The company behind one of the world's most popular video games websites has been found to be in breach of Australian consumer law.

The Federal Court found Valve, which operates online game website Steam, engaged in misleading or deceptive conduct by telling Australian players they were not entitled to refunds for digitally downloaded content.

The ACCC found Valve made false or misleading representations to Australian consumers. Credit:Damian White

The company, based in the US, now faces fines of up to $1.1 million a breach.

In a significant victory for Australian Competition and Consumer Commission, the court found the company was not exempt from Australian consumer law just because it was a foreign online entity.