By: Wesley Paisley
Lately video games are getting a lot of press, in NCAA , IPOs, and now regulation from three foreign trade regulation bodies. The contention is with in-app purchases with free-to-play models. The real issue is how to separate online gambling, online gaming, consumer deception, and addiction, in regards to children.
In 2012, Japan banned Kompu Gacha because it violated its Fair Trade Act. Japan operates similar to the United States in that it has an agency for general consumer complaints (Consumer Affairs Agency [“ CAAJ”]) and fair trade best practices (Japanese Fair Trade Commission [“JFTC”]), but unlike the U.S. it is acivil law system. Pay close attention to the CCAJ’s reports figure 3-3-7 to see a gradual rise of Gacha complaints, or get the white paper here.
Japan probably banned the Kompu Gacha system in part due to the violationSection 4(ii) because it was not transparent about future cost.
Furthermore, by looking at the article’s purpose you can see that it intends to stop misleading practices. However, the government was aware of this type of system for years, but with recent gamification of this concept it has led tochildren abusing the system. The excessive charges created from children are similar to Apple’s FTC case. Unlike Japan, the US has already regulated suchsystems.
In Europe, the approach to online games was less strict than in Japan. The Office of Fair Trade(“OFT”) sent out policies to the video game companies requesting them to make sure their F2P policy is following the Data Protection Act in January. Some have said that these policies are vague. The OFT sent out these policies because the laws that regulate addiction, software, and gambling don’t differentiate between online games.
However, due to the Enterprise and Regulatory Reform Act 2013, the Competition and Markets Authority (“CMA”) will take over for the OFT and the Competition Commission in regards to protecting specific consumers, so we should wait and see who will take the role in the future.
Over in the US, Apple recently settled with the Federal Trade Commission (“FTC”) in regards to its F2P games on its App store. However, the FTC decision is a little more policy based in that the FTC looks at the damage compared to the overall balance of good, at least according to J. Howard Beales.
Furthermore, the FTC went after Apple rather than a whole industry because the agency also has to examine its requirements for the best case possible and be careful not to overstep its boundaries. Unlike the EU and Japan that can afford to go after a whole industry or specific companies, the FTC has to be careful where they spend their resources.
Food for Thought
Other countries have also regulated the game industry but for parallel reasons.
Most consumer laws are geared to adults, because adults make most of the purchases. However, this policy creates problems when children enter into commerce with little knowledge of how things work and no real steps to get out of the trouble. All three governments used laws or regulations to stop the consumer confusion. Japan used custom to solve its problems rather than pass new legislation or create new memorandums to solve the problem. In this case I felt Japan comes first, US second, and EU last in regards to the best approach to regulating a minor loop hole in the industry.