Game Over for Loot Boxes in New Proposed Legislation

Advertising Law

A new federal bill would ban loot boxes, the controversial in-game rewards that have recently made headlines.

Loot boxes typically contain something of value specific to the video game in which they appear—such as a new skill, accessory or weapon for a character—and can be either won or purchased. Over the years, games have become dependent on loot boxes as a source of revenue, and a black market has even developed for loot boxes due to their value.

The recently introduced Protecting Children from Abusive Games Act would eliminate that moneymaking source by prohibiting loot boxes and pay-to-win microtransactions in video games aimed at those under the age of 18, as well as those “whose developers knowingly allow minor players to engage in microtransactions.”

To determine whether a game targets minors, factors such as subject matter and the game’s visual content would be considered in a process similar to that of determining whether a website targets those under the age of 13 for purposes of the Children’s Online Privacy Protection Act.

Enforcement of the proposed legislation would fall to the Federal Trade Commission (FTC) (with violations constituting an unfair trade practice in violation of Section 5 of the FTC Act) and state attorneys general, who could file suit on behalf of their residents against game manufacturers.

“When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction,” SB 1629’s sponsor, Senator Josh Hawley (R-Mo.), said in a statement about the measure. “And when kids play games designed for adults, they should be walled off from compulsive microtransactions. Game developers who knowingly exploit children should face legal consequences.”

Loot boxes have been in the news in recent months, including with respect to a study that found links between loot boxes and “problem gaming” habits, a lawsuit against video game phenomenon Fortnite filed by the parent of a child user over its loot boxes, and an FTC workshop on the issue scheduled for later this year.

To view the Protecting Children from Abusive Games Act, click here.

Why it matters: Currently before the Senate Committee on Commerce, Science and Transportation, the bill has already received pushback from the video game industry’s trade organization, the Entertainment Software Association. “We look forward to sharing with the senator the tools and information the industry already provides that keeps the control of in-game spending in parents’ hands,” the group’s acting president and CEO, Stanley Pierre-Louis, said. “Parents already have the ability to limit or prohibit in-game purchases with easy-to-use parental controls.”



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved