California Law Forces Companies to Be Honest About Digital Purchases vs Licensing

California is addressing one of the biggest irritations surrounding digital “purchases,” forcing companies to disclose when customers are really just licensing digital content.

Online platforms have increasingly switched from selling consumers digital goods to merely licensing them. The practice has drawn growing criticism, especially as companies later disable or revoke access to content or games that customers have paid for.

Catch our chat on California’s new digital content licensing law!

Calfornia’s AB 2426 legislation addresses this, forcing companies to be honest about whether they are selling content, or just leasing it.

The bill, which has already passed and been signed into law by Governor Gavin Newsom, was authored by Jacqui Irwin.

Existing law makes it unlawful for any person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law makes a person who violates specified false advertising provisions liable for a civil penalty, as specified, and provides that a person who violates those false advertising provisions is guilty of a misdemeanor.

This bill would, subject to specified exceptions, additionally prohibit a seller of a digital good from advertising or offering for sale a digital good, as defined, 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, unless the seller receives at the time of each transaction an affirmative acknowledgment from the purchaser, or the seller provides to the consumer before executing each transaction a clear and conspicuous statement, as specified. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The law is a welcome counter to what has become a common practice in the computer software, gaming, and digital media industries, and will hopefully help provide customers with what they need to make informed decisions.