The following is a list of laws providing an overview of laws and regulations that aim to protect consumers from microtransactions.
Regulations in the United States
The Federal Trade Commission Act (FTC Act): The FTC Act prohibits companies from engaging in unfair or deceptive practices, including those related to in-app purchases. These practices include failing to clearly disclose the costs of purchases, making it difficult for consumers to cancel purchases, and encouraging mass spending.
In recent years, the FTC has taken action against video game companies that engage in deceptive or unfair practices related to in-app purchases. For example, in 2014, the FTC settled with Apple over allegations that the company allowed children to make unauthorized in-app purchases without their parents' consent. As part of the settlement, Apple agreed to refund a minimum of $32.5 million to affected consumers that were billed for in-app purchases incurred by children. Apple was also required to modify its in-app purchase practices to ensure that users have a clear understanding of the costs associated with in-app purchases. Similarly, in 2019, the FTC settled with video game publisher, Epic Games, over allegations that the company misled consumers about the cost of in-app purchases in addition to using dark patterns that encourage unintended in-game purchases in its popular game, Fortnite. As part of the settlement, Epic Games agreed to pay $275 million in refunds to consumers and to modify its in-game purchasing practices to ensure that consumers have clear information about the costs of in-app purchases.
The Children's Online Privacy Protection Act (COPPA) regulates the collection of personal information from children under the age of 13 by online services, including video games. COPPA requires companies to obtain parental consent before collecting information from children, which includes information used to make online in-app purchases.
The Better Business Bureau's National Advertising Division (NAD): The NAD is a self-regulatory body that plays a role in protecting children from potentially deceptive and unfair practices related to microtransactions by reviewing advertisement claims for truthfulness and accuracy. The NAD has issued guidelines for video game companies that use in-app purchases, including requirements for clear and conspicuous disclosures of costs and the nature of the purchase. The guidelines also require video game companies to avoid misleading advertisements, such as baiting consumers into believing the benefits of in-app purchases or failing to disclose additional costs associated with the purchases.
Regulations in Asia
Regulations in China
The Chinese Consumer Protection Law regulates consumer protection in China and places extremely strict guidelines, including those related to in-app purchases. The law requires companies to provide clear and accurate information about the cost and nature of in-app purchases. In 2016, all games published in China are required to go through a licensing and approval process through the National Press and Publication Administration (NPPA). The NPPA is extremely strict with loot boxes due to the similarities shared with gambling. Below is a list of restrictions enforced by the NPPA.
The contents within a loot box must be obtainable through other in-game means
Activities that encourage compulsion loops are not allowed
Game developers must disclose the percentage probability of obtaining an item from a loot box. These percentages must reflect reality. For example, an item with a 10% chance of dropping must drop within opening 10 loot boxes. This guarantees that a player would receive an item after opening a certain amount of loot boxes. A strict limit on how many loot boxes a player can open each day, with a clear in-game display notifying the player of that quantity.
Additionally, in 2019, the Chinese government implemented regulations that limits the amount of money players can spend on in-game purchases. The maximum amount ranged from $28 to $57 depending on age.
Regulations in Japan
The Consumer Affairs Agency (CAA) has issued several self-regulatory measures to address several points of criticism in regards to in-game purchases in the form of gatcha mechanics. These regulations include the following.