It’s another excuse to reference ‘Bart vs. Australia,’ for starters
Two years ago, the Australian Competition and Consumer Commission (ACCC) launched a legal challenge against Valve over its treatment of Australian users of its Steam service between the dates of January 1, 2011 and August 28, 2014 (when the case first went to court). The rationale was that due to the company’s explicit policy of refusing to give refunds to buyers of goods that may be defective, Valve was in violation of Australia’s consumer laws.
Back in March, the Australian Federal Court agreed with the ACCC. Valve had explicitly breached the country’s laws. Then, just before Christmas, a final ruling was handed down. The Seattle-based business must pay the Commonwealth of Australia a sum of $3 million AUD (or approximately $2.2 million USD). Not only is this figure significantly higher than Valve’s proposed fine of $250,000 AUD, but the online retailer will also have to inform Australian Steam users of their consumer rights and guarantees.
So, what, exactly, does this mean for Australian consumers, or potentially even buyers of digital games as a whole? What are the ramifications of this legal battle, and what sort of a precedent has been established?
Before I dive into this article, I will admit that — as the only Australian contributor on a website that primarily targets a U.S. audience — the idea of providing a more detailed write-up of a legal battle that’s centred on the laws of this nation may come across as a little unorthodox. While this type of content might not seem to be in the interests of much of Destructoid’s readership — as it’s not about a subject that’s as close to home as some may like — I believe there are intriguing potential ramifications from this court case. It can also serve as a decent stepping stone to a much broader discussion about consumer affairs and the digital distribution of video games.
In Australia, there are consumer laws that dictate that a product sold to consumers must be of acceptable quality, must not be misleadingly advertised or sold under false pretences, and must be fit for purpose. If the product does not match these criteria, then it’s up to either the manufacturer or supplier to remedy the situation. This can be done by either refunding, repairing, or replacing the product, depending on the situation.
While I won’t be explaining the Australian Consumer Law to its fullest — this is a video games blog, after all — before I go any further, I feel like I should dispel the notion that the term “acceptable quality” is referring to the subjective quality of the product. This is not the case. When the Australian Consumer Law declares that a product must be of “acceptable quality,” this just means that it needs to function as one would expect it to. For instance, a game that’s subjectively fun to play, but has a multitude of technical issues such as Fallout: New Vegas could arguably be seen to be of unacceptable quality. In contrast, games such as Ride to Hell: Retribution or Dead or Alive Xtreme 3: Fortune may be subjectively terrible, but they would arguably be of “acceptable quality” simply because they function as intended.
Even when accounting for this broad definition of “acceptable quality,” goods are rarely removed from store shelves unless they pose a significant risk to a person or their property due to a major failure in the product. As it were, some people are more capable of tolerating faults that could be perceived to be minor than others are. Even if a product isn’t inherently flawless, it may still be of “acceptable quality” to such individuals.
At this point, it should become understandable where the limitations in Australia’s consumer laws lie. They’re simply in place to protect buyers from predatory companies that misleadingly advertise products or release something that simply does not work as intended. These laws are not intended to protect users who have made a financial decision that they’ve come to regret for personal reasons. If someone buys a game that’s technically solid, but is not at all fun to play, that’s entirely on them.
As the ACCC explains, the term “acceptable quality” simply means that “…the goods must be safe, lasting, have no faults, look acceptable and do all the things someone would normally expect them to do…” In the case of video games, this doesn’t necessarily mean that the title must be fun to play. It just has to work.
The cost of a product is also considered when determining what is and isn’t of acceptable quality, as well as the type of the goods in question. Computer programs (such as video games) are almost always never bug-free, so minor glitches or hiccups in a game would more than likely not be enough to constitute a major failure of the product in question. That just comes with the territory, so to speak. However, it could be argued that notoriously terrible PC ports such as that of Batman: Arkham Knight and games that are similarly broken are most definitely not of acceptable quality for many individuals. Although at least Warner Bros. did offer refunds to buyers of that port.
To Valve’s credit, this does mean it could be argued that — as of June 2015 — the company has gone above and beyond its consumer obligations in one respect. If a Steam user has played less than two hours of a game, they can receive a refund for it completely unconditionally, provided that they’ve purchased it within fourteen days. This means that a user could get their money back for a game they simply found boring, whereas Australia’s consumer laws aren’t intended to protect people from such a situation.
Of course, it could be argued that two hours isn’t a fair amount of time to assess a title for its technical mishaps, as there is always the potential for game-breaking bugs to occur much later.
As of November, Valve has even started to weed out some forms of misleading marketing on its Steam service. A notice has gone out to developers who use the platform saying that Valve will no longer allow for ‘bullshots’ on Steam store pages. While this is more than likely in response to the backlash over the marketing for No Man’s Sky, this is still a commendable effort.
With that out of the way, here’s where Valve screwed up; it’s entirely unlawful to mislead consumers about their rights in Australia. You cannot tell people they have no rights whatsoever to a refund for a product that could be deemed unfit for purpose. In fact, it could even be argued that the simple act of displaying a “no refund” sign is against the law.
While you can inform people that there are no refunds for a simple change of mind, a flat-out policy of refusal is completely unlawful. These laws cannot be overridden by any private enterprise, or with a license agreement or contract. Any business that operates within Australia, or that explicitly delivers a product or service to citizens in this nation, is subject to the country’s consumer laws.
In a statement made by the ACCC back in March, the consumer watchdog went on to explain that:
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.
Because of Valve’s outright disregard for Australia’s consumer laws, the company was fined a total of $3 million Dollarydoos (or AUD). Valve will also have to post a link to a brief rundown of the Consumer Law on the Steam home page to anyone accessing the service from Australia, as well as train its employees about the country’s consumer rights and guarantees.
While the figure may not sound like much — as Valve can easily make such an amount of money back within 0.2 femtoseconds thanks to the wonders of buyable Counter Strike: Global Offensive glove skins — I would not be surprised if Gabe Newell’s Seattle-based business is subject to greater scrutiny in the future with regards to its consumer obligations. It also potentially opens Valve up to greater action, should the company refuse to abide by these laws.
Considering how much less strict the quality controls employed by Valve over its Steam platform have become, this added scrutiny is almost definitely going to be appreciated by Australian gamers. Considering that Valve will be made to explicitly inform its (approximately) 2.2 million Australian Steam users what their rights and guarantees are, I can’t help but see this as a win for consumers in this country, even if the monetary fine imposed on the business may be comparatively scant.
So why is this ruling important? It’s simple; a clear-cut precedent has been established that states that the foreign status of a corporation and organisation does not invalidate its requirements to abide by Australia’s consumer laws, even if the goods it provides are in digital form. Essentially, digital products have the same guarantees as physical goods, and no company that explicitly opts to sell such goods to Australians is exempt from the obligations that go with consumer transactions in this country. Because Valve has deliberately made representations to Australian consumers, it is directly engaging in conduct within the country.
This precedent also states that distributors of digital goods to Australian citizens cannot mislead or outright lie to consumers about their rights, either.
Then there’s the possibility that some of the potential changes made to digital platforms due to both these laws and similar legislations in other nations may drip over into other territories. Keep in mind that legal action from both Australia and Europe was more than likely a contributing factor to Valve’s decision to implement refunds into its Steam service in the first place.
The ACCC also notes that this case is the first time the extended definition of ‘goods’ that now includes ‘computer software’ has been used in a legal battle. Now that this definition has been used in an established legal precedent, there should be a higher level of certainty for consumers of digital software in the future with regards to their rights and guarantees.
Likewise, just because a company has made some effort to clean up its act after a lawsuit against it starts to proceed, that doesn’t excuse the period where it did actively violate the country’s laws. In a sense, it’s like the person who bullied you throughout your high school offering you candy as an apology for their misdeeds only after you’ve started visiting a therapist about their actions. While it is greatly appreciated, it doesn’t entirely make up for their previous wrongdoings.
Keep in mind that Valve does have until February 20 to appeal this decision, so it is entirely possible for the ruling to change.
When going forward, it’s entirely possible that this precedent could be used by the ACCC against other digital distributors of software and games, such as Sony’s PlayStation Store, Microsoft’s Xbox Store, the Nintendo eShop, the iOS App Store or Google Play. Even if it isn’t, I’d still highly recommend citing this precedent when dealing with customer service representatives from these services if you happen to reside in Australia.
This ruling also shows that it is most definitely worth lodging official consumer complaints should you feel as if you’ve been wronged by other digital distributors. While it may take some time, the system does, in fact, seem to work. It just may take a while for the ACCC to receive enough complaints, and to gather sufficient evidence to present its case.
If I’m to be blunt, I’ve been a little hesitant about the prospect of digital distribution becoming more and more prevalent as time goes on. We’ve already seen time and time again that consumers of digital goods may potentially have to forfeit their rights at the discretion of distributors or publishers. Cases like this one might hopefully be a turning point in this regard, with countries and lawmakers finally stepping in and acting to ensure that consumers of digital goods are given the same guarantees that they would have attained if they’d purchased the physical equivalents of such products.
If it means that digital goods may eventually be just as well-regulated as physical products — with the same enforceable guarantees that come with the purchase of such items — then I can only welcome further action against online distributors of software, should they attempt to invalidate the legal rights of their users.
Here’s the crux of the issue; the problems with digital distribution from a consumerist standpoint are significantly more far-reaching than just Valve and the PC gaming space. With home consoles, there’s still often a huge battle involved with contacting customer support, should a digitally-acquired title be considered defective. Considering that Valve is now starting to embrace refunds; it may be arguably worse now for console owners who prefer to buy digital games than it is on PC.
Even more frighteningly, it’s still entirely possible for a publisher to completely invalidate a person’s digitally-acquired game license on some platforms. For an example of this happening, look no further than what happened with Konami and its treatment of P.T. Although, to be fair, at least that game was a free demo, and no PlayStation 4 owner dropped money it. It still sets a terrifying precedent nonetheless.
It’s true that Australia’s laws do mention that unless explicitly stated prior to purchase, goods must “…come with undisturbed possession, so no one has a right to take the goods away or prevent you from using them.” But even then, it may still take a long time for the law to catch up on anyone who takes such actions against the consumer. Keep in mind how long it took for the ACCC to compile evidence against Valve, and then the time it took for the court battle against the company to finish up.
Even though I will rarely try and get a refund for a game, and despite the fact that situations where publishers will actively nullify licenses are rare occurrences, I just find it hard to truly feel secure with digital distribution methods. Such a feeling of insecurity will only end when I know for sure that the online storefronts I access will respect my rights as a consumer. Cases like this, in my mind, set a precedent that may make me a hell of a lot more open to the idea of a digital-only future. Even then, I still don’t think we’re quite there yet.
Perhaps I’m just being a little idealistic.