When it comes to win/loss ratios, the ACCC has a pretty impressive strike rate. It's won cases against some of the world's biggest companies over how they do business in Australia, and now the Australian consumer watchdog and it's consumer champion in chief, Chairman Rod Sims, is on the warpath against Valve, one of the world's biggest video game companies.
For those not familiar with this morning's big story, Valve has drawn the ire of the Australian Competition and Consumer Commission (ACCC), and is about to land itself in the Federal Court of Australia for alleged breaches of the Australian Consumer Law. The ACCC alleges that Valve has failed to comply with Australian Consumer Law by allegedly telling customers that they can't get refunds on games purchased through the network.
"Under Australian Consumer Law, everybody who buys a product or a service has a right to a refund if the product doesn't work. They have a right to a refund, or a repair. Those rights are enshrined in Australian Law, and our allegation is that Valve sought to remove those consumer rights which is a breach of Australian Consumer Law," Sims said in an interview this morning. "The fact that they [Valve] are an offshore company doesn't affect the rights for consumers."
So how many customers have been affected by the alleged Valve refund drama? Speaking to us this morning, Sims believes that that's the wrong way to think about it.
He says that Valve misrepresented itself to each and every one of its 1.3 million Australian Steam customers.
"We're focussing on liability here. We're not thinking about a [specific] number of breaches in this case. Step one in this case is the Court deciding if there's been a breach of [Australian Consumer Law]. We know they've got about 1.3 million active customers in Australia. I'm not sure we know how many have been affected by denying their rights, but the representations themselves are on their websites and in their agreements with [all of] those customers. Those representations are going out to all 1.3m customers."
"We've also had a large number of complaints from individuals and consumer organisations. There's a lot of concerns. We allege that the denial of consumer guarantee rights is pretty clear in that case."
The Chairman added that the watchdog had been in contact with Valve over the issues, but added that the alleged breaches of the Australian Consumer Law are so severe that they need to go in front of a judge.
"We felt that the nature of this behaviour was better to be put before the court," the Chairman said, adding that sometimes the ACCC needs to make an example out of big companies to keep the others in line.
"If every time a company — and I'm speaking generally now — said they'd stop [breaching the Act] when we asked them to, companies in Australia would have carte blanche to know that if we just knocked on the door and asked them to stop, they [wouldn't have to pay penalties]," Sims specifies.
This is the Chairman who has led the consumer watchdog to some of its most profitable wins yet against some of its biggest opponents. The ACCC in the last few years has taken Optus for $3.5 million, Apple for $2.5 million over the iPad 4G and a number of energy companies to the tune of $1.5 million. Rod Sims and his independent agency are out to set a fierce precedent that Australia is not somewhere you can misrepresent yourself as a big company.
"We want all companies doing business in Australia, even if they're doing business offshore to comply [with Australian Consumer Law]. Big media companies doing business in Australia have to comply with Australian consumer law. Point number one is if you're going to do business in Australia, you have to comply with Australian law. The second is don't have blanket conditions around the world without bothering to check," Sims warns.
Valve does specify in its terms and conditions that it won't provide refunds unless they are required by local laws. The company said as much today when it responded publicly to the lawsuit.
Valve's Doug Lombardi said today:
As with most software products, unless required by local law, we do not offer refunds or exchanges on games, DLC or in-game items purchased on our website or through the Steam Client. Please review Section 3 of the Steam Subscriber Agreement for more information.
Whether or not Valve is misrepresenting itself to customers and denying Aussie consumers their rights is a matter for the Federal Court now. Sims said that unless Valve wants to come to the table and negotiate, the case could go on for a number of years.
"Whether or not we accept an undertaking prior to court depends very much on how blatant the behaviour was. In each of these cases it depends on the approach of the company that we're taking action against. They can either move quickly [to settle]...or they can fight the case.
"If they [Valve] want to reach an early resolution it could be over in a month or two. They're a huge company with massive resources, so if they want to fight it could go one or two years.
"We'll wait and see to see if they want to do."