Lior Leser on the matter of Star Citizen refunds and the ToS

[Danakar Endeel]

I found this video very insightful as Lior Leser is an actual lawyer and knows what he's talking about.

 

 

 

TL;DW - No you are not owed a refund 

[Juntau]

Great share @Danakar Endeel Thank you!

[J. Coren]

Also a good reminder that this applies to almost every digital media transaction.

You are not legally guaranteed the product you pay for, nor are you guaranteed a refund. If a company, whether it be CIG, Valve, Netflix or Amazon Video wants to fuck you over, they can. The only thing that can stop this are consumer protection laws and regulations made to benefit the end user.

Welcome to the nightmare of a digital millennium. Enjoy your stay.

[Boildown]

That is why I still buy physical CDs and Blu Rays.

[Basard]

4 hours ago, Boildown said:

That is why I still buy physical CDs and Blu Rays.

I still like the idea of owning a physical copy indeed.

[Metternich70]

Interesting piece for sure,  but the conclusion he reaches is true under USA law (where law does not provide general remedies against "unfair" agreement clauses when they are accepted by the customer). In most EU member states things work quite differently.

Since CIG charges VAT on pledges, a judge has the power to ignore the name given to the agreement by parties and state it's a "hidden sale" of digital goods (thus implying that the same judge can grant the customer certain guarantees directly provided bu the law, no matter what the agreement says)

Secondly, just checking a box in a website is not considerad a written signature in most EU legal systems. And all the "heavy" clauses in agreements - for sure the ones that exclude or limit guarantees as well as the clauses that submint the agreement to a foreign jurisdiction and/or law - shall be accepted with a (in certain cases even double and specific) written signature. 

And there are also a lot of other things to be said, but of course this not the place. 

Also the mighty Facebook was slapped hard in the face by Italian court with a heavy damage restoration (I was the plaintiff's lawyer there), regardless the agreement was actually excluding any possible guarantee/remedy for the customer and also submitted expressely the agreement to a Californian arbitrate and to California law.

In gernal I can say that US companies ofter have rough awakenings when they try to enforce in Europe some business practices that they usually (and lawfully) carry out in the USA.

[Danakar Endeel]

14 hours ago, Metternich70 said:

Interesting piece for sure,  but the conclusion he reaches is true under USA law (where law does not provide general remedies against "unfair" agreement clauses when they are accepted by the customer).

Well that makes sense given that he's a US lawyer who was going over the US version of the ToS. Can't really expect him to know the laws and exceptions for every country.

But you bring up a good point regardless and I can't wait to see someone from Italy trying to sue CIG for a collective refund of multiple individual purchases (years after the purchases were made) and see how a judge responds to it. Please share the results if something similar ever happens as you're probably better in the loop regarding the laws and rulings in your country than me.  

[Metternich70]

On 22/7/2018 at 3:23 PM, Danakar Endeel said:

Well that makes sense given that he's a US lawyer who was going over the US version of the ToS. Can't really expect him to know the laws and exceptions for every country.

But you bring up a good point regardless and I can't wait to see someone from Italy trying to sue CIG for a collective refund of multiple individual purchases (years after the purchases were made) and see how a judge responds to it. Please share the results if something similar ever happens as you're probably better in the loop regarding the laws and rulings in your country than me.  

In Italy we do not have actual collective actions, so I guess that a lawsuit of that kind (in order not to become a total waste of money) could be started just by an "Italian whale"

[Danakar Endeel]

7 hours ago, Metternich70 said:

In Italy we do not have actual collective actions, so I guess that a lawsuit of that kind (in order not to become a total waste of money) could be started just by an "Italian whale"

No no, I didn't mean collective actions as in a group wanting to do a combined lawsuit or anything. I meant 'collective refund' as someone wanting a full refund for many individual purchases that they bought continuously over a period of several years. So yeah, I meant an 'Italian whale' wanting to sue for a refund of everything years later even though they willingly and knowingly kept pledging for things over and over during that time.  

[Metternich70]

On 23/7/2018 at 6:54 PM, Danakar Endeel said:

No no, I didn't mean collective actions as in a group wanting to do a combined lawsuit or anything. I meant 'collective refund' as someone wanting a full refund for many individual purchases that they bought continuously over a period of several years. So yeah, I meant an 'Italian whale' wanting to sue for a refund of everything years later even though they willingly and knowingly kept pledging for things over and over during that time.  

Actually I would not actually like if things turn that way, since it would probably mean that SC development will be going very bad

[Danakar Endeel]

3 hours ago, Metternich70 said:

Actually I would not actually like if things turn that way, since it would probably mean that SC development will be going very bad

Well, personally I doubt we'll see many such lawsuits as from what I've seen it's just a tiny number of isolated incidents where someone thought that they could easily win in small claims court simply because they were fooled into believing a couple of haters on their 'refund'-sub with their fake stories.

[Boildown]

With those EU rules, EU citizens simply won't be allowed to participate in crowdfunded projects, simple as that. 

And I thought the whining over US gaming company contests not being allowed overseas was bad....

 

[Metternich70]

15 hours ago, Boildown said:

With those EU rules, EU citizens simply won't be allowed to participate in crowdfunded projects, simple as that.

 

We (lawyers) adore people talking about how "simple" things are, since they are the same people that come in our firms when they realize that things are ... well ... more complex than they expected.

US company usally take the risk of infringing EU consumer protection law, since they know that - due to the lack of collective actions - no one will start a lawsuit for small sums (and in case of big sum, a confidential out of court settlement is always possible).

 

[Boildown]

There's two possibilities.  Either it is possible to phrase a EULA / Crowdfunding agreement / whatever you call it in such a way that the end result is suitable to the crowdfunded project, where missing deadlines won't kill the project by requiring the money which was spent trying to deliver the project to be returned (which would be impossible, because it was spent), or it is not possible to phrase the conditions that way, in which case crowdfunding projects simply won't sell to citizens who's nations have those laws (i.e., if your previous assertion is accurate, the EU).

The only crowdfunding projects that would risk it otherwise, would be those that are such a slam-dunk to be successful that they shouldn't even need to be crowdfunded in the first place.

We (business people) don't adore laws that are unsuitable for the business we are thinking of entering.  We typically choose to only sell our products where it can be done legally and profitably.  When missing a deadline risks bankruptcy, we simply choose to do business elsewhere, especially given the unknowns inherent in software development.

[Metternich70]

On 25/7/2018 at 7:20 PM, Boildown said:

We typically choose to only sell our products where it can be done legally and profitably.  

Have you ever heard that in most EU country rasing money with a public crowdfunding is not allowed for EU based companies?

But EU law does not prohibit to EU citizens to participate in a crowdfunding that is lawfully organized outside his state.

Result of this situation is that - if a lawsuit arises between the pledger and the company and is subject to the jurisdiction of a EU member state judge and such a Judge refuses to apply the US law (because of the fact that crowdfunding is not allowed in his state) - he may not consider the deal as a pledge.

You US people think that all the world shall make things your way, and that's the very reason why US company sometimes have rough awakenings in EU courts.

So, basically, CIG is perfectly aware of this situation but took the risk (and, in my honest opinion, they took a reasonable risk due to the fact that, on one side, cutting out the EU market from the funding would have meant waiving a crapton of money and, on the other side, no EU average pledger will ever bear the costs of a lawsuit for a 300 Euro refund and we do not have collective consumer actions).

So basically, smart business owners (like CIG) are the ones that are able to take reasonable risks, the "no risK" business people are just the so called "managers" that use lawyers as the "no men" that can cover their asses with the board of directors or with shareholders.

Trust me, I know so many of both kind, i mean ... the smart ones and the other ones.

[Boildown]

Do you not have the legal concept of legal precedent over there?  Where one person winning a case to get their $300 back will allow everyone else to get their pledge back without a protracted and expensive legal fight?

And skip the personal attack memes.

[Metternich70]

18 hours ago, Boildown said:

Do you not have the legal concept of legal precedent over there?  Where one person winning a case to get their $300 back will allow everyone else to get their pledge back without a protracted and expensive legal fight?

And skip the personal attack memes.

Thanks for teaching a EU lawyer (and law university professor) lessons about EU law. Of course I will not consider it a personal attack to my professionality, since I'm always willing to learn from more skilled persons .... but ....

.... if you win a case for 300 (three hundred) bucks and spent 10.000 (ten thousands) in legal assistance that you cannot recover, I guess no one would be very likely to emulate.

It's not a matter of law or legal precedent, rather of ... common sense (which should be the same on both sides of Altantic Ocean)

 

[Boildown]

Clearly this conversation can go nowhere when you consider my every simple statement and question a personal attack on what you say is your profession.

[Metternich70]

1 hour ago, Boildown said:

Clearly this conversation can go nowhere when you consider my every simple statement and question a personal attack on what you say is your profession.

Uhm I wrote I do NOT consider it a personal attack ... and still ... you owe me an answer on the 300 - 10,000 bucks argument.

[Comet]

Unbelievable that after years people still think they are entitled to refunds in a crowdfunding project.

Crowdfunding is a funding model. It's not a pre-order.
So no refunds. This is pretty much stated everywhere.
If there were refunds there would be no risk since the money backers are sending to CIG would not be required to build the game. Someone else would be taking the risk.

The fact that so many people don't understand this basic principle of any risk investment is just a mirror of people's stupidity and their inability to take responsibility over their actions.

Anyway some sources of information :

https://support.indiegogo.com/hc/en-us/articles/526876-Refunds-Can-I-get-my-money-back-

https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded-

https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded-

https://www.popularmechanics.com/technology/gadgets/a25741/popslate-crowdfunding-fail-no-refunds/

With that said.
I don't care one bit about defending CIG. They have NO RISK.
 

[Metternich70]

1 hour ago, Comet said:

Unbelievable that after years people still think they are entitled to refunds in a crowdfunding project.

Crowdfunding is a funding model. It's not a pre-order.
So no refunds. This is pretty much stated everywhere.
If there were refunds there would be no risk since the money backers are sending to CIG would not be required to build the game. Someone else would be taking the risk.

The fact that so many people don't understand this basic principle of any risk investment is just a mirror of people's stupidity and their inability to take responsibility over their actions.

Anyway some sources of information :

https://support.indiegogo.com/hc/en-us/articles/526876-Refunds-Can-I-get-my-money-back-

https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded-

https://help.kickstarter.com/hc/en-us/articles/115005028834-What-is-a-creator-obligated-to-do-once-their-project-is-funded-

https://www.popularmechanics.com/technology/gadgets/a25741/popslate-crowdfunding-fail-no-refunds/

With that said.
I don't care one bit about defending CIG. They have NO RISK.
 

What so many people do not understand is that the risks in any funding model, when you accept money also from people that are outside your home country, depend on the actual enforeceability of such model according to the law applied by the judge actually deciding the possible case of refund.

That means that, if a customer based in a foreign country sues a US company before a Court in his own foreign country, the foreign country Judge will apply his own country consumer protection law which will in any case prevail on the contract law possibly appointed in the agreement as the governing law of the pact.

It's not difficult to understand, provided that one knows that Judge of state "A" - in case of a consumer protection action in his state - doesn't give a shit about laws of state "B" even if the defendant is a company based in state "B". It's called national sovereignty.

So, basically, the summary is that the fact that US pledgers, according to US law, are screwed (I have no reasons to argue about it since a US lawyer said so) does not imply that others countries' pledgers cannot be entitled to a refund on the basis of their own countries consumer protection laws, provided that they sue the US company before a court of their own country.

But hey ... no lawyer would give so many legal advices free. So I stop here .... 

[Juntau]

@Metternich70 But how does this sovereignty apply to the internet where sales are global? I find it hard to imagine that these issue were fully fleshed out by any country and/or any legal system. I know consumer protection laws definitely apply to businesses within or in close proximity to the state in question where a purchase has been made or within a group of states that have predetermined arrangements regarding such sales. The question is, is a company based in the united States bound to the commerce laws of all other countries across the globe? I'm not sure how this works or if it in fact works at all. If it is anything like criminal law, pre-existing arrangements need to exist in order for something like extradition to take place for example. At least this is how I understand it. 

[Metternich70]

20 hours ago, Juntau said:

@Metternich70 But how does this sovereignty apply to the internet where sales are global? I find it hard to imagine that these issue were fully fleshed out by any country and/or any legal system. I know consumer protection laws definitely apply to businesses within or in close proximity to the state in question where a purchase has been made or within a group of states that have predetermined arrangements regarding such sales. The question is, is a company based in the united States bound to the commerce laws of all other countries across the globe? I'm not sure how this works or if it in fact works at all. If it is anything like criminal law, pre-existing arrangements need to exist in order for something like extradition to take place for example. At least this is how I understand it. 

It works more or less this way: if a foreign Judge applies his local law and gives, let's say, a refund decision in favour of the consumer of his country, the actual enforcement of such decision depends on some things:

- i) if the foreign company that was ordered to pay the refund (or, in certain cases, also a controlled or related company thereof) has assets in the country of the consumer, the decision may be executed on these assets according to local law

- ii) if not, then the consumer shall start, in the country of the company, a proceedings to make the decision enforceable in such a jurisdiction (those proceedings are jursdictional procedings that may be ruled either by international multilateral or bilateral conventions or, in defect of an international convention, by the local law of the country and are ruled by very different requirements)

- iii) what is absolutley SURE is that

- the fact that the obligation arised from an agreement stipulated on the internet is not relevant if the affected consumer is residing in the EU judge's jurisdiction;

- an obligation which is deemed to be in violation of EU consumer protection law (let's say, in hypotesis, a "no refund clause") - even if it is accepted in written form by the consumer - will not be considered binding by a judge when consumer protection is involved, since consumer protection law has the very purpose to overrule agreements, being based on the assumption that the consumer is  the "weak" party of the pact, thus somehow "obliged" by the professional (and then "stronger") party to accept the unfair contractual clauses.

[Rocket Man]

Alright, I know I am late to the party here.

My biggest gripe with people in general is depicting they are "buying" ships and in-game assets rather than "pledging" into the project as a whole.  Everyone knows the drop-down basic pledge is an Aurora (or another starting ship) and the game.  This will become the sale package when the game fully releases.  And right now, it is listed cheaper than the anticipated market price of the full release game.  Anything else offered in the store are assets still accessible by the base game package, but if you want to "pledge" more to the project because you want to support the development further, you are welcome to.  Nobody is "buying" other ships, they are supporting the kickstarter project further.  I really hate when I find You Tubers or other media sources bashing people supporting this game.  "Why would you spend $400 on a digital ship that does not exist yet?"  "Who would buy a $27,000 package?  How ridiculous!"  These are the people that cannot decipher "buying" from "pledging."  Who is anyone to judge people wanting to support the development of the game?  My response to people has been, "I like the project they are working on, and I decided to support them further.  That is why I have pledged more than the base game package."  Let people do as they please with their money. 

Ok, I had to get my stance made there.  As for refunds; I am glad the law goes as I view them.  No refunds.  You decided from the start, that you are supporting the project.  From the start, everyone knew what they were getting into.  This project was ambitious and was going to take time.  To expect a developer starting with twelve people following the kickstarter campaign to release an AAA title are unrealistic.  CIG had to grow; and along with that growth develop a custom gaming engine to support the project.  I say take the time and do it right.  StarCraft 2, ten years development.  GTA V, 9 years.  WoW, 7 years to release, now 14 years in continuous development and support.  And all of these had large companies at the start, not 3 years in.  And as a backer of the game, now considered early (2014), I knew that any money I do pledge to the project I may never see again.  Oh well, it's called investing.  Some people invest on the stock market, others in funds, some real estate.  All gambles where you can lose it all.  CIG developing SC is a gamble, one we are all willing to take.  It is unfortunate that some people feel entitled to claim their pledge has been a fraud and demand refunds.  It is rather interesting to see how the EU handles this.  But I hope there is not a massive wave of people losing faith in the project.  Just give it time to "cook" now that the engine side is nearly ready.  Content is quick with some of what they are working on.