The ACCC found Valve made false or misleading representations to Australian consumers. Photo: Damian White
The company behind one of the world’s most popular video games websites has been found to be in breach of Australian consumer law.
The Federal Court found Valve, which operates online game website Steam, engaged in misleading or deceptive conduct by telling Australian players they were not entitled to refunds for digitally downloaded content.
The company, based in the US, now faces fines of up to $1.1 million a breach.
The ACCC said it was the first time the courts had applied the definition of ‘goods’ to include computer software. Photo: Rebecca Hallas
In a significant victory for Australian Competition and Consumer Commission, the court found the company was not exempt from Australian consumer law just because it was a foreign online entity.
It found Valve made false or misleading representations to Australian consumers about their rights under Australian consumer law.
This included false representations about Valve having excluded statutory guarantees about goods being of acceptable quality.
Valve was set up by former Microsoft employees in 1996.
ACCC chairman Rod Sims said the court’s decision would have far-reaching consequences for other digital companies claiming to operate outside of Australian law.
“There’s going to be a lot of companies we can now turn to and say look, be careful what you say about consumer guarantees because you are liable under Australian consumer law,” he said.
He said the judgment meant companies based overseas – but selling goods and services to Australians online – could be subject to the same treatment.
“In this case, Valve is a US company operating mainly outside Australia, but, in making representations to Australian consumers, the Federal Court has found that Valve engaged in conduct in Australia,” he said.
“It is also significant that the court held that, in any case, based on the facts, Valve was carrying on business in Australia.”
In his judgment, Justice James Edelman said Australian consumer law applied to transactions involving a foreign company and digital products, and that foreign companies like Valve had no exemption under the law.
“Valves conduct was in Australia and it was carrying on business in Australia,” he said.
The ACCC said it was the first time the courts had applied the definition of ‘goods’ to include computer software – in this case, digitally downloaded games.
“[This] will provide greater certainty where digital goods are supplied to consumers through online platforms,” Mr Sims said.
Steam has more than 125 million users worldwide and about 2.2 million of those are in Australia, the ACCC says. Its games include the Counter-strike, Half-Life and Day of Defeat series.
Valve was set up by former Microsoft employees in 1996. The company now faces multimillion-dollar fines over the conduct, which will be decided by the Federal Court at a later hearing.
The penalty for misleading and deceptive conduct is up to $1.1 million for each breach.
Valve advises players in its terms and conditions that all game fees are payable in advance and “not refundable in whole or in part”.
The ACCC argued that this was a false representation of the consumer guarantees in Australia. Valve argued that the relevant Australian consumer laws did not apply to it.
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