On September 24, Gov. Gavin Newsom signed into law AB 2426 (effective Jan. 1, 2025), a consumer protection bill that expands the scope of false advertising in California. In short, AB 2426 prohibits interactive entertainment and digital media companies from using words like "buy," "purchase," or any other words that indicate unrestricted ownership over digital goods. Violators may face injunctions and civil penalties imposed by California regulators or civil claims from individuals with proper standing.
To comply with this law, digital goods sellers must provide adequate notice or obtain an affirmative acknowledgement that digital goods are "bought" or "purchased" under the terms of a license (e.g., an End User License Agreement) prior to the point of sale. These notices or acknowledgements have specific requirements under the law, such as being clear and conspicuous and separate and distinct from any other terms presented to purchaser during the transaction.
Specifically, AB 2426 does not apply to digital goods sellers who:
- (At time of sale) Receive an affirmative acknowledgement from purchasers indicating: (i) purchaser is receiving a license to the digital goods, (ii) a complete list of restrictions/conditions of the license, and (iii) access to the digital goods may be revoked by seller if seller no longer has a right to the digital goods; OR
- (Prior to sale) Provide a clear and conspicuous statement: (i) in plain language that buying/purchasing is a license, and (ii) including a hyperlink/QR code to access full terms and conditions of the license.
Notably, the law also does not apply to digital goods that are subscription-based services, free digital goods, or any digital goods that are made available through permanent offline download to external storage sources that can be used without connection to the internet
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