David Schollenberger, Partner and Head of Gaming and Leisure Team at Healys LLP, reports on the UK Office of Fair Trading’s release of proposed principles for online social gaming.
In September 2013 the Office of Fair Trading in the UK (OFT) released proposed principles (‘Principles’) for online social gaming companies in response to concern about certain practices common in the industry. The principles arose following an investigation study commenced in April 2013, to determine whether common features of web and app-based games complied with current consumer legislation or were otherwise misleading, aggressive or unfair.
The OFT examined 38 web-based and app-based games, reviewed submissions from parents and industry stakeholders and held meetings with businesses and trade associations to get additional input. The feedback from these submissions and meetings were the basis for drafting the Principles.
The Principles are not intended to be binding or act as law, or to create any new legislation, but rather to produce a set of guidelines to make clear the OFT’s views on the obligations of businesses under existing consumer protection law and what social games suppliers should do to avoid being the subject of enforcement action for violation of consumer law.
The Principles have been put out to the public for consultation for eight weeks, which will end on November 21, 2013. The OFT will then refine the Principles and formally publish a final version in January or early February, 2014. After publication, there will be a grace period until April 1, 2014, after which time businesses in violation of the Principles will be targeted for enforcement actions.
OFT study concerns
Following the study, the main concerns expressed by the OFT were, in its view, a lack of transparent, accurate and upfront information about costs and the distinction between spending in-game currency and real money. Further concern was expressed about children being encouraged by in-game statements or images to make additional real money purchases, leading children to make these purchases directly or persuading their parents to make purchases on their behalf.
The OFT found that some games include features which were unfair and aggressive and to which children might be particularly vulnerable. By way of example, it cited games that implied that if the child did not make an in-game purchase, that he or she would be less popular, or games where the child is made to feel guilty that unless certain purchases were made, he or she is not properly feeding or looking after a pet character or would be letting other players down.
Summary of Principles
In a nutshell, the Principles require clearer, more prominent and upfront disclosure about relevant aspects of the overall game cost, pricing, commercial intent and the game suppliers business. Further, in their games content, games suppliers must not mislead game users on required payments, use aggressive practices with children to pressure them, directly solicit children to purchase additional content or get them to persuade their parents to do so, or take payment unless it has been specifically authorised and there is informed consent.
The eight Principles, in brief, are specifically as follows:
Principle 1: Information about costs
The first Principle requires that information about costs should be provided clearly, accurately and prominently up-front before the consumer begins to play, download or sign up, or agrees to make a purchase. This includes the initial cost of signing up, subsequent costs that must be paid to continue playing the game and optional extras. An example of non-compliance is where a game is advertised as ‘free’ but in reality the player cannot access content integral to play without making in-game purchases.
Principle 2: Information about the game
The second Principle provides that information about the game should be clear, accurate, and provided up-front, before the consumer begins to play, download or sign up, or agrees to make a purchase. Games must prominently disclose cancellation rights, use of personal data and third-party advertising.
Principle 3: Information about the business
The third Principle states that information about the business should be clear, accurate, prominent and provided up-front, before the consumer begins to play, download or sign up, or agrees to make a purchase. A game website that provides little or no information about the business, or who to contact about complaints, is unlikely to comply.
Principle 4: Commercial intent
Principle four requires that the commercial intent of any in-game promotion of paid for content, or promotion of any other product or service, should be clear and distinguishable from game play. A noncompliant game would be where game play and messages intended to encourage players to pay for premium content are intertwined and indistinguishable. An example given by the OFT is the message in a game: “Buy a Dachshund puppy” (where the puppy is bought with in-game currency), and in the same game another message “Buy extra bones for your puppy” (where bones are a form of in-game currency bought for real money).
Principle 5: Misleading impressions that payments are required
The fifth Principle is that a game should not mislead the consumer by giving the false impression that payments are required or are an integral part of the way the game is played, if that is not the case. Some games give little or no prominence that the game can be continued for free and the player believes that they must pay to progress.
Principle 6: Aggressive practices
Principle six sets out that games should further not include practices that are aggressive, or which otherwise have the potential to exploit a child’s inherent inexperience, vulnerability or credulity. An example given is the message in a game “Your seagull is hungry! Feed him ice cream or he will be unhappy,” where ice cream is only available for real money purchase only and sardines are available to feed the seagull at no additional cost.
Principle 7: Solicitations to children to purchase or persuade others to purchase
Principle seven mandates that a game should not include direct exhortations to children to make a purchase or persuade others to make purchases for them. An example given of this practice is where, during a free trial version of a game, there are repeated encouragements to upgrade to the full version of the game which must be purchased for real money.
Principle 8: Informed consent for payment
The eighth and final Principle is that payment should not be taken from the payment account holder unless authorised. A payment made in a game is not authorised unless informed consent has been given by the account payment holder. A practice which this principle would prohibit is where a consumer authorises a one-off purchase of the app and subsequent purchases during game play are authorised by default without further notice or consent of the account holder.
Analysis and burden on games suppliers
The principles are intended to correct some unfortunate abuses by the industry, to protect children from themselves, and to appease angry parents who claim that they are paying increasingly higher bills for games charges that they, or their children, understood were free to play or minimal in cost.
Although the consumer laws being applied are not new, enforcement to date has been varied and inconsistent. The guidelines will bring more clarity to what practices could lead to an enforcement action. The Principles, at least initially, are likely to add substantial cost to games suppliers, who will need to have their legal and compliance teams screening every feature of their existing and future games to ensure full disclosure and compliance.
Suppliers will have to modify games where they are not compliant. As a positive, the Principles will level the playing field between games suppliers who have already been avoiding these practices and those who have been exploiting them, and provide more clarity of what is, and isn’t, legally acceptable going forward.