Digital Stores in California Must Now Inform Customers: You’re Licensing, Not Buying Content

California Governor Gavin Newsom has taken a decisive step to protect consumers in the digital marketplace by signing Assembly Bill 2426 (AB 2426). This new law is designed to address the growing issue of "disappearing" digital purchases, which has become increasingly relevant as more people rely on digital platforms for their entertainment needs. Under this legislation, digital storefronts will be required to clarify the nature of their transactions, ensuring consumers understand that they are purchasing licenses to access digital content rather than acquiring full ownership of it.

Set to take effect next year, AB 2426 prohibits digital platforms from using terms like "buy" or "purchase" without also informing customers that their access to the digital products is limited and can be revoked at any time. This means that when consumers make a transaction, they must be explicitly informed that what they are obtaining is a license that comes with various restrictions, and they should be made aware of those limitations upfront. In addition, companies that violate these regulations could face fines for misleading advertising practices.

The law does not apply to digital stores that offer "permanent offline" downloads, which typically allow users to maintain access to their purchases without the risk of losing them due to external factors like server shutdowns. The impetus for this legislation comes in response to actions taken by major companies in the gaming and digital content industries. For example, Ubisoft faced backlash in April when it began removing the game *The Crew* from players' accounts after shutting down the servers necessary for online play. Similarly, last year, Sony made headlines when it announced plans to delete purchased *Discovery* content from users' PlayStation libraries, a move they later retracted amid public outcry.

Assemblymember Jacqui Irwin, a key proponent of the bill, expressed the importance of this legislation in a statement, emphasizing that as retailers shift away from physical media sales, it is crucial to establish strong consumer protections for digital transactions. Irwin stated, "As retailers continue to pivot away from selling physical media, the need for consumer protections on the purchase of digital media has become increasingly more important. I thank the Governor for signing AB 2426, ensuring the false and deceptive advertising from sellers of digital media incorrectly telling consumers they own their purchases becomes a thing of the past."

While the law does not prevent companies from revoking access to digital content, it aims to enhance consumer awareness regarding the limitations of digital purchases. By requiring storefronts to clarify that they are selling licenses rather than actual ownership, consumers will have a clearer understanding of the implications of their purchases. This measure seeks to empower buyers in an era where digital transactions are becoming more commonplace and where the risk of losing access to purchased content is a real concern.

Overall, AB 2426 represents a significant step forward in digital consumer rights, offering a framework for greater transparency in the digital marketplace. As consumers increasingly rely on digital platforms for their entertainment and information needs, such protections are essential to foster trust and accountability in the rapidly evolving landscape of digital media. This legislation not only serves to protect individual consumers but also sets a precedent that may influence other states and countries to consider similar measures in their pursuit of consumer rights in the digital age.