The court’s finding follows action brought by the Australian Competition and Consumer Commission (ACCC).
The Court found that Valve - through its online game distribution platform Steam, and its Steam website - made the following false or misleading representations to consumers, in the terms and conditions contained in three versions of its Steam Subscriber Agreement and two versions of its Steam Refund Policy:
• Consumers were not entitled to a refund for digitally downloaded games purchased from Valve via the Steam website or Steam Client (in any circumstances)
• Valve had excluded statutory guarantees and/or warranties that goods would be of acceptable quality; and
• Valve had restricted or modified statutory guarantees and/or warranties of acceptable quality.
Justice Edelman concluded that making each of the representations involved conduct in Australia by Valve and that, in any event, Valve was carrying on business in Australia.
Valve sells digitally downloadable computer games through Steam to Australian consumers but does not have physical retail stores in Australia and predominately operates from Washington State.
The ACCC noted that digital gaming sales worldwide grew 8% from 2014 to 2015 and has become a $61 billion industry.
ACCC Chairman, Rod Sims, said the Federal Court’s decision “reinforces that foreign based businesses selling goods and/or services to Australian consumers can be subject to Australian Consumer Law obligations, including the consumer guarantees”.
“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. It is also significant that the Court held that, in any case, based on the facts, Valve was carrying on business in Australia.
“This is also the first time Courts have applied the extended definition of ‘goods’ to include “computer software” in the ACL. It will provide greater certainty where digital goods are supplied to consumers through online platforms.”
Sims cautioned that consumer issues in the online marketplace are a priority for the ACCC and the commission will “continue to take appropriate enforcement action to hold businesses accountable for breaches of the ACL."
Under the Australian Consumer Law, all consumer goods or services come with automatic consumer guarantees that they are of acceptable quality and fit for the purpose for which they were sold. If they are not, consumers have a right to a remedy, which may include refund, repair or replacement in certain circumstances. These consumer rights cannot be excluded, restricted or modified.
A hearing on relief will be held on a date to be fixed by the Federal Court.