In proceedings brought by the Australian Competition and Consumer Commission (ACCC) in the Federal Court (Court), US based technology company, Valve Corporation (Valve), was found to be in breach of the Australian Consumer Laws (ACL), in making certain misleading representations to Australian consumers regarding consumer guarantees.
Valve operates an online game distribution website, Steam, and uses it to sell computer games to Australian consumers.
The Court found that the making of representations to Australian consumers involved Valve engaging in conduct in Australia, and also carrying on a business in Australia.
Therefore although Valve was a US based company, it was not exempt and therefore subject to the ACL obligations as well.
Under the ACL, there are certain consumer guarantees that cannot be modified in relation to goods and services, including, for example, that the goods are of acceptable quality. If such guarantees are modified or not included then consumers can exercise their ACL rights to access remedies, including a refund for the goods.
The representations to consumers made by Valve and the subject of the Court proceedings were contained in the terms and conditions of Valve’s subscriber agreements and refund policies.
The representations included that consumers were not entitled to refunds for games purchased through Valve’s website, and there were no guarantees or warranties from Valve that the goods were of acceptable quality.
Valve’s breach may involve fines in the millions of dollars given that the maximum penalty for conduct of this nature is $1.1 million. The exact penalty is to be determined by the Court at a later hearing date.
This case involved the Court extending the definition of “goods” to include computer software, and it is likely that the decision will have consequences for other foreign companies selling goods online to Australian consumers.
Melbourne Dan Pearce, Partner
T: +61 3 9321 9840
Brisbane Trent Taylor, Partner
T: +61 7 3135 0668
Disclaimer The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.