot muscles, without basing these assertions on any scientific merit. The gist of her claims was that Vibram illegally obtained an economic windfall from her because it was only by making false health claims that Vibram induced consumers to buy Five Fingers shoes, and to pay more for them than they would otherwise.
The settlement consists of two kinds of relief. The first is refunds to class members who submit valid and completed claim forms. Vibram will deposit $ 3.75 million into an escrow account and those funds will be distributed to those valid class members who purchased a pair of Vibram Five Fingers shoes between March and the date of the first dissemination of summary settlement notice or class notice, whichever is earlier.

Five Fingers will award up to a maximum of $ 94 per pair, though the agreement acknowledges that based on similar settlements it is reasonable for class members to expect to receive between $ 20 and $ 50 per pair. For the second part of the settlement, Vibram has agreed to discontinue to make any claims that Five Fingers footwear is effective in strengthening muscles or reducing injuries in its marketing and advertising campaigns, unless the company discovers new scientific evidence that proves it.

Vibram is required to establish a website, www.fivefingerssettlement.com, to inform class members of the terms of the agreement. The company is also required to post banner ads with the settlement information on a number of websites, including Runnersworld.com and Facebook.com, in order to deliver this message.

a. Advise Vibram five benefits of conducting business ethically. Provide relevant facts from the case to support your answer
b. Suggest five actions that Vibram could pursue during this crisis.

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