Last week, the State of Texas sued Google in state court for allegedly deceptive advertisements by radio personalities (radio DJs) praising the Google smartphone, the Pixel 4. The lawsuit claims that Google violated the state’s Deceptive Trade Practices Act when it used radio personalities to read scripted testimonials before they had access to the phone. According to the state’s petition, the media company had requested, and allegedly was initially refused, Pixel 4 phones from Google to validate the endorsement claims. At the same time, the petition concedes that Google did ultimately provide Pixel 4 phones to the media company. The state appears to take issue primarily with the alleged timing of when the phones were provided. A spokesman for Google has responded that the “[state’s] allegations appear to misrepresent what occurred here,” signaling that more facts will be revealed as this lawsuit develops. In addition to injunctive relief, the state is requesting civil penalties against Google.
According to the lawsuit, radio personalities made statements including, “It’s my favorite phone camera out there, especially in low light, thanks to Night Sight Mode,” and “The only thing I love more than taking the perfect photo? Taking the perfect photo at night.” These types of radio advertisements are not new. For decades, radio personalities have endorsed products through paid advertisements. In fact, Texas alleges that Google’s creative control in the advertisements at issue “is customary in the advertising industry.” So, this lawsuit is surprising for a couple of reasons. First, because there does not seem to be any dispute that Google in fact provided the Pixel 4 phones to be tested by the radio personalities, nor is there any claim that, at the end of the day, the scripted testimonials were actually false. How much momentum Texas is able to create on an apparent dispute about timing remains to be seen. Second, this suit challenges the use of advertisements in a traditional medium, while enforcement more recently has focused on new app technology and the increased use of influencers on social media, both of which have raised new issues involving the deceptiveness of paid advertisements on these platforms.
The lawsuit does, however, signal multiple trends in the area of advertising. We previously discussed the U.S. Supreme Court’s decision in AMG Capital Management v. FTC, which eliminated the FTC’s primary tool for recovering monetary redress in enforcement actions. This lawsuit is a significant example of the enforcement states stepping in to fill the void created by AMG. Each state’s deceptive practices act provides different ranges for penalties, but the Texas statute creates significant penalty exposure. Under the Texas Deceptive Trade Practices Act, the attorney general can request civil penalties of up to $10,000 per violation, which is what this lawsuit requests. Like many states’ “mini FTC Acts,” the Texas statute does not define what constitutes a “violation,” vesting the court with discretion to count any violations and calculate any penalties.
The lawsuit also is in alignment with renewed enforcement attention to allegedly deceptive endorsement practices. The FTC announced last October that it would be taking widespread enforcement action against deceptive endorsement practices. Notably, the FTC mentioned the practice of misrepresenting that the endorser was an actual, current or recent user. Texas has made a significant move in this area by filing this first-in-the-nation lawsuit and beating both the FTC and other states to the courthouse. Finally, given the recent change in federal administration from Trump to Biden, this lawsuit may reflect a realignment of Republican AGs’ offices away from collaboration with Democrat-led federal enforcers like the FTC.
So what does all this mean? Just like you should not focus only on the FTC and take the state AGs for granted, don’t focus only on social media influencers and forget about the use of more traditional endorsements. Just because DJs have been hawking product during music breaks forever and a day doesn’t mean they get an exemption. It is a good time to ask your marketers about all the ways they are using endorsements to make sure they are broadly compliant and not just lasering in on social media influencers.
Interested in hearing about more about advertising and State AGs? Join today’s session on State AG enforcement as part of our monthlong webinar series that recaps the key insights and lessons learned in advertising and marketing law in 2021 and predicts trends for 2022.