Explained: New EU CPC Principles on In-game Currencies
7 min read
“CPC Network’s key principles on in-game virtual currencies”
TL;DR: The EU Consumer Protection Cooperation Network has released a set of principles for games companies to follow when using in-game virtual currencies, with the aim of improving compliance with consumer protection law. This includes stating the value of the item in ‘real-world’ money.
Here’s our overview of the guidance and how it might affect the video games industry in the EU and in the UK. If you enjoy this article and want deeper analysis or tailored advice and support, then get in touch – we’d be happy to discuss how Flux Digital Policy’s expertise can meet your needs. Even if you’re just curious about it all, we'd love to chat.
Why has the CPC produced these principles?
The principles are intended to address concerns raised by the European Consumer Organisation (BEUC). BEUC and the CPC are concerned that in-game virtual currencies may obscure the real-world price of in-game items – that is, how much money a player would have to spend to have enough virtual currency to purchase an item within the game. This could be a breach of European consumer law because presenting information in a way that causes players to spend more than they otherwise would have would be likely to unfairly impact their transactional decisions. They have set out seven principles that they consider would protect consumers from these effects.
How does this affect the games industry in the EU and the UK?
Many games, particularly in the mobile sector, use virtual currencies in a range of ways. Some virtual currencies can only be obtained through a purchase and therefore act as a straightforward proxy for real-world money, others can only be earned in-game (which would be out of scope of the principles), and many fall between by featuring an earnable currency that can also be purchased. As such, these principles affect an awful lot of games companies.
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Abiding by the principles (summarised below) is likely to entail changes to a variety of systems underpinning in-game purchase mechanics, and these will vary according to how virtual currencies are implemented. Depending on a company’s current practice, these changes could be significant. While the principles technically do not have the same legal weight as the law that they seek to reflect, in practice they will be followed by each jurisdiction’s regulator with responsibility for enforcing consumer protection law, and compliance with them will therefore be expected.
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This guidance only applies within the EU. In the UK, the closest equivalent is the Committee of Advertising Practice’s guidance on advertising in-app purchases, which provides self-regulatory advice on complying with consumer protection law in marketing. Now that the Digital Markets, Competition, and Consumers Act has been passed, the UK consumer protection legislative landscape is diverging from the EU and there is no requirement for them to be aligned. However, this divergence is an important consideration for games companies acting in both markets (which is practically everyone in the industry) because care must be taken to avoid inadvertent breaches of one regime in attempts to comply with another.
What are the principles?
The guidance gives seven principles to abide by, with examples of practices to follow or to avoid. They are preceded by a statement that the CPC considers purchasable in-game currencies to be ‘digital representations of value’, and that transactions using these currencies are subject to the same level of consumer protection law.​
1. Price indication should be clear and transparent
The real-world money price of in-game digital content or services must be provided in a clear and comprehensible manner. This applies whether or not currency can be earned in-game as well as purchased and must be based on the full price a player would need to pay for the required amount of currency, without any quantity discounts or the like.​​
2. Practices obscuring the cost of in-game digital content and services should be avoided ​
As an extension of the above, this prohibits ‘layering’ or mixing different virtual currencies to obscure the price of an item. Using multiple currencies for purchasing in-game items or requiring several exchanges (e.g. real-world money to currency 1, then currency 1 to currency 2) makes it harder to understand the real-world price.
​3. Practices that force consumers to purchase unwanted in-game currency should be avoided ​
Some games offer currency for purchase in increments that do not match the in-game prices for items – e.g. sales in increments of 50, with purchases in increments of 70. This could lead to players being forced to buy more currency than they need, so the principle would require the sale of bundles matching item values and the sale of specific amounts of currency.​
​​4. Consumers should be provided with clear and comprehensible pre-contractual information​
Since in-game virtual currencies are considered by the CPC to be digital representations of value, any pre-contractual information required in real-world money transactions would be necessary for in-game currency transactions.
​5. Consumers’ right of withdrawal should be respected
Similar to the above, purchases of digital content and services using in-game currency would require the same rights of withdrawal (and waivers thereof for immediate use) as those made using real-world currency. This includes a 14-day cooling-off period for any unused in-game virtual currency.
​​6. Contractual terms should be fair and written in plain and clear language
Following on, the same requirements for fairness and clarity for contractual terms as real-world transactions apply to virtual currency transactions. This includes prohibitions on ceasing, modifying, or withdrawing the purchased content in an unfair manner, or preventing account access without the ability to contest.
7. Game design and gameplay should be respectful of different consumer vulnerabilities
​Due to an increased risk of distorting behaviour by disconnecting real-world money from in-game item purchasing, the vulnerabilities of certain groups of players should be considered in the design of purchasing processes. This is particularly the case for high-spending players and children (and any game not intended exclusively for adults should be expected to have a significant under-18 player base).
What is the practical impact on games companies?
These principles outline a strict approach to compliance with consumer protection law, in more definite a manner than has previously been seen. As such, few games will be fully compliant with every principle. Depending on how an individual game uses in-game virtual currency, there could need be considerable changes to one or more processes.
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Pricing and Value
The requirements to include statements of real-world currency value wherever items are sold with purchasable in-game currency could mean significant changes to in-game stores. Similarly, the instruction to allow customers to purchase specific amounts of in-game currency (rather than preset amounts) could require changes to how this currency is sold in the first place, as well as changes to increments of currency bundles and/or item prices. Where multiple currencies are used, arriving at a compliant position could require an entire change of approach (which may come with its own complications in terms of customers who have already purchased content under the existing arrangement).
​Contractual information
Principles relating to the provision of information at and ahead of the use of in-game currency will affect what and how details are displayed in in-game stores. The application of cancellation and of cooling-off periods for unused currency may mean changes to processes so that players can exercise these rights. This may be something that some companies have never needed to consider for in-game storefronts before.
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Vulnerable Consumers
The statement that any game not exclusively intended for adults should expect a significant part of its player base to be under 18 may mean that several games companies now find themselves in scope of this principle when previously they might not have. Approaches to mitigate risks to children affect a wide range of game mechanics (such as the prominence and wording of ‘buy now’ messaging), so a lot of content may need revising. The concept of excessive spend is likely to be more well-known and considered, but the principles increase the necessity for companies to examine their processes and customer base.
​​How can Flux help me?
The strict direction set by these new principles may mean that some companies will potentially need to engage with these issues more deeply than before, or even for the first time. The diverse nature of approaches to in-game purchasing means that the impact on each company will be different; we can help you understand what these principles mean for your games and how the EU and UK positions intersect or diverge.
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As consumer protection in this space continues to evolve in the UK (chiefly through the Digital Markets, Competition, and Consumers Act enforcement programme by the CMA) and the EU (through these principles and the proposed Digital Fairness Act) we can keep you on top of key developments and provide advice or support for any opportunities to engage with policymakers.
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We have a high level of expertise in this area; our team includes a policy expert who authored CAP’s self-regulatory principles on in-game purchasing and subsequently worked on consumer protection issues around pricing more broadly. Regardless of your size, reach, or platform, Flux is perfectly placed to help.
Author: Dr Celia Pontin, Director of Public Policy and Public Affairs