The problem is all too common; leaving your smartphone or iPad with your child to play some games, only for them to ask you moments later “can I buy this?”. Has your child ever asked you for money, or better yet, used your credit card without your permission to purchase something in a video game? If so, chances are they were purchasing a “loot box”.
“Loot box” is a term used to describe the exchange of real currency for something of virtual value. Loot boxes have been implemented into many popular video games such as Fortnite, FIFA 19, Candy Crush Saga, Overwatch, Star Wars Battlefront II, and Counter-Strike: Global Offensive. A loot box’s contents are random, and there is no guarantee of what an individual could receive when they purchase the box. For instance, in FIFA 19, a user can open a FIFA Pack that contains a player worth little or hit the jackpot and pack a player worth millions of coins. In this sense, a loot box resembles a lottery or game of chance you would find in a casino.
Loot boxes are controversial as many children engage in an activity that appears to be similar to the gambling that adults engage in. Whether loot boxes fall under the legal definition of gambling has yet to be thoroughly explored and dealt with in Canada. Nonetheless, other jurisdictions have adopted a more combative and restrictive approach to the issues that loot boxes pose.
The Netherlands Gaming Authority (“NGA”) launched a study into loot boxes to examine their operation. The NGA found that some loot boxes have integral elements that are similar to slot machines, especially when they use multiple visual and sound outputs to achieve a ‘near miss’ effect. Loot boxes that have these elements, among other characteristics, are comparable with blackjack or roulette in terms of addiction potential. As children have less impulse control, these games are arguably more addictive. This comparison between gambling and loot boxes is suitable given that some games will offer its users free loot boxes when they initially start playing the game, mimicking the complimentary vouchers you would find in Vegas’ casinos. The study also reveals that once minors are exposed to game of chance mechanisms, there is a significantly higher risk that they will have problems with them at a later stage in their lives, given their addictive potential. Following the study, The NGA had ruled that several of the video games they investigated were in violation of their gambling laws and must be changed.
Belgium’s Gaming Authority (“BGA”) also conducted a study into loot boxes. The study reveals the various psychological techniques that video game developers use in luring players to engage with loot boxes. Activision has a patent designed to influence users into purchasing loot boxes. Their patented technology monitors the behaviour of users to identify which in-game item they are most interested in. Following this, the user is pitted against a higher-ranked opponent with the item they desire. The goal is to incent the less experienced player to purchase either that item or the chance of acquiring that item through a loot box. Another psychological tool that games benefit from is in-game currency, which has the effect of disconnecting a user from the real world. As users are trained to think in in-game currencies like coins or tokens, they can become out of touch with the real value associated with these fictional currencies. As a result, the BGA had ruled that the loot boxes they examined were illegal and recommended criminal prosecution if they were continued to be offered.
Australia has also found links regarding the psychological aspects of gambling and loot boxes. In the U.S., Senator Josh Hawley recently introduced The Protecting Children from Abusive Games Act, which would “[ban] the exploitation of children through “pay-to-win” and “loot box” monetization practices by the video game industry.” While this legislation has not been passed, there is a growing recognition that loot boxes, if not regulated, should at least incorporate protective measures.
Several common recommendations have appeared in these jurisdictions. Perhaps the most common is that games with loot boxes should be limited to users of legal gambling age. Further, games with loot boxes should display warnings about the presence of loot boxes and come equipped with a financial expenditure ceiling. Although this may not solve the problem entirely, it is a start in fighting against the predatory nature of loot boxes, particularly as it involves children who are vulnerable to their addictive power and unable to exercise the judgment to resist them.
In Canada, there has been no legislation or action taken to deal with loot boxes. As such, Canadian consumers may have that sort of protection in food and marketing laws that address false advertising to children, but nothing that as of yet addresses loot boxes. Given their popularity, a discussion on loot boxes is deserved. There are already numerous stories of children accumulating hundreds and even thousands of dollars of debt on their parent’s credit card, with the parents unaware of what they and their children have gotten themselves into.
If your child makes a purchase on your credit card it may be next to impossible to recover the money. The contracts with the game apps may absolve them of any liability or requirement to refund money for the purchase of loot boxes based on the initial consent provided when the parent downloaded the game. Currently, in the absence of legislation regulating loot boxes in Canada, we recommend that the best protective measure is a proactive one. Setting up accounts with parental settings can prevent your child from accruing hundreds of dollars on your credit card. Please click on the links below informing you how to set up a parental account on your child’s gaming platform.
SET UP A PARENTAL ACCOUNT
LOOT BOX STUDIES
Senator Hawley’s Legislation: https://www.hawley.senate.gov/senator-hawley-introduce-legislation-banning-manipulative-video-game-features-aimed-children
CONSUMER HORROR STORIES
‘My son spent £3,160 in one game’: https://www.bbc.com/news/technology-48925623
Pembroke parent gets $8K Xbox bill after son racks up charges: https://www.cbc.ca/news/canada/ottawa/pembroke-xbox-bill-8000-1.3397534
You Spent $1,500 on Virtual Bazookas? Kids Are Splurging on Digital Goods
Video of UK Parliament Questioning on Loot Boxes: https://www.youtube.com/watch?v=V_O7bZVMf08&frags=pl%2Cwn
Parents Beware: That Videogame Under the Tree Might Ask for More Money