Selling Digital Goods in California? The Risks and Rules Companies Need to Know
Most consumers have had the experience of “buying” a digital product, such as music, a movie, an ebook, or a video game, only to learn later that what they received was not ownership of the product but a revocable license with restrictions.
California’s AB 2426 is aimed squarely at that gap between how digital transactions are marketed and what the buyer actually receives. The law took effect on January 1, 2025, and it adds a new provision to California’s False Advertising Law: Business & Professions Code section 17500.6.
A year in, plaintiffs’ firms are beginning to invoke the statute in putative class actions, including a recently filed case against GameStop in federal court in the Eastern District of California. The early filings are a reminder that AB 2426 isn’t just a compliance issue on paper—plaintiffs are already suing over it, and the language used to sell digital products online matters.
And while the statute has received a lot of attention in the context of video games and digital entertainment, its reach is potentially much broader, especially as more products and services move from physical to digital.
What the Law Covers
Section 17500.6 targets the sale or advertising of certain “digital goods” when the seller uses terms like “buy” or “purchase,” or other language that suggests ownership. The issue is when the consumer is actually receiving a license that comes with restrictions—and in some cases, can be revoked.
The statute defines “digital goods” broadly, including:
- Digital audiovisual works
- Digital audio works
- Digital books
- Digital codes (including codes used to access digital goods)
- Digital applications or games (including add-ons and additional content)
Two Ways to Comply
AB 2426 creates two main ways to comply when offering covered digital goods with ownership-signaling language. In broad terms, sellers can either
1. Get an affirmative acknowledgment at checkout
This approach requires the purchaser to affirmatively acknowledge (in substance) that they are receiving a license, not unrestricted ownership, and to be informed about key license restrictions and revocability where applicable.
2. Use a clear, conspicuous license disclosure before purchase
Alternatively, the seller can provide a clear and conspicuous disclosure—before the transaction is completed—stating in plain language that the purchaser is obtaining a license, along with an accessible way to review the applicable terms (commonly via hyperlink).
One feature worth noting because it may become a compliance focal point: the disclosure/acknowledgment is intended to be distinct, not buried inside general terms and conditions.
Key Exceptions
AB 2426 includes several statutory exclusions that can materially change the analysis for certain products or delivery models.
- The law does not apply to subscription-based services that provide access to digital goods only during an active subscription.
- It also excludes certain situations in which the seller cannot revoke the consumer’s access to the digital good, such as when the digital good is made available for permanent offline download to the consumer’s device and remains usable without an internet connection.
These exclusions are one reason a “one size fits all” approach can be risky. A company may offer multiple digital products (or multiple delivery methods for the same product) that fall on different sides of the statute depending on how access is provided and whether it can be restricted or revoked.
Why This Isn’t Just a Video Game Issue
Many businesses hear “digital goods” and think: video games, movies, audiobooks. That’s certainly where early attention has clustered. But the statute is drafted broadly enough to raise questions for other companies, too, especially those that market access to digital products through a consumer-facing online purchase process.
Even in business-focused industries, it’s common to see:
- consumer-facing purchasing pages for apps and tools,
- digital access keys or redemption codes,
- “buy” language on landing pages, even when the underlying transaction is a license,
- bundles that include digital add-ons, downloads, or code-based access.
The practical risk is that common marketing language can create an “ownership” impression that doesn’t align with the legal reality of access rights and their maintenance.
What to Review on Your Website
For companies that sell digital goods, digital add-ons, or digital codes to California consumers, this is a good time to audit your storefront and disclosures.
Some areas to focus on include:
- Ownership language
Where do you use “buy,” “purchase,” “own,” “keep,” “yours,” or similar language? - Placement of that language
Look beyond checkout: ads, landing pages, product descriptions, emails, and loyalty/rewards copy. - Timing of disclosures
If you’re relying on the “clear and conspicuous” approach, is the disclosure truly hard to miss, and does it appear before the consumer commits? - Separation of terms
If the disclosure is buried inside a general Terms of Service flow, consider whether it is sufficiently separated and clear for AB 2426 purposes. - Less obvious digital goods
These may include add-ons and code-based access points, such as redemption codes, downloadable features, in-app purchases, expansions, upgrades, and other “additional digital content.”
Conclusion
AB 2426 is no longer just a “new law to be aware of.” It has now been in place long enough that plaintiffs’ firms are focusing on it, and it is broad enough to touch a wide range of digital commerce, especially as more business models shift toward digital delivery and code-based access.
Companies that sell digital goods, add-ons, or codes to California consumers should consider auditing their storefront language and disclosures now, while changes can be made deliberately rather than reactively.
