Sony and Ubisoft scandals lead to California ban on fraudulent sale of digital goods

California recently became the first state to ban the fraudulent sale of so-called “disappearing media.”

On Tuesday, Gov. Gavin Newsom signed AB 2426 into law, protecting consumers of digital goods such as books, movies and video games from being defrauded into purchasing the content without realizing that access was only granted under a temporary license.

The bill, sponsored by Democratic Assemblywoman Jacqui Irwin, prohibits the illegal “advertising or offering for sale of a digital good to a purchaser with terms of purchase, purchase or any other term that a reasonable person would understand as conferring an unlimited ownership interest in the digital good or with a term rental option.” specified.”

Going forward, sellers must clearly indicate when a buyer is merely licensing a digital good and not making a purchase. Sellers must also clearly disclose that access to a digital good may be terminated if the seller no longer retains the rights to license the good.

Perhaps most importantly, these disclosures cannot be hidden in the context of the services but “shall be separate and distinct from any other terms of the transaction to which the purchaser acknowledges or consents,” the law says.

An exception applies to goods advertised in “plain language” that states that “the purchase or acquisition of a digital good constitutes a license.” There are also carve-outs for free goods and subscription services that provide limited access depending on the duration of the subscription. Additionally, a digital good can be advertised if access is never revoked, such as when users purchase a permanently downloaded file that can be accessed offline, regardless of the seller’s rights to license the content.

Ubisoft and Sony claimed consumer damages

In a press release earlier this month, Irwin noted that the bill was intended to “address the increasing incidence of consumers losing access to digital media purchases through no fault of their own.”

She indicated that Ubisoft was revoking licenses for purchases of its video game Crew last April, and Sony sparked a backlash by threatening to revoke access to last year’s Discovery TV shows as significant examples of consumer harm.

Irwin noted that the U.S. has been monitoring the issue since at least 2016, when the Commerce Department’s Internet Policy Task Force published a white paper that concluded that “consumers would benefit from more information about the nature of the transactions they engage in.” , including whether they pay for access to content or ownership of copies, to inspire greater trust and increase online market share.”

It took eight years for the first state lawmakers to act on that recommendation, Irwin said, noting that retailers are increasingly licensing content rather than selling goods and rarely offering refunds for “disappearing media.”

“As retailers continue to move away from selling physical media, the need to protect consumers when purchasing digital media becomes increasingly important,” Irwin said. “AB 2426 will make false and deceptive advertising by digital media sellers that misinform consumers that they own their purchases a thing of the past.”

In Irwin’s press release, University of Michigan law professor Aaron Perzanowski praised California for leading the way with a law that clearly labels the practice as false advertising.

“Consumers around the world deserve to understand that when they spend money on digital movies, music, books and games, these so-called ‘purchases’ can disappear without warning,” Perzanowski said. “There is still much work to be done to secure consumers’ digital rights, but AB 2426 is a key step in the right direction.”