Video game giants face EU scrutiny over exploitative microtransactions

A complaint has been lodged with the European Commission and EU consumer protection agencies against companies in the video game industry, including the producers of popular games like Fortnite and Minecraft. The allegations involve manipulating and coercing players into purchasing virtual currencies, known as microtransactions.

The complaint is backed by the EU consumer organization BEUC, along with 22 organizations from 17 EU countries, including Belgian Testachats, German VZBV, and the Polish Consumer Federation.

The groups accused the video game giants, including the producers of such popular titles as Fortnite, EA Sports FC 24, Minecraft, and Clash of Clans, of using unfair practices and manipulative techniques aimed at persuading players to spend additional money, which violates EU consumer protection laws.

The main issue is the encouragement of users to purchase virtual currencies, known as virtual premium currencies, which can be bought with real money either in the game or through app stores. These currencies take different forms in the game, such as points, coins, or gems, which players typically use to buy so-called skins, like better outfits for characters or items that change the appearance of their weapons. These items are cosmetic and do not help players win.

Organizations accuse gaming companies of a lack of transparency in the pricing of in-game currencies, meaning that players don't know exactly how much they are paying for a given digital item. For instance, if a new helmet costs 3,000 diamonds, this could mean either CAD 15 or CAD 150. The lack of clarity, point out the organizations, often pushes consumers to spend more money in the game.

They added that the companies' argument that players prefer virtual currencies in-game is flawed, as many consumers find this step confusing.

Furthermore, consumer organizations warn that it is primarily children who fall victim to the unfair practices of gaming companies, as they are more susceptible to online manipulation. Data shows that minors in the European Union spend an average of CAD 580 per month on in-game purchases.

"Companies are well aware of the vulnerability of children and use tricks to lure younger consumers into spending more money," emphasized the director of BEUC.

The BEUC organization also stated that in recent years, video game producers have developed business models increasingly reliant on in-game purchases, including game currencies. A review by BEUC of 50 video games most played in 2023 shows that 21 of them (42%) included premium currencies. Of these 21 games, eight were available to children aged 12 and up.

European Commission spokeswoman Joerdis Ferroli acknowledged on Thursday (September 12, 10:00 AM ET) that the EC had received the organization's complaint, but only after thoroughly analyzing the allegations made against the companies will they be able to decide whether to take further steps.

The EC's spokesperson for digitalization, Thomas Regnier, reminded that companies operating in the digital world must comply with regulations stemming from the Digital Services Act (DSA). This also applies to digital stores that must, among other things, adhere to the obligation to assess the risks associated with selling specific digital products, including to children, and implement appropriate measures.

Statistics show that more than half of EU consumers regularly play video games. The majority are children—84% of players are aged 11-14. In 2020, the global revenue from in-game purchases amounted to over CAD 74 billion (approximately 50 billion euros), which constitutes about one-quarter of the revenue in the video game market. The video game sector generates more revenue from in-game purchases than the film and music industries combined.