The popularity of the internet and technology has resulted in the rise of multinational online retailers selling products to Australians. It is important that as a multinational online retailer, you comply with the Australian Consumer Law (ACL) and the Privacy Act 1988 (Cth). The ACL will affect your business terms and conditions if you carry on business in Australia. Although terms and conditions may be enforceable and valid in your business’ country of origin, it may not be the case when you sell to consumers in Australia. If you use a generic form of terms and conditions without adapting them to different jurisdictions your business operates in, they may not be valid or enforceable.
Additionally, if you carry on business in Australia and/or collect or hold personal information in Australia, you need to ensure you comply with the Privacy Act, whether or not your organisation has a physical presence in Australia.

How does the ACL affect my business terms and conditions?

Schedule 2 of the Competition and Consumer Act 2010 (Cth) contains the ACL. Goods and services, not purchased for resupply that are valued at less than $40,000 or are above $40,000 but usually acquired for personal, domestic or household use are subject to the ACL. Hence, the ACL applies to the majority of online retailers.

The ACL provides many ‘consumer guarantees’ for goods and services. These guarantees essentially create implied terms that operate alongside your terms and conditions, and you cannot exclude them throughout your terms and conditions.

The guarantees provide, among other things, that goods will be of acceptable quality, and fit for their purpose. If there is a breach of one of the guarantees, Australian consumers have a right to the remedies available under the ACL, which may include replacement, repair or refund.

Your online presence in Australia: a look at the Valve case

ACCC v Valve Corporation (No 3) [2016] FCA 196  is a recent Federal Court case that shed light on the effect of the ACL on multination online business terms and conditions.

Valve is a company based in the USA and enables users to pay for and download games online through the popular website ‘Steam’. Users were required to register for an account and informed of the terms and conditions that applied to them at that time. The terms and conditions and refund policy provided that users were not entitled to refunds, and attempted to exclude guarantees of acceptable quality.

Initially, the ACCC commenced proceedings against Valve that required them to issue refunds to Australian consumers. When Valve did not comply, the ACCC began proceedings alleging misleading and deceptive conduct and making false and misleading representations about the application of the ACL.

Key Issues

The key issues, in this case, were:

  • the proper application of law,
  • whether Valve was, in fact, conducting business in Australia, and
  • whether the supply of games was a ‘supply of goods’ for the purpose of the ACL.

Proper Law

When discussing the issue of ‘proper law’, the Court discussed section 67 of the ACL entailing the conflict of laws. Section 67(b) states that if a contract for the supply of goods contains a term entailing a foreign country’s law that essentially substitutes the ACL consumer guarantees, the ACL consumer guarantees are applicable despite such term.

Although the proper law was, in fact, that of Washington, USA, the Court held the ACL would still apply under section 67. Therefore, foreign online retailers cannot rely on jurisdiction and applicable law clauses to exclude the operation of the consumer guarantees under the ACL.

Carrying on business in Australia

As the foundation of Valve is in the USA and their contracts specified the jurisdiction is the law of Washington, USA Valve alleged that the ACL was not applicable to them. The Court, however, disregarded this and held that sales to consumers in Australia, and their servers and other property held in Australia, amounted to operating a business in Australia.

Supply of goods

Valve alleged that it primarily provided services, not goods. The Court rejected this proposition under Section 2 of the ACL, which includes ‘computer software’ under ‘goods’, and pointed out that even though supplying computer software was not one the only thing Valve provided, it was a key component of their sales to Australian consumers.

What do you need to do under Australian Privacy Law?

Privacy law in Australia regulates the collection, use, storage and handling of personal information; that is, information that can identify and individual. As of March 2014, the new Australian Privacy Principles (APPs) took effect.

An organisation that carries on business in Australia, whether physically or online, must comply with the APPs in respect of activities undertaken in Australia, including:
Ensuring any offshore data storage arrangements are compliant. The APPs place an obligation on organisations to ensure the foreign recipient of personal information takes steps to comply with the APPs; otherwise, your organisation could be held responsible for breaches of the APPs.

Having a privacy policy that complies with the Privacy Act and the APPs. Your privacy policy should include specifics on how you collect information whether you may disclose it to overseas recipients, and how to make complaints regarding a breach of the law and deal with them.

Provide customers with additional information. You not only have to inform individuals of when and why you will collect information, but also when you may disclose such information to other organisations, and how an individual may access and correct their personal information.

Developing a privacy compliance program. You should create a plan for your business that ensures compliance with the APPs and outlines how you deal with complaints.

Key Takeaways

As a multinational online retailer selling to Australians, you need to check that your business terms and conditions are consistent with the ACL guarantees and ensure your privacy policy complies with the APPs. If you do not have either of these documents in place, you should ensure you draft them before engaging in business in Australia.

At LegalVision, we have many experienced business lawyers who regularly review and draft documents for international online businesses selling to Australians. Don’t take the risk – contact us today to ensure your business complies with Australian laws!

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