Federal Court finds Valve made misleading representations about consumer guarantees

29 March 2016

The Federal Court has found that Valve Corporation (Valve), through its online game distribution platform Steam, and its Steam website, engaged in misleading or deceptive conduct and made false or misleading representations to Australian consumers about the consumer guarantees under the Australian Consumer Law (ACL), in proceedings brought by the Australian Competition and Consumer Commission.

The Court found that Valve 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 these representations involved conduct in Australia by Valve and that, in any event, Valve was carrying on business in Australia.

“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,” ACCC Chairman Rod Sims said.

“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,” Mr Sims said. “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,” Mr Sims said.

“Consumer issues in the online marketplace are a priority for the ACCC and we will continue to take appropriate enforcement action to hold businesses accountable for breaches of the ACL."                                                     

A hearing on relief will be held on a date to be fixed by the Court.

Background

Valve is an entertainment software and technology company located in the United States of America. Valve owns and operates an online computer game distribution platform known as ‘Steam’ that has over 125 million users worldwide, with approximately 2.2 million of those users being Australian consumers. In 2015, Valve’s revenue was reported at over $3 billion.

Valve sells digitally downloadable computer games through Steam to Australian consumers. It does not have physical retail stores in Australia and predominately operates from Washington State.

Digital gaming sales worldwide grew 8% from 2014 to 2015 and has become a $61 billion industry.

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.

To find out more about consumer guarantee rights, please visit: http://www.accc.gov.au/consumers/consumer-rights-guarantees.

 

Release number: 
MR 35/16
Media enquiries: 
Media team - 1300 138 917

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