Between 2012 and 2015, when free-to-play mobile games were hitting their stride, European regulatory interest was at its peak.
The UK’s Advertising Standards Authority was frequently ruling against the marketing of ‘free games’, the EU’s CPC Network published its common position on consumer protection in online games, and a case around the direct exhortation of children in Runes of Magic reached German’s highest civil court.
For the past seven or so years, the focus for European policymakers has predominantly been loot boxes. The debate around whether they should be more tightly regulated under gambling legislation, youth protection laws or broader consumer protection legislation rumbles on today.
The last couple of months have, however, marked a step-change in the European Union’s focus on consumer protection.
In September this year, the European consumer group BEUC (an acronym that originates from its French name, ‘Bureau Européen des Unions de Consommateurs’) published a report that takes aim at certain in-game purchase practices.
In particular, the BEUC report heavily criticises the use of premium currency, particularly in relation to purchases made by children and teenagers. Below, we dig a little further into some of the alleged issues raised by the BEUC report.
1. Parental controls have come a long way – and are still developing
The BEUC report states that children are often spending in games without their parents’ knowledge or authorisation – the article cited in the report (See ‘Kids Who Wasted Thousands of Dollars on Gaming’, published by Grunge in 2023) is a compendium of articles which themselves were published between 2013 and 2016.
This is not to deny that this issue has been entirely eradicated. However, there is evidence to suggest that its importance is diminishing; for example, the most recent survey from Video Games Europe indicated that spend by children on video games has in fact decreased.
This is also not a games-specific issue (see for example, here and here). Mitigating the risks of unauthorised spending relies on platforms and payment providers to continue to deliver parental controls that work – and importantly for parents to actually use them.
As raised in last year’s report by the Swedish Consumers’ Association, password protection on purchases “all in all… provide a satisfactory level of protection” and the suggested additional technical protections on a platform-level would essentially mean that Apple and Google have parity in their existing core controls. Development hasn’t stopped either – for example, Google announced its new ‘school time’ controls this August.
2. The framing of premium currency does not represent many games
The BEUC report particularly targets the use of ‘premium currency’ (as explained above). However, the report fails to highlight that many games in fact deploy ‘mixed currency’ – in-game currency that can be earned via gameplay or purchased.
The UK’s Committee of Advertising Practice understands this distinction, in particular reiterating its position in its recent update to the Guidance on advertising in-game purchases (“in many games, the currency can be earned in-game and also purchases as a top-up for in-game use… where a virtual currency can be earned in game, the storefront is outside of remit, regardless of whether the currency can also be purchased”).
Mitigating the risks of unauthorised spending relies on platforms and payment providers to continue to deliver parental controls that work – and importantly for parents to actually use them
This makes BEUC’s suggestions around subsequent purchases of virtual items being presented with a ‘real money’ price incredibly challenging. Indeed, BEUC makes the point itself, stating that there may be situations where the real price cannot actually be calculated.
This also sets video games apart from the cited TikTok commitments, where use of Coins can be used to purchase gifts for content creators, which can in-turn be converted to Diamonds then real money.
A more holistic approach would be to assess how the economy and gameplay works as a whole and whether this is fairly presented to the player, considering:
- Whether it’s clear to the player how much currency they have, and how much a virtual item is in in-game currency and how much in-game currency they need to purchase it (if any), as set out in the CAP’s Guidance on advertising in-game purchases; and
- Whether it’s clear how that currency can be obtained aside from purchasing – i.e. that all options (e.g. buy, play, wait or cancel) are equally presented to the player, as set out in the OFT’s Principles for online and app-based games, which was referred to by the EU’s CPC Network in its December 2013 Common Position.
Another criticism by the BEUC of the use of premium currency is it reduces the ‘pain of paying’, therefore increasing spend by players. However, the research cited here is limited and focuses on general spend on credit cards (with the key research predating the existence of in-game purchases).
As things stand, there appears to be only one piece of research related to premium currencies on this topic. No piece of research, on the face of it, appears to consider mixed currency.
3. Premium currency as digital content versus a means of payment
The BEUC report also explores whether premium currency should be classed as a “means of payment” under EU consumer law instead of ‘digital content’. Currently, ‘virtual currencies’ under the Digital Content Directive are only considered to be a “means of payment” if they are “digital representation of value” recognised by national law with real-world value.
Recital 23 of the Digital Content Directive clearly does not apply to in-game currencies, since they do not have real-world value. In-game currencies are tied to use within the game ecosystem and cannot be used to purchase other goods and services like a recognised virtual currency would. This definition is used to capture officially issued virtual currencies (e.g. central bank digital currencies) – clearly a different beast from in-game currencies.
More research is needed to better inform policy making in this area – including on topics such as virtual currency and the ‘pain-of-paying’
This is further supported by the Commission’s Guidance on the Consumer Rights Directive, which refers to the “payment of a price” to include instruments with a “certain convertible or monetary value”.
Additionally, it highlights that in-game micro-transactions would normally be classed as digital content (or if not, digital services). The legal status of such transactions is well established, and games have been built around this accordingly (see, for example, the principles around the separation of commercial transactions and gameplay in the OFT’s Principles – cited above).
Closing thoughts
There are three key areas where games companies need to remain vigilant in order to help prevent issues arising around in-game purchases:
1. Education Ensuring that players and parents are aware of the controls available will continue to play a key role in giving consumers the experiences they want (e.g. campaign such as Get Smart About P.L.A.Y.).
2. Research More research is needed to better inform policy making in this area – including on topics such as virtual currency and the ‘pain-of-paying’. Programmes such as the UK’s Video Game Research Framework need to be leveraged on several topics, particularly in relation to the impact on younger players.
3. Next steps The games industry appears to be entering a new era of regulatory attention in the EU. The BEUC report summarises the key arguments that have been submitted to the European Commission as part of a complaint against seven games, including Diablo IV, EA Sports FC 24 and Clash of Clans. There has been no comment at this stage about if or when the European Commission will respond to the complaint – however alongside the Digital Fairness – Fitness Check, in-game practices are being heavily scrutinised.
Isabel Davies is a senior associate in the interactive entertainment team based in London at media, tech and IP law firm Wiggin LLP.
