The Gatorade Company violated state law by urging players of its advergame to ditch water for the sports drink, California’s attorney general alleged in an action against the company.

In 2012, Gatorade worked with its media agency and a third-party game developer to create Bolt!, a free mobile app in which users guided a cartoon version of Gatorade pitchman Usain Bolt to the finish line of a race. Released to coincide with Bolt’s 2012 Olympic performance, the game was targeted to a youthful demographic, featuring animated flying pirate ships and stolen gold. Although the app is no longer available, it was downloaded more than 2.3 million times (an estimated 30,000 times in California), with 87 million games played by an audience composed predominantly of those age 13 to 24 years old.

But according to AG Xavier Becerra, Bolt! also ran afoul of the state’s false advertising law (FAL) and Unfair Competition Law (UCL) in three ways: by falsely depicting “water slowing down the athletic performance of the Olympic sprinter, while depicting Gatorade as increasing his speed”; by using a “fuel meter” in the game that falsely depicted “water as decreasing the amount of ‘fuel’ available to the Olympic athlete, while depicting Gatorade as increasing the amount of available fuel”; and by offering a tutorial that “directly told its users to ‘Keep Your Performance Level High by Avoiding Water.’”

Although the purpose of the game was to entertain a youthful audience and share a Gatorade-branded marketing message, the company overstepped with a message that was not only misleading, but also was a dangerous communication for a youthful audience “that is particularly prone to inaccurate beliefs regarding the nutrition benefits of beverages.”

“California law prohibits false or misleading statements in connection with the selling of a good,” according to the complaint. “This is true regardless of the medium in which the statements are made—whether through more traditional advertising or emerging fields such as advergames or social media—and regardless of whether the ‘statements’ are made through words, images, or a combination thereof. Brand integration in mobile gaming is thus no exception to the rule: sellers of goods must follow California’s [FAL] and [UCL] regardless of what medium sellers use to advertise their goods.”

To settle the charges, Gatorade agreed to pay $300,000 and stop “making statements that disparage water or the consumption of water.” In addition, the company—which did not admit any liability—is prohibited from the marketing or advertising of an app or game that creates a misleading impression that water will hinder and/or adversely affect athletic performance, that consuming water in general is to be avoided in favor of consuming Gatorade, that athletes consume Gatorade and avoid all water consumption, and that water consumption in general should be avoided.

For a period of five years, the company also promised to use “reasonable efforts” to abide by parent company PepsiCo’s Policy on Responsible Advertising to Children, which prohibits advertising in media where children under 12 make up more than 35 percent of the audience, and include a provision in its endorser contracts that they will clearly and conspicuously disclose their relationship with Gatorade in communications promoting the company on any webpages or social media channels.

To read the complaint in California v. The Gatorade Company, click here.

To read the final judgment and permanent injunction, click here.

Why it matters: “Making misleading statements is a violation of California law,” AG Becerra said in a statement about the action. “But making misleading statements aimed at our children is beyond unlawful, it’s morally wrong and a betrayal of trust. It’s what causes consumers to lose faith in the products they buy.” The attorney general added that his office will “pursue false advertisers and hold them accountable,” and that the complaint provides an important reminder that less-traditional advertising forms such as advergames and social media are not safe from the AG’s scrutiny.