Sony’s been hit with an enormous $3.5 million fine, adding to the ACCC’s string of wins against companies refusing digital refunds to Australians. In the court’s ruling, Federal Court Justice Steward explained why Sony was fined so much.
In the full Federal Court ruling, the maximum fine for 21 contraventions of the Australian Consumer Law would have totalled “at least $63.9 million”, according to the Federal Court ruling. However, both the ACCC and Sony Europe’s legal representatives ended up agreeing on a $3.5 million fine, broken down as such:
- $2 million for the Terms of Service representation;
- $1 million for the Wallet representation;
- $150,000 for the referral to Publisher Representation;
- $200,000 for the No Obligation to Refund Representation;
- $150,000 for the Refund to Wallet representation
The various representations refer to terms and conditions presented to users at various points as they tried to buy games on the PlayStation Store. A “Top Up Confirmation Email”, for instance, told users between “at least” September 1, 2017 and until September 17, 2019, that wallet funds could not be cancelled or refunded. The court could not find out how many times users received these particular emails, but they did note that “between November 2018 and May 2019”, Australians received the Top Up Confirmation email just over 8.9 million times.
The Wallet representation, meanwhile, was a notice informing users that “funds added to the wallet are non-refundable”. This notice appeared whenever a user tried to purchase a game from the PSN, but lacked sufficient funds in their PSN wallet to buy the title they wanted.
The ACCC’s case revolved around the experiences of five users — User JA, HP, BM, JS and CK — who were refused refunds by Sony support staff at different points in 2017. For three of the users, Sony submitted that “even if a game had a major failure or some other failure to comply with a guarantee that could not be, or had not been, remedied”, Sony’s support staff argued that they were not required to supply refunds if the game had been downloaded. In another instance, user CK was offered a refund, but only in the form of PSN wallet credit.
Between October 2017 and November 2017, SIENE (through its call centre agents), in trade or commerce … engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and made false or misleading representations to each concerning the existence, exclusion or effect of any right or remedy they may have had, by representing that, even if a game had a major failure or some other failure to comply with a guarantee that could not be, or had not been, remedied, SIENE was not required to refund the users more than 14 days after purchase or if the game had been downloaded, when in fact there is no such limit on consumers’ rights to obtain redress from suppliers of goods under ss. 259 and 263 of the [Australian Consumer Law], in contravention of ss.1 8 and 29(1)(m) of the [Australian Consumer Law].
In a separate instance, the judge also found Sony engaged in misleading or deception or likely to mislead or deceive conduct by telling one user that they were “not required to refund … unless User JA obtained authorisation from the publisher (or developer) of the game for the refund to be made” even though Australian consumers are entitled to obtain refunds “directly from suppliers of goods”.
The judgement also noted Sony’s instructions to support staff explaining why users could not receive refunds for digital purchases:
4.4.1 – Can I get a refund because I’m not happy with the quality of the game I purchased?
In this case, the content has been downloaded, is available to use on your console and cannot be removed, even after refunding. As the content cannot be ‘returned’, we cannot consider a refund of the purchase.
As there is no actual fault with the content we cannot consider a refund of the purchase.
Justice Steward accepted a submission from both the ACCC and Sony Europe that Sony had “not previously contravened the [Australian Consumer Law] or its predecessor, the Trade Practices Act”, which was taken to be a “significant mitigation factor” in accepting the proposed fine. Both parties also agreed that there was no evidence that Sony was deliberately attempting to contravene Australian Consumer Law, which was accepted by the judge.
In explaining the acceptance of the fine to Sony, Justice Steward wrote the following:
It is clear that Sony Interactive Entertainment Network Europe [SIENE] is a large enterprise with vast resources. Realistically speaking, a penalty in the sum of AUD$3.5 million is highly unlikely to have a significant impact on SIENE’s overall financial position. But that is not to the point.
The question is whether the size of the pecuniary penalty would operate as an effective deterrent. The penalty must be substantial in order to be meaningful given SIENE’s resources, but must not be so high as to be oppressive. In my view, the amount of the proposed penalty is in each case sufficiently high to have a deterrent quality. Further, the penalties have been set at a level which acknowledges the factors which support a lower penalty that might otherwise be imposed.
In particular, SIENE co-operated in resolving this proceeding; it has since amended the Terms of Service; it ceased to make the Wallet Statement on the Confirmation of Purchase Page and changed the Top Up Confirmation Email prior to resolution of the proceeding; and it provided updated instruction to PlayStation Support Centre staff.
Justice Steward also had a warning for other digital retailers or companies with online marketplaces:
I am also satisfied that the penalty amounts proposed make it clear to other corporations dealing in digital goods that is not acceptable to contravene the [Australian Consumer Law]. I consider they are of sufficient magnitude to deter others in the industry who may be disposed to engage in similar prohibited conduct.
Similar to the case against Valve, Sony will be required to publish a proposed notice on the PlayStation Australia website outlining users’ rights under the Australian Consumer Law. The court also thanked Sony for “voluntarily” disclosing information to the ACCC and beginning settlement proceedings, which the court said “have obviated the need for a full trial which undoubtedly would have demanded significant resources”.