UCL claim against Twitter survives where advertiser allegedly was charged for bot activity

DotStrategy Co. v. Twitter Inc., 2020 WL 4465966, No.
19-cv-06176-CRB (N.D. Cal. Aug. 3, 2020)

Twitter “promises advertisers on its platform that they will
only be charged when “people” interact with the accounts or Tweets they are
paying to promote.” DotStrategy alleged that it was charged for interactions
with automated accounts and that Twitter failed to refund it for those
interactions even after it learned that the truth. The court partially granted
and partially denied denied Twitter’s motion to dismiss—granted to the extent
that DotStrategy complained about “fake” accounts that were nonetheless
controlled by people, denied to the exent that the complaint concerned bots.

As an example of its representations, in 2013, Twitter
represented to advertisers that they would “only be charged when people follow
your Promoted Account or retweet, reply, favorite or click on your Promoted
Tweets.” DotStrategy is a marketing company; between October 2013 and December
2016, it placed thirty-four ads on Twitter for which it paid a total of
$2,220.76.

Twitter’s Advertising Terms state that Twitter “[t]o the
fullest extent permitted by law … disclaim[s] all guarantees regarding …
quality … of … any User Actions….” and state that “[c]harges are solely based
on [Twitter’s] measurements for the Program.” 

“A large number of accounts on Twitter are primarily
controlled by bots rather than human beings.” Around the time that Twitter
deleted 70 million accounts “it had deemed spammy, inactive, or which were
displaying ‘erratic’ behavior that indicated they were likely bots,” 480 of
dotStrategy’s Twitter followers were deleted. After a Twitter account has been
deleted, it is allegedly “as if the account never existed,” making it difficult
or impossible to find information about the account. DotStrategy sued for
violation of the UCL.

Twitter argued that the complaint failed to satisfy Rule
9(b) because dotStrategy alleges that Twitter wrongfully charges for “fake,”
“false,” or “spam” accounts without adequately defining those terms. The court agreed
to the extent that the complaint alleged that a broader category of
human-controlled Twitter accounts are fake, without identifying the outer
boundaries of this group. DotStrategy argued that the terms “fake,” “false,”
and “spam” cannot be insufficiently precise, because Twitter itself has used
those words to describe activity forbidden on its platform. “But the fact that
Twitter knows what it means when it uses these terms does not excuse
dotStrategy’s obligation to identify the categories of interactions it was
wrongfully charged for.”

Also, any theory of liability premised on interactions with
human-controlled accounts failed because Twitter never promised not to charge
advertisers for interactions with “fake” accounts that were controlled by
people. “A reasonable advertiser would understand that achieving its goals
might require some interaction with Twitter users who use the platform to
disseminate spam, violate Twitter’s terms of service, or otherwise qualify as ‘fake’
despite being human. This is especially true because according to dotStrategy’s
own allegations, Twitter is rife with such users.” Likewise, no reasonable
advertiser “would understand the word ‘people’ to mean people who abide by
Twitter’s rules.”

“However, dotStrategy adequately alleges that Twitter
falsely represented that advertisers would not be charged for interactions with
bots.” And the complaint adequately alleged that such charges were imposed. The
allegations that dotStrategy lost 480 (roughly 17%) of its followers in the
twenty-eight days preceding July 20, 2018, during Twitter’s bot purge, and the
allegations that a large number of automated accounts are active on Twitter, plausibly
alleged that at least some of the 480 deleted accounts must have been bots,
that dotStrategy most likely paid for interactions with some of those bots, and
that Twitter failed to reimburse the money paid for those interactions despite
knowing they involved automated accounts.

Though dotStrategy didn’t identify what interactions with
the 480 deleted accounts it was charged for or which deleted accounts were bots,
that was “matter[ ] within the opposing party’s knowledge.” Only Twitter—not
dotStrategy—has access to information about deleted accounts.

DotStrategy also adequately alleged reliance, even though it
agreed to the Advertising Terms in October 2013. The complaint adequately alleged
that Twitter misrepresented in 2013 that advertisers would not be charged for
interactions with botsso even if statements made after that point were
irrelevant, dotStrategy would still adequately allege reliance. And dotStrategy
allegedly continued to place ads, thereby incurring additional charges, after that
time; it could have relied on the misrepresentations when deciding to place
additional ads at additional cost, distinguishing this situation from one in
which misrepresentations were only made after the plaintiff’s purchase was complete.
And dotStrategy’s reliance was reasonable. A reasonable consumer would
understand statements such as “You’ll only be charged when people follow your
Promoted Account or retweet, reply, favorite or click on your Promoted Tweets”
to mean that Twitter would refund charges for those interactions if it later
learned they involved a bot.

Twitter’s contractual disclaimers weren’t sufficient. First,
a UCL fraud claim can be based on misleading representations in a solicitation
even when the plaintiff later signed a contract with provisions contradicting
the earlier falsehoods. “The question, then, is not whether Twitter’s
contractual terms corrected the false statements in its advertising, but
whether dotStrategy’s reliance on the false advertising was reasonable even in
light of the contractual disclaimers.” And it was. The contractual provisions
weren’t irreconcilable with dotStrategy’s understanding. “Disclaiming the ‘quality’
of ‘User Actions’ is not a clear warning that those users might not be people,”
but could just be about whether they’d be nice or naughty. “That understanding
would be particularly reasonable given Twitter’s other representations
guaranteeing that advertisers would not pay for interactions with automated
accounts. … An advertiser could reasonably believe that Twitter would determine
the amount of advertising charges in a manner consistent with its other
representations.”

DotStrategy also sufficiently alleged injury by alleging that
it “paid for ads for which it would not have agreed to pay anything at all had
it known the truth about Twitter’s misconduct.” Twitter argued that dotStrategy
received the benefit of its bargain because it gained more Twitter followers,
but “a public[ly] visible increase in … follower count” isn’t the only goal
an advertiser might have in promoting its products on Twitter. “Presumably
human followers are more valuable to advertisers than automated ones, because
humans, unlike bots, sometimes purchase goods and services. If anything, that
difference seems more meaningful than, for example, a product’s domestic
origin.” [Well, that surely depends on one’s goals; there’s no need to
disparage the materiality of a claim in one purchasing context in another
totally different context.]

 

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