On August 28, 2024, the CFPB issued a consumer advisory warning that many video games and “virtual worlds” increasingly resemble traditional banking and payment systems that allow the storage and exchange of billions of dollars in assets, including virtual currencies.
The advisory emphasizes that these “non-traditional” markets have many of the risks associated with real-world transactions, as well as their own unique risks, but without gaming companies providing protection against such risks.
“Parents have reported an overwhelming amount of unexpected gaming transactions on their credit or debit card statements in consumer complaints to the Federal Trade Commission and Consumer Financial Protection Bureau,” the CFPB said.
According to the advisory, an estimated 45.7 million children in the U.S. – or more than 80 percent of all children ages 5 through 18 – play video games. Gamers, their parents, or their guardians have reported being scammed or having assets stolen on gaming platforms, the CFPB said, adding that people who are scammed said they have little recourse with gaming companies when they are victims of scams or theft. The CFPB said that game publishers contend that they have no obligation to compensate players for financial losses, even when a game is suspended or a consumer’s account is closed.
While the advisory references unnamed “recent public reports [that] have underlined the harms incurred through the industry’s use of design tricks, technology, and surveillance data to entice players into spending money,” the CFPB is presumably referencing its own prior report, “Banking in video games and virtual worlds,” released in April 2024. That report identified risks associated with in-game financial transactions and the heightened risk the Bureau believes they present to young people whose financial habits are still forming.
The advisory asserts that many games require some form of payment to be stored on the gaming account to allow for easy conversion to dollars and that gaming companies may use those in-game currencies to conceal the true cost of transactions in-game. In addition, the CFPB reported that players usually are prompted to purchase game currency outside of game play, which drives up costs by separating those decisions from the players’ spending decisions while playing a game.
The advisory also alleges that many games use gambling-like design tricks to hide the odds and encourage compulsive spending.
The advisory offers suggestions to gamers or their parents, including using gift cards or other payment options to block surprise charges, utilizing parental controls on payments, choosing games without in-game purchases, and limiting limit data collection and sharing on a child’s account.
Finally, the advisory solicits consumer complaints about problems with a financial service or product in video gaming. As we advised earlier this year when the CFPB issued its report on banking in video games, video game makers are now on notice that the Bureau will be scrutinizing any financial products and services that they offer.
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