The consumer watchdog has successfully prosecuted a US computer software company for misleading consumers in Australia. The case has big ramifications for overseas companies supplying Australian consumers.

Valve is an online game distribution network that operates from Washington State. It allows users to download computer games through subscription to its "Steam" platform. That might not mean much to the non-techies out there, but with over 125 million users of Steam worldwide, and an annual revenue of over $3 billion, Valve is kind of a big deal.

The ACCC brought proceedings against Valve, claiming that it had made misleading representations about the availability of refunds and the application of statutory guarantees imposed by the Australian Consumer Law (ACL). One of the primary issues in this case was whether the ACL applied to Valve's conduct even though it was a foreign company without an Australian office. For that to happen, the ACCC had to show that either Valve's conduct actually occurred in Australia or that Valve, as a foreign corporation, was carrying on a business in Australia. The Court found the former because (among other things):

  • Valve has 3 servers in Australia that receive content and are worth $1.2 million;
  • Valve has 2.2 million subscribers in Australia to whom it provides support; and
  • Valve made payments to an Australian company for expenses relating to the servers.

Interestingly, with similar reasoning, the Court also determined that had Valve's conduct not been in Australia, Valve still would have been caught by the ACL for carrying on a business here.

And yada yada yada, the Court found Valve to be in breach of the ACL.

A lot of foreign companies who deal with Australian consumers ignore the ACL. The moral of this story is you can run but you can't hide. If you're a foreign company dealing with Australian consumers, get advice on whether the ACL applies.