The European Consumer Organisation (BEUC) and 22 of its members across Europe have filed a complaint against video game companies accusing them of misleading gamers on their platforms into spending money. Here we’ll discuss more about the case and see why gaming companies often get into trouble for their business practices.

The BEUC registered its complaint with the European Commission and the European Network of Consumer Authorities, accusing several gaming companies including Roblox and Fortnite publisher Epic Games of tricking gamers. It accuses these companies of maximizing consumer spending by using premium in-game currencies and argues that in-game purchases should be displayed in real currencies so that the buyer knows their real price.

“BEUC’s members have identified numerous cases where gamers are misled into spending money. Regulators must act, making it clear that even though the gaming world is virtual, it still needs to abide by real-world rules,” said BEUC Director General Agustin Reyna in a statement.

Children Are Vulnerable to Overspending on Games

Children are especially vulnerable to overspending on these in-game purchases. “Today, premium in-game currencies are purposefully tricking consumers and take a big toll on children. Companies are well aware of children’s vulnerability and use tricks to lure younger consumers into spending more,” said Reyna.

The BEUC report said that on an average children in Europe spend €39 ($43) per month on in-game purchases. “While they are among the ones playing the most, they have limited financial literacy and are easily swayed by virtual currencies,” it said in its report.

Are Video Game Companies Tricking Gamers into Spending More?

To be sure, video game companies are facing scrutiny across the world, especially concerning in-game purchases and gaming addiction among children. Gaming is becoming increasingly popular among kids and it is estimated that over 80% of all children between 5-18 play video games in the US.

In its report last month, the US Consumer Financial Protection Bureau accused many games of using “gambling-like design tricks to hide the odds and encourage compulsive spending.”

It added that “These design tricks can lead to increased spending, especially when a game is connected to a mobile payment service or credit or debit card.” The report also said that many parents have reported unexpected gaming transactions in their card statements to the Federal Trade Commission and Consumer Financial Protection Bureau.

Video Game Companies Are Facing Scrutiny

Roblox which is quite popular among kids is embroiled in several controversies and is facing lawsuits over allegations of child labor and its targeting of kids’ gaming addiction. Earlier this year, Stefano Corazza who heads Roblox Studio seemed to justify what seems like obvious child labor arguing it helps kids make money.

However, these kids are paid in Roblox’s in-app currency known as Robux. Apart from Roblox, these can also be used elsewhere on the internet including on some third-party exchange and gambling sites. These gambling sites are used by regular Roblox users (again, almost entirely children) too, setting them down an extraordinarily dangerous path of addiction.

Earlier this year, Atlanta-based law firm Bullock Ward Mason filed a class action lawsuit against Roblox on behalf of several parents. The lawsuit accused Roblox of misleading advertising, labor law violations, false advertising, and exploitation of child labor by offering them a “worthless digital currency” for their labor.

Could Europe Go After Video Game Companies Next?

Meanwhile, the BEUC has accused the video game companies of breaking European Union consumer protection laws and has called upon regulators to act. While it hasn’t specifically listed what actions it wants regulators to take against video game companies, its release calls out the deceptive pricing used for in-game currencies which are particularly difficult to comprehend for children.

It also says that “Consumers are often denied their rights when using premium in-game currencies, tied to unfair terms favouring game developers.”

While it is not yet clear what action European regulators would take on the complaint, the region has been at the forefront in targeting tech companies and ensuring fairness for customers.

Europe Has Come Down Hard on Tech Companies

The EU’s Digital Markets Act aims to ensure fairness for small businesses and consumers from big tech companies like Amazon, Apple, and Alphabet who are well known for their monopolistic business practices.

The region’s General Data Protection Regulation (GDPR) privacy rules are among the most stringent globally and effectively bar Meta Platforms from training its large language models (LLMs) using data from users based in Europe.

Meta had to offer an ad-free paid version of Facebook and Instagram in the EU amid concerns over user privacy, while Apple would initially not offer its Apple Intelligence features in the region as it engages with regulators over issues related to data. Most recently, the EU’s top court ruled that Apple and Google pay billions of dollars in antitrust and tax cases.

The gaming industry saw rapid growth in 2020 and 2021 amid the COVID-19 lockdowns. As most other entertainment avenues were closed, people turned to gaming and online streaming.

The video game industry has also shown signs of stabilization and even as the growth has slowed down – it is still expected to grow at high double digits until the end of this decade. The industry’s strong growth, especially the growing usage (read addiction) among children is bound to attract scrutiny from regulators sooner rather than later.

While Europe might not go as far as China which has imposed limits on how long kids can play video games as not only are these measures undemocratic, but are difficult to impose, it won’t be surprising if the region comes up with new regulations to ensure transparency in in-app purchases.