Thinking | 12 August 2020

Consumer guarantee fallout continues: ACCC takes enforcement action regarding videogame

By James Deady, Mark Lebbon and Tamara Charlwood

The Australian Competition and Consumer Commission (ACCC) has continued to pursue enforcement action against retailers, manufacturers and other suppliers for making false and misleading representations to consumers about their rights, particularly consumer guarantee rights, under the Australian Consumer Law.[1]

The ACCC recently accepted court enforceable undertakings from retailer Electronics Boutique Australia Pty Limited (EB Games) regarding statements EB Games made to consumers about alleged faults with the Fallout 76 videogame.

The ACCC previously accepted court enforceable undertakings regarding similar allegations against the publishers of Fallout 76, ZeniMax Media Inc and its European and Australian subsidiaries (ZeniMax).

In addition, the Federal Court also recently ordered Sony Interactive Entertainment Network Europe Limited (Sony) to pay penalties of $3.5 million for making false and misleading representations to Australian consumers regarding their rights under the consumer guarantees in respect of PlayStation online store games.[2]

Consumer guarantees

The Australian Consumer Law provides consumers with the benefit of certain consumer guarantees in respect of the supply of goods and services to that consumer. ‘Consumer’ is broadly defined under the Australian Consumer Law. In particular, businesses (even large and sophisticated businesses) can, in some cases, be consumers for the purposes of the Australian Consumer Law and therefore receive the benefit of the consumer guarantees.

Broadly, consumer guarantees for goods relate to the goods being of acceptable quality, fit for the specified purpose and that goods match the relevant description or sample. There are also guarantees relating to title and possession, repairs, spare parts and express warranties.

There are also consumer guarantees for services, such as guarantees regarding services being performed with due care and skill, fit for the relevant purpose and supplied within the applicable timeframe.

Suppliers and manufacturers cannot generally limit, restrict or exclude the consumer guarantees or the rights of a consumer under the consumer guarantees.

EB Games undertaking

EB Games is an Australian retailer of computer games. Fallout 76 is an online, multiplayer action role-playing videogame that launched in November 2018 and was sold by EB Games both online and via its retail stores. The videogame had a number of reported faults, including problems with the servers and in-game bugs.

Between 14 November 2018 and 31 October 2019, a number of consumers who purchased Fallout 76 from EB Games complained that the videogame was faulty. EB Games allegedly made statements in response, such as:

  • consumers had no entitlement to any refunds for Fallout 76 videogames when downloadable content or ‘one use codes’ were redeemed;
  • consumers had no entitlement to refunds from EB Games for Fallout 76 outside of EB Games’ ‘7 day satisfaction guarantee’;
  • consumers had no entitlement to refunds as ZeniMax was providing patches to Fallout 76; and
  • that consumer guarantees[3] under the Australian Consumer Law had been modified or restricted by EB Games in relation to Fallout 76,

(collectively, the Representations).

The ACCC accepted an enforceable undertaking from EB Games under which EB Games acknowledged that the Representations were likely to have mislead certain consumers about their rights under the Australian Consumer Law regarding the consumer guarantees. EB Games also undertook (among other things):

  • not to make any representation similar to the Representations to an Australian consumer in relation to a Fallout 76 game purchased from EB Games for a period of three years;
  • to provide a refund to relevant consumers in respect of the Fallout 76 games; and
  • to amend its Australian Consumer Law compliance program.

ACCC enforcement

The ACCC has been active in taking enforcement action where it is alleged that misleading and deceptive representations have been made to consumers about their consumer guarantee rights. This is reinforced by the ACCC’s action in obtaining an enforceable undertaking from EB Games, in addition to those already sought from ZeniMax and the penalties in the recent Sony case.

Suppliers of goods or services should be aware of and comply with the requirements in relation to consumer guarantees under the Australian Consumer Law and should be careful not to mislead consumers about their rights in respect of the consumer guarantees. Obligations under the Australian Consumer Law can apply even if the supplier does not have a physical presence in Australia.

Hall & Wilcox regularly advises on consumer guarantee and Australian Consumer Law issues and can assist with reviewing complaints handling procedures, promotional materials and Australian Consumer Law compliance practices and procedures.

[1] Competition and Consumer Act 2010 (Cth), sch 2.
[2] Australian Competition and Consumer Commission v Sony Interactive Entertainment Network Europe Limited [2020] FCA 787.
[3] Competition and Consumer Act 2010 (Cth), sch 2, Div 1, Pt 3-2.

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