The ‘valve’ is off on Steam’s refund policy.

Author: bespoke

17 August 2018 | Reading time: 2 minutes

A battle between ACCC and Valve Corporation (Valve) has ended. The Full Court of the Australian Federal Court ruled that Valve (one of the world’s largest online gaming companies and owner of gaming platform – Steam) contravened the Australian Consumer Law (ACL).

Who is Steam?

Much like Apple’s AppStore provides a platform for iPhone users to purchase apps, Steam (with approximately 2 million Australian subscribers) provides a platform for computer users to purchase and install computer games. The entire transaction is carried out online, including payment and the ‘exchange of goods’.

Valve cheats the system

In 2014, the ACCC claimed Valve attempted to exclude mandatory consumer rights in the ACL by stating:

  • no refunds were available to consumers ‘under any circumstances’; and
  • it was not bound to follow statutory consumer guarantees.

In 2016, the court ultimately found Valve contravened the ACL and ordered it to pay a $3million fine.

In December 2017, the Full Federal Court dismissed Valve’s appeal. Most recently in April 2018, the High Court dismissed Valve’s application for special leave to appeal the Full Federal Court’s decision.

ACL is Australia bound

The main considerations the Federal Court were attempting to determine was whether Valve:

  • was operating in Australia, and thus whether it was bound by the ACL;
  • had made their representations in Australia; and
  • was able to successfully dictate the contract’s governing law.

Was Valve operating in Australia?

Valve argued that as a business with no physical presence in Australia, and primarily located in the USA, it was not bound by the mandatory guarantees in the ACL.

However, the court found that because of significant Australian customers, servers and ongoing costs incurred in the country, it was operating in Australia[1]. This was despite the fact they had no employees or physical premises in Australia.

No boundaries

Valve argued that, even if it was found to be operating in Australia, its representations to consumers were made in Washington, and therefore the conduct was not enforceable through the ACL.

However, the court found that, as the conduct was directed at Australian consumers, regardless of who else had access to them, then the representation was made in Australia – they were intended to be relied on by Australian consumers[2].

Governing jurisdiction of the contract?

Valve submitted that a proper reading of s67 of the ACL[3] meant that if the governing law of a contract was foreign, then the provisions would not apply.

The court found Valve’s reading of the section was inconsistent with the legislature’s goal to prevent the ‘contracting out’ of mandatory consumer rights and guarantees[4].

Beware international businesses with Australian customers

The judgement means international businesses may:

  • be considered as being operating in Australia, regardless of whether it has a local office or staff;
  • be found to be making representations within Australia if they are directed at Australian consumers, regardless of whether a wider international consumer base has access to the same representations; and
  • be liable to follow the provisions of the ACL regardless of whether the contract of supply states that the governing rules of the contract are another country entirely.

The ruling essentially widens ACL’s reach to international businesses with Australian customers.

[1] Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224 at 150.
[2] Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224 at 135.
[3] Competition and Consumer Act 2010 (Cth), Schedule 2, s67.
[4] Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224 at 114.