IP, Technology & Data

Good news for purchasers of apps and other digital content, such as films, music and games.

Hidden in amongst the detail of last week’s Queen’s Speech, the Government announced plans to introduce new laws to protect consumers that purchase mobile apps and digital content such as films, music and games.

At present, consumer protection laws are spread across a number of different acts and regulations, with different laws giving consumers different remedies. Rights in relation to digital content are particularly confusing because they do not easily slot into existing definitions of goods and services.

The current consumer protection regime has been criticised in academic and Law Commission reports.

New rights for consumers

According to press reports, the new law will consolidate these rules and provide clear rights for “faulty” digital purchases.

This includes the right to a refund if an online game freezes, or if a streamed film is unwatchable. Note that this is a refund – not just a right to a replacement download/or credit to watch another film/listen to another song. Arguably, that goes beyond the rights available to consumers for purchases of physical media.

How will the rules apply to app purchases?

The Government does not appear to be proposing an extension of distance selling rules (whereby consumers can cancel an order within a defined cooling off period).

We will need to wait until the draft legislation is published to see how the new rules will work. In particular, app developers and providers of digital content will be keen to understand what a consumer will need to do to prove that an app constantly froze, or a downloaded film was unplayable.

In particular, the following questions spring to mind:

  • Software is never error free. No matter how much testing is done, bugs and problems arise. Indeed, licences frequently state that software will not be error free. However, the ability for app stores to push out regular (free) updates with bug fixes is arguably a step forward for users, making it easier to distribute a patched version of the application. What will constitute a bug entitling consumers to a refund? It’s not clear.
  • Where will the burden of proof lie? On the consumer, the content provider or the app/content store?
  • What happens if the problem wasn’t an issue with the downloaded content, but actually the user’s device/operating system? How do you establish where the problem actually arose?
  • Who will be responsible for dealing with claims? Most app stores act as an agent (or commissionaire) of the content provider. The licence is between the content provider and the consumer, with the app store handling payment and sales admin on behalf of the content provider.
  • If it is the app stores, how will app stores deal with complaints? Will they simply issue a refund, knowing that they can charge the refund back to the content provider? That might not go down well with content providers. Here’s a summary of how Apple deals with copyright infringement claims.
  • Who will ensure that the content provider’s EULA complies with the new laws? Many app developers simply rely upon the app store’s proforma EULA, rather than uploading their own. Will we see EULAs containing separate sections for consumers and non-consumers?

The end of the EULA as we know it?

Whilst good for consumers, such rules may become an administrative nightmare for content providers and operators of online stores. The administrative hassle of dealing with a claim for a 99p refund might lead many providers to simply accept a refund claim without challenging it.

However, lots of 99p refunds can quickly add up. Whether this has an impact on pricing remains to be seen.

In the meantime, the days may be numbered for lengthy EULAs that include wide-ranging exclusions and limitations of liability and warranties, and limited remedies for consumers.

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Martin Sloan

Partner at Brodies LLP
Martin is a partner in Brodies Technology, Information and Outsourcing group and has wide experience of advising clients on technology procurement and IT and business process outsourcing projects. Martin also advises on data protection (including the GDPR), and general technology and intellectual property law, and has a particular interest in the laws applying to social media and new technology such as mobile apps, contactless/mobile payments, and smart metering.
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