If you’re a gamer, you’re probably familiar with the Steam game distribution platform, estimated to account for 75 percent of all online game purchases. Online game purchases have surged in recent years, owing greatly to their convenience — one can buy a game from home and play it nearly immediately. However, as sales have grown, consumer rights groups have increasingly turned their attention to the business practices of online software and game retailers.
In August, the Australian Competition and Consumer Commission (ACCC) started proceedings against software company Valve for its refusal to provide refunds to customers purchasing video games through its Steam online store and distribution platform. The ACCC claims that by refusing to refund in all circumstances and stating that it was excluded from statutory consumer guarantees, Valve is making misleading representations: Australian consumer protection legislation creates an implied guarantee of “acceptable quality” that cannot be restricted by contract. Similar immutable implied guarantees can be found in consumer legislation in many Commonwealth jurisdictions, including British Columbia.
This is not the first time that Valve has run afoul of consumer protection groups – German consumer protection group VZBW recently brought Valve to court over users’ right to resell games purchased through Steam. VZBW was not successful in their action because of the unique copyright status of computer games under EU law, but the case illustrates the ongoing struggle between consumers and distributors of digital entertainment over rights to online purchase. Moreover, VZBW was not a government entity, whereas the ACCC is; a regulatory agency taking action against Valve could be indicative of an increased commitment to enforcing compliance with consumer protection law.
If the ACCC prevails in court, the consequences will be felt in Canada, as Canadian courts often find Commonwealth jurisprudence persuasive in forming their opinions. The applicability of any Australian decision is likely to be further enhanced by the close similarity between the relevant Australian and Canadian consumer protection statutes. While wording of the statutory guarantees differs slightly, with the Australia Consumer Law (ACL) section 54 using “acceptable quality” and the British Columbia Sale of Good Act (SOGA) section 18(b) using “merchantable quality”, both statutes include guarantees that the goods be fit for disclosed purposes. The ACL’s guarantees seem to be slightly broader than those provided in the BC SOGA: under the ACL, in addition to being fit for any purpose disclosed by the purchaser, section 55 states the goods must also be fit for any purpose for which “goods of that kind are commonly supplied”. Moreover, in the BC SOGA section 18(b), if the consumer is allowed to examine the goods before purchase, there is no implied condition with regard to defects that the examination would have revealed. Conversely, the ACL’s section 54(4)(b) requires that any such defects be “drawn to the consumer’s attention”, placing the burden on the vendor rather than the purchaser.
However, though the ACL was enacted with the intention of protecting purchasers of goods, game buyers may be less than pleased if Valve raises its famously discounted prices or introduces region-specific retail practices as a measure against financial losses incurred through refunding purchases. In the end, even if an ACCC victory in court brings about increased vigilance over online consumer protection, Valve is likely not going to be subjected to a deluge of refund requests under consumer protection legislation. Such laws only guarantee “acceptable quality” or its equivalent, which have not been defined in the context of a computer game, but likely include guarantees that the game runs on the computer systems it is made for and is free of glitches that render it unplayable. Furthermore, the actual logistics of returning a digital copy of a game complicate matters. Steam can run in an “offline mode”, allowing games to be played without an internet connection. If a customer were to purchase a game, install it, then return it, he or she could potentially use offline mode or an analogous feature on another platform to continue playing the game despite having received a refund.
In the end, whether Valve wins or loses in court, the ACCC’s action is yet another wake-up call to software companies and consumer protection watchdogs. As entertainment media drifts ever further from its roots in physical artifacts like CDs and cassettes, consumer protection regimes ought to evolve as well to ensure that the public is protected regardless of whether the goods they purchase are tangible or not. The application of laws governing physical, tangible goods to digital, virtual online products will continue to be a hot topic in courts worldwide, as previously discussed in the IPilogue, and by the ACCC showcasing the difficulties in applying a legal paradigm of property developed for an offline world to a globally connected Internet.
Adam Chan is an IPilogue Editor and a graduate of the University of British Columbia Faculty of Law.