Federal Court Imposes $3 Million Fine on Valve for Breaching Australian Consumer Law

Wednesday 4 January 2017 @ 11.49 a.m. | Trade & Commerce

The Federal Court of Australia has imposed a $3 million fine on American online gaming company Valve Corporation for breaching Australian consumer law. The court found in March 2016 that Valve had made false and misleading representations to Australian consumers in relation to its refund policy (or lack thereof) concerning its online gaming platform, Steam.

Background

A lawsuit was brought in 2014 against Valve by the Australian Competition and Consumer Commission concerning its then lack of an advertised refund policy. As a result of this, there were cases of users getting one-time or goodwill refunds such as when games were unfinished or released in an unplayable state. However, there were also cases when users were denied refunds entirely for similar issues. At the time, Valve had advertised that Steam had a ‘standalone policy to not give refunds’ found in the Steam Subscriber Agreement. This was in direct contravention of Australian Consumer Law.

Valve argued that their base of operation was in the United States and consequently, any transaction that occurred was therefore taking place in the United States and not subject to Australian Consumer Law. "We think of ourselves as an American company doing business in America which has customers all over the world," Valve's general counsel, Karl Quackenbush, testified.

The Court rejected this argument outright and stated that Steam’s policies and base of operation did not free it from obligations to give any Australian customer with a faulty or defective product a full refund. ACCC Chairman Rod Sims said at the time:

 “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. It is also significant that the Court held that, in any case, based on the facts, Valve was carrying on business in Australia.”

Penalty Imposed

Justice Edelman in determining the penalty imposed was extremely critical of Valve’s attitude. He noted Valve’s very poor nature of compliance with Australian law and found it extremely disturbing that Valve “formed a view …that it was not subject to Australian law…and (also) with the view that even if advice had been obtained that Valve was required to comply with the Australian law the advice might have been ignored.” Justice Edelman also noted that Valve had contested liability on every imaginable point during the hearing.

The judge ultimately ordered a fine of $3 million as well as orders that Valve:

  • publish information on Australian consumer rights on their website for 12 months,
  • implement a consumer compliance program for their system and staff, and
  • not make any similar representations to Australian consumers for three years.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

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