Sony, Ubisoft scandals prompt Calif. ban on deceptive sales of digital goods

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

On Tuesday, Governor Gavin Newsom signed AB 2426 into law, protecting consumers of digital goods like books, movies, and video games from being duped into purchasing content without realizing access was only granted through a temporary license.

Sponsored by Democratic assemblymember Jacqui Irwin, the law makes it illegal to “advertise or offer for sale a digital good to a purchaser with the terms buy, purchase, or any other term which a reasonable person would understand to confer an unrestricted ownership interest in the digital good, or alongside an option for a time-limited rental.”

Moving forward, sellers must clearly mark when a buyer is only receiving a license for—rather than making a purchase of—a digital good. Sellers must also clearly disclose that access to the digital good could be revoked if the seller no longer retains rights to license that good.

Perhaps most significantly, these disclosures cannot be buried in terms of service, but “shall be distinct and separate from any other terms and conditions of the transaction that the purchaser acknowledges or agrees to,” the law says.

An exception applies for goods that are advertised using “plain language” that states that “buying or purchasing the digital good is a license.” And there are also carve-outs for free goods and subscription services providing limited access based on a subscription’s duration. Additionally, it’s OK to advertise a digital good if access isn’t ever revoked, such as when users purchase a permanent download that can be accessed offline, regardless of a seller’s rights to license the content.

Ubisoft, Sony called out for consumer harms

In a press release earlier this month, Irwin noted that the law was drafted to “address the increasingly-common instance of consumers losing access to their digital media purchases through no fault of their own.”

She pointed to Ubisoft revoking licenses for purchases of its video game The Crew last April and Sony stirring backlash by threatening to yank access to Discovery TV shows last year as prominent examples of consumer harms.

Irwin noted that the US has been monitoring this problem since at least 2016, when the Department of Commerce’s Internet Policy Task Force published a white paper concluding that “consumers would benefit from more information on the nature of the transactions they enter into, including whether they are paying for access to content or for ownership of a copy, in order to instill greater confidence and enhance participation in the online marketplace.”

It took eight years for the first state lawmakers to follow through on the recommendation, Irwin said, noting that sellers are increasingly licensing content over selling goods and rarely offer refunds for “disappearing media.”

“As retailers continue to pivot away from selling physical media, the need for consumer protections on the purchase of digital media has become increasingly more important,” Irwin said. “AB 2426 will ensure the false and deceptive advertising from sellers of digital media incorrectly telling consumers they own their purchases becomes a thing of the past.”

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

“Consumers around the world deserve to understand that when they spend money on digital movies, music, books, and games, those so-called ‘purchases’ can disappear without notice,” Perzanowski said. “There is still important work to do in securing consumers’ digital rights, but AB 2426 is a crucial step in the right direction.”