Google’s ‘Free Trial’ Advertisement Not a Binding Offer4 Jun, 2013 By: Arthur Yoon, Jeffrey Richter
When can an advertisement be considered a binding offer? The U.S. District Court of Northern California needed to consider that question in Rachel Frezza v. Google Inc., which was a class action lawsuit filed by merchants alleging that Google breached contracts when it charged their credit cards during a 30-day “free trial” promotion of a service, now discontinued, called Google Tags. Tags was an online feature designed to enhance the appeal and promote the distinctive aspects of a business on the Internet. A business listing with Tags was made to stand out from others through the use of a bright yellow “tag” icon that appeared next to the listing in Google search results.
In 2010, Google began a promotion offering a trial period of the service. The plaintiffs alleged that Google conveyed the message to potential customers that they could try the Tags service for 30 days at no charge. As evidence, plaintiffs relied on a blog posting for the Google Tags service, in which Google stated that it was “offering every business across the country the chance to try Google Tags free for 30 days!” and which described the promotion as a “free trial” with “no strings attached.”
The blog directed the users: “To start your free 30 day trial today, please visit our signup page or check out the help center for more details.” Plaintiffs sued for breach of contract, alleging in the complaint that their credit cards were nevertheless charged fees for using Tags within the “free” 30-day trial period. Google contended that those who accepted the trial offers of Tags were bound by written terms and conditions that a merchant agreed to at the time it provided credit card information and that those terms clearly stated that the promotional credit was for the specified amount of “$25.00, per listing, per month” rather than an unconditional 30-day trial period at no cost.
It is well established under California law that an advertisement generally does not constitute an offer. However, in certain cases where the offer is accepted by the recipient of the advertisement rendering a performance, an advertisement could form the basis of a unilateral contract if the recipient renders the performance. The operative question before the court, therefore, was whether Google, through its blog posting for the Tags service, in clear and positive terms promised to provide a merchant with an unconditional 30-day trial period of the Tags service at no cost in exchange for the merchant visiting Google’s sign-up page or help center to review the details of the service, and whether the merchant reasonably might have concluded that by acting in accordance with the blog posting a contract would be formed.
In considering the question, the court focused on the pertinent language of the actual contract for the Tags service that plaintiffs claimed was reasonably susceptible of the interpretation that the first 30 days of any Tag for which they signed up in the promotion period was free. The court determined that the terms and conditions of the contract were presented at the time of enrollment in the Tags service, which required a merchant to first provide its credit card information, and not through the promotional materials. Plaintiffs could only present the text of blog postings and marketing materials describing the “free trial” and directing consumers to “visit” the signup page or “check out” the “help center.”
Plaintiffs could not demonstrate to the court that the “terms and conditions” of the Tags service at the time plaintiffs entered their credit card information when the contract was formed expressly stated that the promotion period was free. The court found that no reasonable person would understand that merely visiting the “signup page” or the “help center” as being the performance sought in return for the offer of 30 days of free Tags. That the promotional materials were not contemplated to constitute an offer was clear from the undisputed fact that they made no mention of the requirement to provide credit card information, in the court’s view. Accordingly, the court found that the promotional materials did not constitute binding offers and that plaintiffs failed to state a breach of contract claim.
This case is a reminder that an advertiser needs to carefully review any promotion to ensure that it will not be construed as a binding offer. Having a firm understanding of the differences between an advertisement and unilateral contract is essential to avoid breach of contract claims by consumers and for managing business liability.