The EC’s Digital Fitness Check: Could additional legislation for Video Games Companies be on the horizon?

The European Commission’s Digital Fitness Check delves into the risks of integrating dark patterns and other addictive design features into gameplay to gamers’ mental, physical and financial well-being.

The Digital Fitness Check, published on 3 October 2024, explores the effectiveness of current EU consumer protection laws in safeguarding users in the digital environment. The report notes in particular the lack of direct regulation and suggests a need for greater safeguards – especially for vulnerable and underage gamers.

Addictive game design features

Throughout its consultation, a slew of addictive game design features – dubbed “attention-capture dark patterns” – were identified to the Commission by stakeholders as being particularly problematic, including:

• Pity timers, which increase the likelihood of winning after many losses;
• Pay-to-win or pay-to-skip mechanisms;
• Virtual items with uncertainty-based rewards, like loot boxes;
• Marketing practices related to virtual items and currencies, like bundling and pricing presentation; and
• Skin-gambling/betting, where players can wager in-game items on the outcome of competitive multiplayer videogames.

Loot boxes

The report focussed particularly on the use of loot boxes in game design, with many stakeholders arguing that loot boxes are akin to gambling and that their presence in game environments encouraged impulse buying. Loot boxes are not prohibited: the purchase of in-game assets with a randomisation element is subject to national consumer laws, with variation largely hinging on national approaches to determining the existence and validity of consumer contracts. In some instances, this means that the legal status of these transactions is not clear, and therefore neither is the question of the gamer’s entitlement to transactional information or the right of withdrawal under the Consumer Rights Directive (“CRD”).

Stakeholders highlighted calls for greater transparency as to the probability of receiving certain prizes from paid-for loot boxes. Suggestions for achieving this clarity included requiring that in-game purchases and loot boxes ought to be disabled by default and implementing a total ban on offering loot boxes or other pay-to-win features wherever children are likely to form part of the game’s audience.

The Commission has expressed in its previous Guidances that players should be made aware of the likelihood of receiving a random item whenever they purchase a loot box or other probability-based in-game item. This echoes industry body PEGI’s focus on transparency obligations and age-labelling in respect of in-game purchases and Ukie’s 11 Industry Principles on the use of loot boxes in video games.

Confusion over virtual item pricing

The report also drew attention to the use of “intermediate in-app virtual currencies” like coins, gems or credits, which are purchased with real-world currency – typically in bundles – and used to buy virtual items or other in-game assets. Stakeholders flagged to the Commission that there is a lack of transparency surrounding the value of virtual currencies, and that online worlds’ inherently immersive nature distorts gamers’ reality in such a way that they are less aware that their decision to purchase a virtual asset is ultimately a transactional decision to spend real-world currency.

In its Unfair Commercial Practices Directive 2005 (“UCPD”) and CRD Guidances, the Commission said that the price of virtual items available for purchase with virtual currency should also be expressed in real-world currency. There are however complications with this approach whenever virtual currencies adopt a so-called “mixed pot” system, wherein they can be earnt via gameplay as well as purchased with real-world currency. Gaming industry stakeholders flagged that it was not possible to give a true exchange rate between virtual and real-world currencies whenever this approach was taken.

Current regulation: does it go far enough?

The Digital Fitness Check noted that there is currently “no EU legislation that specifically regulates addictive design or specific features such as virtual items or in-app currencies”. The Commission referred back to the 2023 European Parliament resolution on addictive design, which concluded that neither the EU Digital Services Act 2022 nor the EU AI Act 2024  were sufficient in this regard.

Stakeholders on the consumer and children’s rights side suggested to the Commission that more clarity is required regarding the “acceptable boundaries of addictive design” and argued that addiction-inducing interface designs and functionalities should be turned off by default. But games industry respondents expressed concerns about the impact of prescriptive legislation or guidance on developers’ ability to freely design games and highlighted the benefits of existing tools like parental controls and time limits.

The Digital Fitness Check isn’t the only recent publication drawing attention to concerns about addictive game design: last month, the European consumer association BEUC and a number of national regulators complained to the European Commission about in-game purchases. The UK’s Advertising Standards Authority also published new guidance on ads for in-game purchases earlier this year. With similar concerns about the impact of game design on gamers’ wellbeing featuring in a trail of lawsuits cropping up around the United States, it is clear that regulators on both sides of the Atlantic have a lot to consider.