Gaming company Valve Corporation has been hit with a $3 million fine after the Federal Court found its online games site Steam breached Australian Consumer Laws.
The court imposed the maximum fine requested by Australia's competition regulator because of Valve's disregard for Australian law and lack of contrition.
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Top five computer games for Christmas
94.5's Pete Curelli and Daniel Van Der Meer take some time away from their podcast Game On Australia to share their picks for the perfect Christmas present.
Valve's general counsel, Karl Quackenbush, told the court the company did not obtain legal advice when it set up in Australia, and did not check its obligations until the Australian Competition and Consumer Commission got involved in April 2014. It only provided staff verbal instructions.
This lack of interest in Australian laws and lack of cooperation encouraged Justice James Edelman to impose a pentaly 12 times more than Valve Corporation suggested it pay.
"Valve is a United States company with 2.2 million Australian accounts which received 21,124 tickets in the relevant period containing the word "refund" from consumers with Australian IP addresses," Justice Edelman wrote in his judgement.
"Yet it had a culture by which it formed a view without Australian legal advice that it was not subject to Australian law, and it was content to proceed to trade with Australian consumers without that advice and with the view that even if advice had been obtained that Valve was required to comply with Australian law the advice might have been ignored."
A court found in May that Steam's website breached Australian Consumer Law because it stated consumers were not entitled to a refund and had no access to minimum quality guarantees.
Steam must now introduce a compliance program and place an notice in size 14 type on its Australia website informing consumers about their rights.
Steam is an online games store where consumers buy access or downloads of games like Doom, Grand Theft Auto, or Fallout. Games cost up to $75.
Justice Edelman found the subscriber contracts on Steam's website were designed to ensure Steam did not offer consumers any refunds. Australian customers ticked a box agreeing to Steam's terms and conditions. It was ticked 24.9 million times between 2011 and 2014 and it was "impossible to calculate the precise number of consumers who were affected by the misrepresentations".
During the case the court heard Valve did in fact offer more than 15,000 refunds if a customer was unable to install a game, or unable to play it, or where a subscriber purchased the wrong version of a game by mistake.
Valve had suggested it pay a penalty of just $250,000 but Justice Edelman noted the penalty proposed by Valve was "not even a real cost of doing business. It would barely be noticed". Valve is a private company and its profits are unknown, but the court noted its worldwide income and revenue was "massive".
When the original decision was handed down in March, chairman of the ACCC, Rod Sims, said it reinforced that any foreign business selling goods or services in Australia is subject to local laws.
"In this case, Valve is a US company operating mainly outside Australia, but, in making representations to Australian consumers, the Federal Court has found that Valve engaged in conduct in Australia," Mr Sims said.
"It is also significant that the court held that, in any case, based on the facts, Valve was carrying on business in Australia."
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