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consumer

Buying digital products: Software, games, and the CGA

Key Takeaway

In New Zealand, digital products like software and games are covered by consumer laws. The Consumer Guarantees Act 1993 ensures they are of acceptable quality and fit for purpose, while the Fair Trading Act 1986 prohibits misleading representations about them. Consumers have rights to remedies if these laws are breached.

Buying Digital Products: Software, Games, and Your Consumer Rights in New Zealand

When purchasing digital products such as software and games in New Zealand, consumers are protected by key legislation designed to ensure fair trade and satisfactory quality. The primary Acts are the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

What are Digital Products under NZ Consumer Law?

New Zealand consumer law generally applies to transactions involving digital products. The classification of a digital product can determine which specific guarantees apply:

  • Goods: The Consumer Guarantees Act 1993 defines "goods" broadly to include "software" [Source: Consumer Guarantees Act 1993, s 2(1)]. This means that downloaded software, one-off game purchases, or other digital items that are supplied in a way that confers a permanent right of use generally fall under the category of goods.
  • Services: Many digital offerings, such as subscription-based software (Software as a Service - SaaS), online gaming platforms requiring ongoing server access, or technical support for digital products, are typically considered "services." A "service" includes any rights, benefits, privileges, or facilities that are provided in trade [Source: Consumer Guarantees Act 1993, s 2(1)].

Consumer Guarantees Act 1993 (CGA)

The CGA provides a set of automatic guarantees that apply to goods and services supplied by a person in trade to a consumer. A consumer is generally defined as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and not for the purpose of re-supplying them in trade or using them in a manufacturing or repair process [Source: Consumer Guarantees Act 1993, s 2(1)].

Guarantees for Digital Goods

When digital products are considered "goods," the following key guarantees apply:

  • Acceptable Quality: Digital goods must be fit for all purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable. This standard is judged by what a reasonable consumer would regard as acceptable, taking into account factors like price, statements made about the goods, and their nature [Source: Consumer Guarantees Act 1993, s 7(1), s 7(2)]. For digital products, this means they should function as expected, be free from significant bugs that impair use, and perform reliably.
  • Fitness for Particular Purpose: If a consumer makes a specific purpose for acquiring the digital goods known to the supplier, and the consumer relies on the supplier's skill or judgment, the goods must be reasonably fit for that particular purpose [Source: Consumer Guarantees Act 1993, s 8]. For example, if a consumer states they need software for a particular operating system, it must be compatible.
  • Matching Description: Digital goods must correspond with any description given by the supplier [Source: Consumer Guarantees Act 1993, s 9]. This includes descriptions on websites, in advertisements, or on packaging.

Guarantees for Digital Services

When digital products or their associated offerings are considered "services," the following guarantees apply:

  • Reasonable Care and Skill: Services must be carried out with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28]. This applies to the provision of online services, technical support, or installation assistance for digital products.
  • Fitness for Particular Purpose: Services must be reasonably fit for any particular purpose that the consumer makes known to the supplier [Source: Consumer Guarantees Act 1993, s 29].
  • Reasonable Time and Price: If no time for completion is agreed, services must be completed within a reasonable time [Source: Consumer Guarantees Act 1993, s 30]. If no price is agreed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 31].

Remedies under the CGA

If a digital product or service fails to meet a guarantee, the consumer is entitled to remedies:

  • Minor Failure: For a minor failure (one that can be easily remedied and does not significantly depart from description or purpose), the supplier can choose to remedy the failure (e.g., repair a bug, replace the software, or provide a refund) [Source: Consumer Guarantees Act 1993, s 18(2)]. If the supplier fails to remedy it, the consumer can have it remedied elsewhere and recover the costs, or reject the goods/cancel the service [Source: Consumer Guarantees Act 1993, s 18(3), s 32(b)].
  • Substantial Failure: For a substantial failure (one that cannot be easily remedied or significantly departs from description or purpose), the consumer can reject the digital goods or cancel the service. Rejecting goods typically means obtaining a refund or a replacement [Source: Consumer Guarantees Act 1993, s 21]. For services, cancelling means the consumer is not required to pay for the service or can recover money paid [Source: Consumer Guarantees Act 1993, s 32(a)]. Consumers can also seek compensation for any reduction in value [Source: Consumer Guarantees Act 1993, s 18(4), s 32(c)].

Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 is designed to protect consumers from misleading and deceptive conduct and unfair trading practices by businesses. It applies to all aspects of the promotion and sale of digital products.

  • Misleading and Deceptive Conduct: No person in trade shall engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This means that advertising, promotional materials, screenshots, trailers, and any statements made about a digital product must not mislead consumers about its features, functionality, or performance.
  • False Representations: The FTA prohibits making false or misleading representations about goods or services. This includes misrepresenting the standard, quality, performance, characteristics, benefits, or uses of a digital product [Source: Fair Trading Act 1986, s 13]. For example, falsely claiming a game has multiplayer functionality or that software is compatible with a certain operating system would be a breach.

Consequences of Breaching the FTA

If a supplier breaches the FTA, the Commerce Commission can take enforcement action. Additionally, affected consumers may be able to seek various orders from the courts, including damages, injunctions, or cancellation of contracts [Source: Fair Trading Act 1986, s 43].

When to Seek Independent Legal Advice

For specific circumstances or complex legal issues regarding consumer rights for digital products, individuals should seek independent legal advice. Advice can be obtained from qualified legal professionals, or free guidance may be available from consumer protection agencies like Consumer Protection (part of the Ministry of Business, Innovation and Employment) or Community Law Centres.

Key Resources