Texas Attorney General Ken Paxton recently announced his office has reached an $8 million settlement with Google of its lawsuit alleging deceptive radio disc jockey advertisements for the Google Pixel 4 smartphone. You might remember that we previously reported on this lawsuit when it was filed, in January 2022. While Texas was first out of the gate with its lawsuit against Google, the Federal Trade Commission (FTC) and a coalition of six states later sued Google and a large media company for the allegedly deceptive radio ads and settled their lawsuit first for a combined total of $9.4 million in penalties to the states. The state of Texas took advantage of the multistate lawsuit to settle with the media company (along with Arizona, California, Georgia, Illinois, Massachusetts and New York, which settled with both companies) but continued to pursue its solo lawsuit against Google until last week.
Texas’ gamble to “go it alone” against Google appears to have paid off in a big way. Rather than sharing the $8 million purse, it is collecting nearly as much as the six other state attorneys general combined.
Now that the saga appears to be at an end, these lawsuits serve as an important reminder about a basic premise of endorsements: If an ad represents that an endorser actually used your product, that better be true. We don’t see many FTC or state attorney general cases focusing on this specific aspect of the Endorsements Guides, so let’s dive in and see what happened here that apparently warranted a collective $17.4 million in penalties for six states alone.
The facts presented are straightforward. According to the FTC complaint, Google was launching its Google Pixel 4 smartphones before the pandemic, and as part of its marketing campaign, it wanted to have on-air radio personalities record ads endorsing the phone. Google paid the owner of more than 850 radio stations more than $2.6 million to “record and broadcast advertisements by their Radio Personalities endorsing the Pixel 4.”
So far, this seems absolutely fine. Except the FTC and state attorneys general alleged that the radio personalities did not actually ever use the devices before their ads were recorded – and the ad copy they recorded reflected what seemed to be their personal experiences using the device. For example, radio DJs recorded spots where they said things such as, “I’ve been taking studiolike photos of everything . . . my son’s football game . . . a meteor shower . . . a rare spotted owl that landed in my backyard.” These statements went beyond hyping the phone’s features and were alleged to be first-person testimonials of the DJs’ experience with the phone. That’s a very different type of campaign, and the FTC and the state attorneys general alleged these statements created different expectations for consumers listening to the ads – namely, the expectation that the radio DJs had actually used and experienced the phone as advertised. Whether consumers actually have that expectation about radio advertisements is certainly up for debate.
At the case’s core, the FTC and state attorneys general alleged that the endorsement claims were false because the statements misrepresented that the endorsers had actually owned or used a Pixel 4.
As for monetary relief, these cases are a great example of how the FTC is approaching matters differently in a post-AMG world. Bottom line, the two companies settled the FTC and multistate attorneys general cases for $9.4 million, but all that money is going to the states. Theoretically, the FTC could have pushed for an administrative penalty, but it might have been a stretch in this case for the FTC to allege that the conduct was “fraudulent or dishonest,” which is the standard that the agency has to meet in order to get money administratively. Instead, we see the FTC as part of a larger group of enforcement authorities, presumably sharing the burden of litigation and enforcement, yet the FTC didn’t get any money. The FTC did, however, secure multiyear injunctions against both companies, and if either violates the injunction, the FTC can seek penalties at that point. On the other hand, the state of Texas reached a better financial outcome than did the coalition of state attorneys general who partnered with the FTC. While we think we will continue to see joint FTC-state attorney general enforcement, Texas’ recent settlement shows that going stag can pay off too.