California Governor Gavin Newsom has signed a bill aimed at informing consumers who purchase digital media that they're only acquiring a license that can be revoked by the seller.
The bill, AB 2426, prohibits sellers from advertising digital ebooks, movies, games, music and other digital material with the words “buy” or “purchase,” unless the sellers also disclose that they can revoke access at any time.
Sellers also must obtain consumers' affirmative acknowledgement that digital "purchases" can become inaccessible. (The bill's requirements do not apply if access can't be revoked.)
Advertising lawyer Jeff Greenbaum, managing partner at Frankfurt Kurnit Klein & Selz, predicts the law will change how many online marketers advertise digital goods.
Until now, he says, many companies assumed they could offer digital media for “sale,” and then disclose in the terms and conditions that they reserved the right to revoke access.
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“This new law in California really sends a strong statement to marketers,” he says. “If you're telling consumers that they're buying something, they really have to have unrestricted, perpetual access to that thing.”
It's not yet clear what language marketers in California might substitute for the words “buy” or “purchase.”
“Marketers are going to be forced to be creative to use alternative terminology that explains to consumers that they're getting a more limited license,” Greenbaum says.
The new law comes as Amazon is facing a class-action complaint over Prime Video's use of the “buy” button, which gives users the option to “purchase” downloads of movies and television programs.
Consumers in that case say the company violated existing consumer protection laws in three states by offering to “sell” digital videos, while actually retaining the right to revoke access.
U.S. District Court Judge Ricardo Martinez in Seattle ruled in March that the allegations, if proven true, could show that Amazon materially misled consumers.