In a first of its kind in Australia, the ACCC has successfully prosecuted US based online gaming giant Valve Corporation (Valve) for breaching the consumer guarantees regime in the Australian Consumer Law (ACL). On 24 March 2016, the Federal Court found Valve had engaged in misleading conduct and made false and misleading representations regarding the application of the consumer guarantees to their Australian based consumers.

The decision is a timely reminder about the potential liability that foreign corporations could face under the ACL. The decision is also a warning to software providers (including Software as a Service (SaaS) providers) whose scope of liability under the ACL may now potentially be wider than previously thought.

Impact on foreign corporations

The judgment is warning to foreign corporations who engage with Australian consumers that they can be subject to ACL obligations, including the consumer guarantees. The broad interpretation of section 67 of the ACL means that they will not be exempt from those obligations even where the proper law of their relevant contracts with consumers is a jurisdiction other than Australia.

Impact on software providers

The Federal Court decision has also potentially widened the scope of the definition of goods to include software provided by way of a licence. This potentially captures providers of SaaS and other “service" providers whose activities may now be subject to the full complement of consumer guarantees which apply to goods (as opposed to the limited set of guarantees that apply to services).

The proceedings against Valve is the latest in a string of enforcement actions initiated by the ACCC since 2013 targeting consumer guarantees. With the consumer guarantees (particularly in the online marketplace) continuing to rank highly on the ACCC’s enforcement priorities, now is an opportune time for businesses to review their practices and policies with regard to the ACL.

We have developed an interactive guide to the consumer guarantees that may assist you in understanding the broad reach of the consumer guarantees regime as well as your obligations under it. It will also assist in determining your potential liability and may help to identify compliance risks within your organisation.