Online Gaming (Consumer Protection)

Patrick Grady Excerpts

Tuesday 13th September 2016 Westminster Hall

[Owen Thompson]

I absolutely agree. That is one of the critical aspects. I accept that steps have been taken to ensure that free apps are not necessarily advertised as free apps if there are in-game purchases, but that will not satisfy a relatively young child who simply wants to play the full content of the game they have downloaded or bought. If that requires a season pass or the purchase of additional content, it could become difficult to manage that child’s demands and expectations and to explain the terms and conditions and why they cannot have that additional content. We need to be particularly vigilant in that area.

[Patrick Grady (Glasgow North) (SNP)]

I, too, congratulate my hon. Friend on securing this important debate. On the subject of children, is it not the case that young children, in particular very young children, will often not even realise what they are doing if they are playing a game and sign up for an in-app purchase or some kind of enhancement? I met recently with StepChange Debt Charity in Glasgow, and it had numerous stories of parents faced with outrageous bills that they had no chance of ever affording. Their children were buying enhancements to the games without realising. Does my hon. Friend agree that as well as regulation, developers have to take some responsibility?

[Owen Thompson]

I entirely agree with my hon. Friend. The situation he describes is familiar to me. I am aware of a number of cases where that has happened. I accept that steps have been taken and there have been improvements, but it is still possible for young children, because they are playing these games online, to rack up large bills perhaps without realising what they are doing.

To illustrate the situation further, it is worth noting that the Advertising Standards Authority, which is the UK’s independent regulator of advertising across all media, applies the advertising codes, which are written by the Committees of Advertising Practice, and those codes include acting on complaints and proactively checking media to take action against misleading, harmful or offensive advertisements, including media used to encourage children to purchase and/or downloads apps. Specifically with children in mind, the rules contained in the codes are designed to ensure that adverts addressed to, targeted directly at or featuring children do not contain anything likely to result in their physical, mental or moral harm.

The ASA states that the way in which children perceive and react to ads is influenced by their age, experience and the context in which the message is delivered. It is therefore crucial that the adverts that children see, hear and interact with do not confuse, mislead or directly exhort them to make purchases. That said, with the best will in the world, if a young person is playing a game, they want to be able to access the content. If their friends are advancing faster than they are, it is likely that, regardless of any adverts, they will want to purchase further enhancements so that they can catch up.

This issue is not a new concern. In April 2013, the Office of Fair Trading launched an investigation into the ways in which online and app-based games encourage children to make purchases. It investigated whether there was general market compliance with consumer protection law and explored whether online and app-based games included commercial practices that might be considered misleading, aggressive or otherwise unfair under the legislation. As part of that, the OFT published several publications and sent out a stark warning that the online games industry must improve in this specific area.

In January 2015, “The OFT’s Principles for online and app-based games” clarified the OFT’s view of the online and app-based games industry’s obligations under consumer protection law. The principles focus on how games are advertised to children and state that consumers should be told up front about the costs associated with a game, in-game advertising and any important information, such as whether their personal data are being shared with other parties for marketing purposes. The principles also make it clear that in-game payments are not authorised and should not be taken unless the payment account holder, such as a parent, has given his or her express informed consent. Failure to comply with the principles could risk enforcement action. In the press release that accompanied the publication of its principles, the OFT spoke of its aim to raise standards globally. It said:

“Many games are produced abroad and the OFT has been leading the global debate on these issues. By working closely with international partners, the OFT has ensured that the principles are consistent with the laws of most key jurisdictions to help to raise standards globally.”

The OFT also published guidance for parents to help to ensure that children are not pressured into making in-game purchases and to reduce the risk of their making unauthorised payments.

Specifically, the OFT advice suggests that parents take various actions, including restricting payments, playing the game themselves, and being aware of automatic updates that may change either the game content or the associated terms and conditions. That is clearly sensible and good advice. I would certainly recommend that advice to any parent or gamer, although it is clear that it is not always practical in today’s modern world, where recording an appointment or making a call requires an app.

In terms of progress, it is encouraging that the Competition and Markets Authority, which has taken over the functions of the Competition Commission and certain consumer functions of the OFT, has an overarching responsibility for monitoring the gaming app sector to assess its compliance with consumer protection law. The CMA has affirmed the OFT’s principles for online and app-based games guidance. However, it is important to note that the original text was retained unamended and so does not reflect or take account of developments in case law, legislation or practice since its original publication. That is a missed opportunity.

In June 2015, the CMA concluded its work monitoring the children’s online and app-based games market and referred three online games to the Advertising Standards Authority for investigation on the basis that they may have breached the UK non-broadcast advertising code, by directly encouraging children to buy or ask their parents to buy extra game features. On 26 August 2015, the ASA ruled that both the “Moshi Monsters” and “Bin Weevils” games had breached the advertising code by putting pressure on children to buy a membership subscription and stated that the adverts in each of those games must not appear again in their current form. The third game was referred to the equivalent Spanish advertising self-regulation organisation.

On 4 June 2015, the CMA also published a short guide providing advice to parents and carers about the games, again prompting parents to assess purchases. It also released further information about progress overall. It stated that it had worked closely with the European Commission, the International Consumer Protection and Enforcement Network and national consumer protection authorities around the world and that, as a result, Google and Apple had made changes, in particular to strengthen payment authorisation settings and to ask games makers to stop describing games as free when they contain in-app purchases. Those changes are designed to prevent parents from being landed with unexpected bills from in-app purchases made by their children. The CMA at that point was encouraged by

“positive changes in business practices since we started looking at this sector”,

but was

“concerned that some games may directly encourage children to buy extra features during the game.”

Therefore, to present the Consumer Rights Act 2015 as legislation that can guide and help consumers and protect children and businesses may at this point be a little ambitious at best.

In noting that last point about the CMA’s work, it cannot go without saying that we should value the work of our European partners. My colleagues and I in the Scottish National party are very concerned about the effect of being taken out of the European Union, not only on our collaboration on issues such as consumer protection, but on the value of our world-leading video games industry. Gaming is one of Scotland’s many success stories, from creating the globally renowned “Grand Theft Auto” series to a whole host of other massive successes. There is a huge talent pool available that could see significant impacts as a result of the decision to leave the European Union. Scotland is internationally recognised for innovative game development and for its groundbreaking university courses. Clive Gillman, director of creative industries at Creative Scotland, recently said:

“Scotland’s games are played by millions all over the world—there is no doubt that Scotland has played a hugely significant role in establishing this industry as one of the leading forms of entertainment globally.”

Looking further into the future, we must address concerns and uncertainties about the status of European-based funding. Horizon 2020 is the European Commission’s largest primary funding programme for research and innovation, with a budget of €79 billion. It allocates funding through two-year work programmes administered by the Commission, and includes calls for tenders for interactive entertainment projects such as games. Creative Europe, administered by the European Commission, has a budget of €1.46 billion, of which €3.4 million has been set aside for the development of new video games with high circulation potential. In 2015, the UK was the largest beneficiary of that fund. I would welcome any clarity the Minister could provide on the likelihood of such funding for the games industry continuing in the post-Brexit environment. Concerns have also been raised about the validity of international licences and our ability to affect and be compatible with EU consumer law.

The last point I want to touch on is an incredibly important one. In an industry driven by talent, led by talent and entrepreneurs, we want to encourage a market supported by Government that is fair for both consumers and businesses. Right now, that is being put at huge risk, particularly in Scotland, by restrictive UK immigration laws and, crucially, the status of the post-study work visa. It is simply economic vandalism that the ability to travel, work and study across the EU is now at risk following Brexit, and it is a further lack of judgment by the Home Secretary to refuse Scotland an opportunity to take part in the trial of a new post-study work visa scheme. That is an appalling missed opportunity.

I look forward to the Minister’s response. This is a topic on which we could expand at endless length and I very much hope that progress can be made to recognise the ever-moving feast that we see within the games industry. With that, I simply say: game over.