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Volume XII, Number 23

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UK Regulator Issues New Guidance on In-Game Advertising

What is the UK advertising regulator’s position on the costs of mystery items, bonus time, and levelling up? Several platforms urgently need to change their game mechanics to comply with new rules.

Virtual currency is staple fodder in the world of gaming in order to purchase more “lifes”, items of assistance or time to complete a level. Now, increasingly, game developers are also providing opportunities for players to reach into their real-world wallet and purchase virtual currency.

It is this crossover with the real world that has caught the regulator’s attention. The UK Advertising Standards Authority’s ‘Committee of Advertising Practice’ (“CAP”) and its broadcast sibling (the “BCAP”) have recently published guidance (“Guidance”) considering the interpretation of the UK Codes of Broadcast and Non-Broadcast Advertising (“Codes”) in relation to in-game purchases.

It is worth noting that this Guidance has not amended the Codes. Instead, it provides a useful framework to enhance businesses’ understanding of their obligations when conducting in-game advertising. The Codes, whilst not legally binding, are underpinned by UK consumer protection law – organisations are therefore well advised to follow them to both the spirit and the letter.

The scope of the Guidance is limited to inducements to purchase virtual currency or in-game items, but only if they are solely obtained by transactions involving real-world money (i.e., the call to action is that the consumer should spend their hard-earned real-world cash to buy tokens to use in the game). For example, within the popular “FIFA” franchise, a consumer’s purchase of “FIFA Points” for use in-game (a virtual currency exclusively tied to real-world spend and which cannot be earned purely though playing the game) would fall under the remit of the Guidance. Importantly, communications which encourage the player to obtain virtual currency that can be earned as well as purchased is “very unlikely” to be considered advertising.

Some of the key takeaways from the Guidance are:

  • Real-world costs: The cost of the currency must be clear, particularly where the price is bundled so the price per unit changes according to the size and price of the bundle, e.g., 50 coins for £5 and 70 coins for £6. Statements such as “cheapest” should refer to the overall price, rather than the price per unit.

  • In-game storefronts: Where in-game storefronts are used (virtual marketplaces to buy digital items), gamers must be able to determine easily the real-world equivalent value.

  • Odd-pricing: This is where increments of two types of related purchase do not match each other; for example, virtual currency available in units of 50 credits, and items available in increments of 20 credits – meaning that players must purchase more currency than they need to spend on the items. Given this may mislead consumers into making a transactional decision that they otherwise would not have done had they received more information, developers should take extra care to not mislead gamers.

  • Savings claims: Claims regarding savings on bundled items should be representative of the savings that are made generally by players, rather than inflating the savings based on the most expensive price-per-unit equivalent.

  • Adverts presented in urgent game situations: Advertisers are advised to avoid placing “undue pressure” on players and be prepared to justify use of advertising mechanisms (e.g., pop-up ads) that are time-limited (for example) in relation to the game context.

  • Random-item purchasing: If it is not certain what the player will receive in return for their money, marketers should be careful not to mislead as to the likelihood of receiving rare items.

  • Time-limited offers: Advertisers must not suggest offers are time-sensitive if they will be made available again.

  • Advertising the game: Outside of the game, adverts should be upfront about whether in-game purchasing is part of the game. Where adverts contain purchased items or features, care should be taken to not imply these are part of the basic game.

Failure to comply with some of the above are ‘hardcore’ restrictions in consumer law legislation. So failure to follow the rules could even lead to the commission of a criminal offence.

Loot Boxes

In the last few years, there has been growing discussion on “loot boxes” (in-game items whose content is only revealed to the gamer post-transaction) resulting in many concerns being voiced when the draft Guidance was published.

In 2017, the Gambling Commission highlighted that, properly structured, loot boxes did not constitute gambling under current UK legislation, a position they affirmed in 2019, as reported by the BBC.

Since then however, there has been a rise in concern on the impact of loot boxes, resulting in the House of Lords Gambling Committee publishing a report stating that loot boxes should be brought within the ambit of the Gambling Act 2005. A call for evidence on the impact of loot boxes followed, which has since closed having received over 30,000 responses. In July 2021, the Minister for Digital and Culture updated that an “external rapid evidence review” had been commissioned following the call for evidence and the Government’s response would be “published in the coming months.” Last month, in the House of Lords debate on “Gambling-related Harms,” it was noted the response will set out “the next steps” they intend to take.

In the Practice Statement on the new Guidance, CAP and BCAP stated that the question of whether random-item purchasing should be classified as gambling is outside of their remit. They amended the draft guidance, in response to the comments on loot boxes, to remove any unintentional implication that random-item purchasing amounted to gambling. Importantly, where purchases come under gambling legislation, the corresponding advertising communications will be subject to the gambling specific rules under the Codes.

Practical Advice

It is clear that in-game purchases are currently a hot topic of discussion. Advertisers of games or apps that feature virtual currency of any sort should review the mechanics of this in line with the Guidance, the UK Advertising Codes and consumer protection law to ensure compliance. Additionally, those games including loot boxes should keep an eye out for the response to the Government’s call for evidence and any legislative changes that may follow.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 337
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About this Author

Carlton Daniel Intellectual Property Attorney Squire Patton Boggs London, UK
Partner

Carlton Daniel advises on intellectual property rights, commercial contracts and consumer regulatory law. He handles both contentious and non-contentious matters.

Carlton has a particular focus on providing advice to clients in the advertising, marketing and media sectors, and also to businesses operating in the food and drink, retail, automotive and tech sectors.

Intellectual property rights: Carlton has significant experience advising on the exploitation and protection of trade marks, designs, copyright, databases, confidential information and patents. As...

44 20-7655-1026
Dillon Ravikumar Associate Attorney Leeds England UK Intellectual Property Patents Squire Patton Boggs Law Firm
Associate

Dillon Ravikumar is an associate in the Intellectual Property & Technology Practice Group, based in Leeds. Dillon advises on a broad range of commercial contract, intellectual property and consumer law issues.

+44-113-284-7544
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