Background 

In 2014 the Australian Competition and Consumer Commission (ACCC) initiated proceedings against Valve Corporation (Valve) alleging it had breached the Australian Consumer Law (ACL) by engaging in misleading and deceptive conduct in relation to the consumer guarantees available under the ACL.

Valve is a company based in the United States that operates an online game distribution network called Steam. Steam has approximately 2 million Australian subscribers (of its 120 million subscribers globally). The ACCC alleged that Valve made misrepresentations in relation to the acceptable quality guarantee in the ACL (that cannot be modified or excluded by a contract). The ACCC further alleged that Valve contravened the ACL by making representations that were misleading or deceptive or likely to mislead or deceive. There were nine alleged misrepresentations including statements that no refunds would be, or were required to be, given at any location in the world. This representation was made to numerous customers in online support conversations as well as in the Steam Subscriber Agreements which included the statement, in all capitals, that ‘ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART’.

The Federal Court found that a reasonable consumer would understand Steam's statements to mean that a refund was not available under any conditions. This was held to be misleading because consumers, pursuant to the ACL, are entitled to receive a refund if goods fail to comply with the consumer guarantees. Valve unsuccessfully defended the claim arguing that it was not carrying on a business in Australia and that Washington State law should apply instead of the ACL. In 2016 the Federal Court found that the ACL applies if an overseas supplier is carrying on business in Australia or the relevant conduct occurred in Australia. The Court held that Valve was in fact carrying on business in Australia and that the representations made to Australian consumers in online help chats had been made in Australia. Valve was ultimately ordered to pay a $3 million penalty for non-compliance with the ACL.

In 2017 the Full Federal Court dismissed Valve's appeal and confirmed that although Valve is based in Washington, is not registered in Australia and processes subscriptions in US dollars, it carried on business in Australia and is therefore bound by the ACL in its Australian dealings. Further Valve engaged in conduct which was misleading or deceptive and made false or misleading representations concerning the exclusion of a mandatory consumer guarantee.

In late April of this year the High Court dismissed an application for special leave by Valve to appeal the Full Federal Court's decision.

Implications

This decision confirms the ACCC’s view that overseas companies selling to Australian consumers must follow the ACL and are required to give effect to the automatic and mandatory consumer guarantees that goods are of acceptable quality and fit for the purpose for which they were sold. Additionally, a failure by overseas companies to comply with the ACL may attract the ACCC's attention and significant pecuniary penalties.