Last month, the Office of Fair Trading issued principles to protect consumers from the aggressive monetisation practices used in many free-to-play video games.
Alan Moss, partner at London-based law firm Harbottle and Lewis, explains what this is going to mean for both publishers and developers.
Last week the Office of Fair Trading released its final principles for online and app-based games.
Following a market investigation into online and app-based games in 2013, the OFT had voiced concerns that consumers – children in particular – were being subjected to practices that were misleading, aggressive or unfair. The principles are intended to crack down on such practices by making it very clear how the UK's existing consumer protection laws apply in this context.
Every studio and platform engaged in developing and publishing online or app-based games should take time to consider the eight principles carefully and ensure that they are in compliance with them by April 1st, which is the date from which they will be actively enforced by the Competition and Markets Authority (CMA), the new body replacing the OFT from that date.
WHICH GAMES DO THE PRINCIPLES APPLY TO?
Interestingly, much of the attention has focused on how the principles apply to children's games – the OFT's initial draft report was entitled Children's Online Games – probably because of the numerous recent press reports of children racking up significant bills while playing app-based and online games. Similarly, much of the press relating to the principles has given the mistaken impression that the principles only affect in-app transactions. In reality, the majority of the principles actually apply to any app or game that is made available for download to consumers in the UK.
Only Principles Six and Seven specifically refer to children, and only Principle Seven is solely targeted at the protection of children (with a child likely to be considered a person under the age of 16 for these purposes).
With regard to Principles Six and Seven, the factors that should be considered when determining whether a game is ‘likely to appeal to children' have been hotly contested in the games industry. The original draft OFT report issued in September 2013 contained a non-exhaustive list of factors such as ‘bright colours' and ‘cartoon-like graphics' and the report stated that if a game has some or all of the attributes included in that list, it was likely to appeal to children. To many, this appeared far too broad as it potentially captured many games that were not targeted at children.
The wording contained in the final version of the principles is more sensible, although some will say it still does not go far enough. It states that a significant determinative factor as to whether a game is likely to appeal to children is whether ‘children are known to play the game or if the game is marketed to children'. It then goes on to say that ‘other factors or attributes that may mean a game is likely to appeal to children are set out in [the] list' thereby giving the factors in the list such as ‘bright colours' or ‘cartoon-like graphics' less weight.
WHICH PRACTICES ARE LIKELY TO COMPLY AND WHICH ARE NOT?
The OFT has provided examples of practices that are likely to comply with each principle and those that are less likely or unlikely to comply. However, the examples provided present a stark example of either good or bad practice and so may be of limited use to studios or platforms whose practices may fall somewhere between the two. Further guidance from the OFT may be required.
WHO IS RESPONSIBLE FOR COMPLIANCE?
It is clear from the OFT's general notes on the principles that it views compliance with the principles as being the responsibility of both studios and platforms, albeit that the primary responsibility is allocated to either the studio or the platform, depending to the principle concerned. For example, primary responsibility for complying with Principles Four to Seven falls almost entirely on studios, but platforms that are aware of a studio's failure to comply with these principles have an obligation to take prompt action to minimise the risk of consumer harm.
WHAT HAPPENS IF THERE IS A BREACH?
If the CMA suspects a breach of the principles there is a range of actions that it could take, from the collaborative to the more draconian, such as issuing court proceedings. Whilst the latter has always been viewed as a last resort by the OFT, it will be interesting to see whether the CMA adopts the same approach when it takes over responsibility for enforcing the principles in April.
Currently, consumers do not have a direct right of action against studios or platforms that have subjected them to aggressive or unfair practices. However, plans to introduce such a direct right of action are currently being considered by the government. If introduced, direct right of action for consumers could give rise to more claims against studios or platforms as a minor breach of the principles could result in a consumer bringing an action against the offending studio or platform.
WHAT IS THE IMPACT IN JURISDICTIONS OTHER THAN THE UK?
The OFT has said that it is confident that the principles are consistent with the laws of 'most key jurisdictions' – we will need clarity on what the OFT means by ‘most key jurisdictions' – and it's likely that principles similar to the OFT's principles will come into effect in those jurisdictions to create a level playing field.
Care will need to be taken to ensure that the OFT's principles are not considered to be more restrictive than any equivalent principles that are released in such other jurisdictions so that the UK's games industry is not placed at a competitive disadvantage.
Alan Moss is a partner at London law firm Harbottle and Lewis and a specialist in film, television and interactive entertainment.
THE OFFICE OF FAIR TRADING'S PRINCIPLES FOR ONLINE AND APP-BASED GAMES:
Principles One to Three require studios and platforms to be more transparent and accurate about the game, the costs associated with a game – including the costs of any in-game purchases that may be made – and the studio that made the game available. This information needs to be provided up-front so that consumers can make an informed decision about whether or not to purchase or download a game, or any in-game content.
Principles Four and Five require studios to make the commercial intent of any in-game message clear to the consumer at the outset so that consumers are not misled into thinking that payments are not required to progress in a game when they are or that payments are required to progress in a game when that is not the consumer's sole option.
Principles Six and Seven aim to prevent studios from including ‘aggressive practices' in their games or practices which put pressure on or urge children to make purchases or pressurise other people to make purchases for them. The younger the child the more care studios will have to take to avoid breaching Principles Six and?Seven.
Principle Eight makes it clear that it is not acceptable for payments to be made without the informed consent of the person who owns the bank account from which any payments are debited. Opt-out consent will not be sufficient and consumers must explicitly acknowledge their obligation to pay at the point of sale of each purchase.