As we observed in our last blog post, legal complaints regarding microtransactions in video games continue to increase in both their complexity and frequency. We suggested the US Federal Trade Commission Order against Epic Games indicated the FTC likely had reason to believe game developers hire psychologists to opine on design elements, such as user interface, notifications, loot boxes, and other microtransactions.
As we predicted, a new complaint filed in Arkansas explicitly makes that allegation against many of the top game developers in the world.
Casey Dunn v Activision, et al
Filed by two parents individually and on behalf of their child, the Complaint names as Defendants Activision Blizzard, Inc., Epic Games, Inc. and Ubisoft Montréal, among several other high-profile gaming corporations, and alleges the Defendants manufactured, published, marketed, and sold video games and related services (including the popular games Fortnite and Call of Duty, among others), that were “specifically developed and designed” to cause addiction in minors and young adults. The implication is that the Defendants leveraged addictive design in order to maximize profits.
In essence, the Complaint alleges the Defendants intentionally implemented psychologically addictive features in their games to keep users playing, allowing the Defendants to increase their revenue by way of “predatory monetization schemes,” including selling loot boxes, pay-to-win models, and “rubber-banding” (a tactic used to adjust the cost of in-game items to ensure players will purchase them). Additional features are also allegedly included to keep players engaged and addicted, such as algorithms and feedback loops. Interestingly, the Complaint also references several patent designs, which it alleges were incorporated to increase in-game spending and contribute to higher risk consumer behaviours.
The Complaint relies on 14 causes of action, including two strict liability counts, four counts of negligence, outrage, violation of the Arkansas Deceptive Trade Practice Act, deceit/fraudulent misrepresentation, deceit/fraudulent omission or nondisclosure, fraudulent inducement, civil conspiracy, and loss of consortium. Contained within these are allegations the Defendants breached:
- the Arkansas Deceptive Trade Practices Act, which prohibits “deceptive and unconscionable trade practices”;
- the Arkansas Prize Promotion Act, which seeks to (a) ensure consumers are provided with all relevant information necessary to make an informed decision about sweepstakes, contests, and prize promotions; and (b) prohibit misleading and deceptive prize promotions; and
- the Children’s Online Privacy Protection Act, which, among other things, requires adequate notification to parents about collection of personal information of users under the age of 13.
Interestingly, the Complaint appears to be one of the first to specifically identify so-called “whales.” The term is borrowed from casino lingo to denote a player who spends far more money than others, and pejoratively implies an inability to control their own spending. In our view, the Plaintiffs’ counsel’s use of terms such as “whales” is a sort of shibboleth, and further sign that plaintiffs and their counsel are becoming increasingly dialed into the video game industry and its specificities and eccentricities.
Canadian legislation and court actions
Several provinces in Canada have legislation similar to the Arkansas Deceptive Trade Practices Act, prohibiting unfair or unconscionable acts and practices, including British Columbia’s Business Practices and Consumer Protection Act,which was relied upon in a recently certified class action against Electronic Arts Inc. and Electronic Arts (Canada) Inc involving allegations related to loot boxes.[1] In that case, the Court concluded that a reasonable cause of action existed with respect to some of the allegations raised in the action:
… the defendants mislead class members by omission by failing to disclose, or inadequately disclosing, that they structured loot boxes to make obtaining valuable or desirable items difficult or nearly impossible, while at the same time promoting the purchase of loot boxes to improve game performance and enjoyment, with the effect that class members were deceived or mislead into spending money in a fruitless attempt to obtain those items.[2]
Additionally, the plaintiffs were granted to leave to amend their claim to include material facts to support their allegations of unconscionable acts or practices. Interestingly, while the pleadings included allegations the game developers included addictive game elements, such as loot boxes, to increase the time and money players spend in their games, the Court found that those allegations were not connected to the deceptive act or practice claims.[3]
The Court noted that “video game addition plays no role in the BPCPA claims against the defendants.” The absence of an express cause of action likely drove the Court’s finding. However, our view remains that—like the Plaintiffs in the Arkansas Casey Dunn case—plaintiffs are becoming increasingly sophisticated in their claims and it’s only a matter of time before addictive elements become frequently raised. Indeed, it’s possible that a sort of “boilerplate” set of claims form the basis for most claims against video game developers.
Risks to developers
Ultimately the emergent risks to developers this year are individual civil claims, class actions, and even regulatory charges increasing in both number and sophistication.
Further, these types of claims appear to be building off of one another, paradoxically becoming more focused (using video game industry specific language) and broader (containing multiple causes of action across disparate subject matters).
As this area of law is developing rapidly, we will likely see in the near future either amendments to existing legislation or jurisprudence addressing the conduct of video game developers and publishers.
For more information, and all your legal needs in this and other developing areas of electronic entertainment, please contact the authors.
[1] Sutherland v Electronic Arts Inc, 2023 BCSC 372.
[2] Ibid at paras 84–85.
[3] Ibid at para 8.
