Don’t play games with Australian consumer rights

The Federal Court has ordered that Sony Interactive Entertainment Network (Sony) pay AUD$3.5 million in penalties as a result of making false and misleading representations to consumers in connection with their rights under the Australian Consumer Law (ACL).

Background

Sony is incorporated in the United Kingdom and is responsible for the PlayStation Network (PSN). It operates the PSN and PlayStation store and provides Australian consumers with access to the PSN. This includes the “terms of service” to which Australian consumers must agree when creating and using a PlayStation account.

The second respondent, Sony Interactive Entertainment Europe (SIEE) is also a based in the United Kingdom and is Sony’s parent. SIEE is responsible for the content available at the PlayStation website. This includes displaying on its website the “terms of service”.

Proceedings

In 2019, the Australian Competition and Consumer Commission (ACCC) instituted proceedings in the Federal Court of Australia against Sony and SIEE alleging contraventions of sections 18 and 29(1)(m) of the ACL.

Misleading statements

The ACCC alleged that between October 2017 and May 2019 Sony had made false and misleading representation to consumers who were seeking a refund for a faulty game sold by Sony. These consumers had issues with either downloading or playing the game.

The ACCC alleged that Sony customer service representatives had told customers that Sony was not obliged to provide refunds:

1. 1. for games once the game had been downloaded; or
   2. if fourteen (14) days had passed since the game was purchased.

Terms of Service

The ACCC also alleged in its terms of service Sony stated or implied that:

• Australian consumers did not have consumer guarantee rights regarding the quality, functionality, completeness, accuracy or performance of their purchased digital systems (No Guarantee Representation);
• Australian consumers did not have the right to a refund for goods with major failures (No Refund for Major Failures Representation);
• if Sony accepted money for the supply of a game and then did not deliver it, Sony could elect to deposit the purchase price into the PSN wallet as opposed to making a refund (Refund to Wallet Upon Non-Delivery); and
• a consumer could never obtain a refund of funds added to the PSN wallet (Wallet Representation).

The ACCC argued that:

• the No Guarantee Representation was and is misleading or deceptive as to the consumer guarantees available to consumers under section 54 of the ACL;
• the No Refund for Major Failures was misleading and deceptive as to Sony’s obligation to provide a refund if the purchased game had a major failure under sections 54, 55, 56, 259(3) and 263 of the ACL;
• the Refund to Wallet Upon Non-Delivery was misleading and deceptive as to Sony’s obligations to supply the purchased game under section 36(4) of the ACL; and
• the Wallet Representation was misleading and deceptive as to Sony’s obligation to provide a refund in the form of money if the purchased game had a major failure under sections 54, 55, 56, 259(2)-(3) and 263 of the ACL.

Decision

The Federal Court found in favour of the ACCC and declared that Sony had breached the ACL on the basis that it had made misleading representation to four (4) Australian consumers as to their rights under the consumer guarantee provisions of the ACL.

Sony was also found to be in breach of the ACL by telling one of the four consumers that Sony was not obliged to provide a refund unless the game developer authorised it, and by telling a fifth consumer that Sony Europe could provide a refund using virtual PlayStation currency instead of money.

Sony admitted liability and made joint submissions to the Federal Court with the ACCC. Sony will also contribute to the ACCC’s legal costs.

This decision serves as a timely reminder about the risks and consequences of making false or misleading representations to consumers under Australian law. Critically it demonstrates the “long arm of the law” and shows that Australian regulators are quite prepared to pursue and seek enforcement against overseas based companies for breaches of Australian consumer laws. Any international company that sells goods or services to Australian consumers needs to properly ensure its commercial offering and the legal remedies available under its “terms of service” reflect Australian law.

Authored by:

Antoine Pace, Partner
Dudley Kneller, Partner
Lisa Haywood, Associate