On January 1, 2025, an amendment to California’s existing false advertising law will become effective.  The amended legislation takes aim at deceptive digital ad representations that lead consumers to believe that they are purchsing owership rights in a product when, in fact, only a revocable license is being conveyed.

 

With limited exception., AB 2426 prohbitis sellers of digital goods from using terms such as “buy,” “purchase” or similar terms when the net impression thereof objectively leads a reasonable person to believe that they are purchasing an unrestrictice ownership interest.  The exception to the foregoing restriction is when a seller of digital products obtains affirmative acknowledgement from the buyer of a complete list of restrictions and conditions of the license, and that access to the digital product may be unilaterally revoked by the seller (e.g., if the seller no longer has the right to license).  Additionally, prior to completing the sale, the seller must provide the buyer with a hyperlink, QR code or other means of accessing the license terms and conditions, a a clear and conspicuous disclosure that purchase of the digital product merely constitutes a license.

 

The new legistlation defines “digital goods” broadly.  The law also sets forth exclusions, such as any distribution of television, video or radio service.  The new law also does not apply to specifically enumerated subscription-based services and digital goods such as those advertised for no monetary consideration.