In our last article, we looked at IP and Privacy considerations for apps developers in Australia. Another important area for apps developers relates to Australia’s strong consumer protection regime, which is administered by the Australian Competition and Consumer Commission (ACCC). Under the Australian Consumer Law, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Additionally, a person must not, in trade or commerce, in connection with the supply or promotion of goods or services, make certain false or misleading representations, for example, relating to whether the goods or services have sponsorship or approval, or relating to the existence, exclusion or effect of any condition, warranty, right or remedy.
Misleading or deceptive conduct specifically relating to apps has been a recent target of the ACCC. In September 2013, the ACCC, as part of the International Consumer Protection and Enforcement Network Sweep Day, joined forces with consumer protection authorities in over 50 countries to search through application platforms for “free” apps which fail to disclose significant in-app purchases. In December 2013, it released the results of its sweep, covering more than 340 children’s game apps on the App Store and Google Play, which revealed that:
- fewer than 25 per cent of these apps found on one of the platforms which claimed to be “free”, disclosed that in-app purchases could be made; and
- fewer than 20 per cent of these apps found on both platforms which claimed to be “free”, contained information on how to restrict devices to prevent inadvertent in-app purchases.
In addition to the adverse publicity, which is likely to ensue when a finding of misleading or deceptive conduct has been made, there may also be exposure to Court orders:
- for an injunction (to stop the contravening conduct);
- to compensate for loss or damage suffered by another person because of the conduct;
- for redress to non-party consumers, where the conduct caused or is likely to cause a class of persons to suffer loss or damage; and
- to pay statutory penalties to the ACCC (for making certain misrepresentations only and not for misleading or deceptive conduct generally), of up to A$220,000 for a contravening individual, or up to A$1.1 million for a contravening corporation.
Other legal issues relating to the commercialisation of apps in Australia which are worth noting, but which unfortunately cannot be dealt with in full in the space available here, include the following:
Content regulation – The Australian Communications and Media Authority (ACMA) has power, under the Broadcasting Services Act 1992 (Cth), to investigate and issue take-down notices in respect of objectionable online content that is hosted in or provided from Australia.
Gambling apps – Providers of gambling apps may be guilty of a criminal offence, if they provide certain interactive gambling services to customers in Australia.
Health / Medical apps – Providers of health/medical apps, in addition to being required to comply with requirements under the Privacy Act in respect of dealings with sensitive information, may also need to comply with stringent regulations under the Therapeutic Goods Act 1989 (Cth), where the relevant app is considered to be a “medical device”, before they are supplied in Australia. An example would be an app which measures blood glucose levels and patient body temperature.
ePayments – Payments by credit cards are regulated by the ePayments Code, where the payment service provider is a subscriber to the Code (which includes, for example, American Express, PayPal and all four of the major retail banks in Australia), although subscription is voluntary. The Code requires subscribers to provide clear and unambiguous service terms and conditions, which should include rules relating to payments for unauthorised transactions and the recovery of mistaken payments. The Australian Tax Office also recently issued a draft ruling on the tax consequences of the use of Bitcoins, holding that they are “property” rather than “money”. This means that suppliers of Bitcoins (where they are registered for Goods and Services Tax (GST)) would be subject to a 10% GST and that holders of Bitcoins may be subject to Capital Gains Tax for any increased value in the Bitcoins.
Ready to launch?
App developers looking to venture into the Australian market, will do well to properly review their options relating to both intellectual property protection and user experience. Terms and conditions of use should address the unique legal issues that may arise. In this way, a smooth start will increase the chances of a rewarding result.
Tracy Lu, Associate, Allens See Profile