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Computer Mouse

The provisions of the Australian Consumer Law (ACL) are the big guns of consumer protection legislation in Australia. But how do they apply to online dealings between Australian consumers and foreign companies? The recent decision of ACCC v Valve in the Federal Court of Australia has provided some clarity on these issues.

Proceedings were commenced by the ACCC against Valve, a company based in Washington state, USA, most well known for its immensely popular Steam software distribution platform and online multiplayer games such as Counterstrike.

The ACCC alleged Valve engaged in misleading and deceptive conduct under the ACL by telling its customers that in no circumstances would any fees paid to Valve be refundable.

Under the ACL, consumers have the protection of a guarantee that any goods purchased are of “acceptable quality”. If the goods fail to meet this standard, consumers are entitled to a refund, or other remedies. It is also a specific offence under the ACL to make false or misleading representations about the existence or effect of consumer guarantees, which is what the ACCC alleged Valve did.

Valve attempted to argue the ACL did not apply because:

  1. Valve did not engage in conduct in Australia, or carry on business in Australia - the Court did not accept this in circumstances where Valve maintained servers worth $1.2m in Australia, had approximately 2.2m Australian subscribers and incurred tens of thousands of dollars in Australian expenses every month. Further, the making of the misleading and deceptive representations about ‘no refunds’ to Australia consumers constituted conduct in Australia;
  2. the contract between Valve and the end user expressly stated the laws of Washington state applied – however the Court found this did not prevent the application of the ACL;
  3. it did not “supply goods” within the meaning of the ACL, but only a “service” via a licence agreement – the Court noted that the definition of “goods” under the ACL specifically includes computer software and, while Valve did provide some “services”, the provision of software was at the heart of its business.

The decision confirms that Australian consumers can enforce their rights under the consumer guarantees in the ACL against foreign companies who provide goods such as software. This is the case despite any statements or agreement that the ACL does not apply.

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