California Mandates Clarity in Digital Goods Purchases

California’s newly enacted AB 2426 law represents a major shift in how digital goods are marketed and sold to consumers. Signed by Governor Gavin Newsom on September 24, 2024, and effective January 1, 2025, the legislation requires transparency from companies selling digital products, such as e-books, video games, and audio files, when describing the nature of their purchase terms. The law targets a long-standing ambiguity in digital storefronts that use terms like “buy” or “purchase” while only granting users limited licenses, often leaving consumers with far less control than they might assume over their digital acquisitions. Under AB 2426, businesses offering digital goods must clearly state when a consumer is only obtaining a license rather than outright ownership. If terms like “buy” or “purchase” are used, they must be accompanied by conspicuous disclosures explaining that the goods are subject to conditions and can potentially be revoked. This requirement applies to a wide range of digital content, from music and movies to non-fungible tokens (NFTs) and in-game purchases. Sellers must also ensure consumers affirmatively acknowledge these terms before completing a transaction.