The purpose of this House of Commons Library briefing paper is to provide a brief overview of the Consumer Protection from Unfair Trading Regulations 2008 (as amended).
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UK consumer spend on videogames is increasing: according to figures from the Entertainment Retailers Association (ERA), the total value of consumer sales was around £2.8m in 2015, up 10% on the year before.
The table below shows how spend is distributed between different formats and types of spending. Consumers in 2015 spent more on digital than hard-copy content. Spending was also considerably higher for online retailers compared to ‘bricks and mortar’ shops.
|Sales (£million)||% Market Share|
|‘Bricks & mortar’||£627||22%|
|Paying to…||Access content||£1,172||41%|
41% of consumer spend was on the right to access content, rather than owning it outright. In-app purchases are counted under the ‘access’ category.
There are 3 main pieces of legislation that impacts directly on purchases of this kind, namely:
- The Consumer Rights Act 2015
- The Consumer Protection from Unfair Trading Regulations 2008 (known as the Unfair Trading Regulations) (as amended by the Consumer Protection (Amendment) Regulations 2014)
- The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
Taken together, this legislation sets out the basic rules which govern how consumers buy and businesses sell goods, services and digital content (including online gaming apps) in the UK.
The role of the ASA
The Advertising Standards Authority (ASA) is the UK’s independent regulator of advertising across all media. It applies the Advertising Codes, which are written by the Committees of Advertising Practice. Its work includes acting on complaints and proactively checking the media to take action against misleading, harmful or offensive advertisements. In respect of children, rules contained in the Codes are designed to ensure that adverts addressed to, targeted directly at or featuring children do not contain anything that is likely to result in their physical, mental or moral harm.
In June 2015, the Competition and Markets Authority (CMA) concluded its work on monitoring the children’s online and app-based games market. The CMA referred 3 online games to the ASA for investigation, on the basis that these games 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 announced that its ruling that both the Moshi Monsters and Bin Weevils games breached the Advertising Code by putting pressure on children to buy a membership subscription. The ASA has stated that the adverts in each of these games must not appear again in their current form. The third game has been referred to the Asociación para la Autorregulación de la Comunicación Comercial (Autocontrol). Autocontrol is the Spanish advertising self-regulation organisation, equivalent to the ASA in the UK.
Review of children’s online games
Work undertaken by the OFT
In April 2013, the Office of Fair Trading (OFT) 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 that legislation. As part of this investigation the OFT published the following documents:
- Children’s online games – report and consultation
- Response to consultation
- OFT press release, Games industry should not pressure children to purchase, says OFT, dated 26 September 2013
- Children’s Online Games: A Survey of the Literature (dated January 2014)
- OFT press release, OFT investigates free children’s web and app-based games, dated 12 April 2013
Following this investigation, the OFT published its finalised principles for online and app-based games on 30 January 2014:
- The OFT’s principles for online and app-based games guidance, 3o January 2015
- Press release: Online games industry given two months to get house in order following OFT investigation (30.1.14)
“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 focused on the way in which games were advertised to children. The OFT principles state that consumers should be told upfront about costs associated with a game or about in-game advertising, and any important information such as whether their personal data is to be shared with other parties for marketing purposes. The principles also make 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.
The OFT also published guidance for parents to help make sure that children are not pressured into making in-game purchases and reduce the risk of their making unauthorised payments.
Work undertaken by the CMA
On 4 June 2015, the CMA published a short guide providing advice to parents and carers about these games: Buying features in online games: advice for parents and carers.
On the same day, the CMA published a press notice, CMA refers three children’s online games to the ASA. 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. As a result of this collaboration, 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-game purchases. These changes are designed to prevent parents being landed with unexpected bills arising from in-game purchases made by their children.
The following recent PQs are of relevance to this debate:
Anna Turley: To ask the Secretary of State for Culture, Media and Sport, what discussions she has had with Nintendo about incidences of trespass or disrespecting of cemeteries or religious sites caused by players of Pokémon Go.
Matt Hancock: Many people in the UK enjoy playing Pokemon Go and most act responsibly whilst doing so. It is important that all players abide by the law and respect their surroundings. During the summer Pokemon Go’s developers in the US, Niantic, added some new warnings to the game’s loading screen, for example reminding players not to trespass and not to enter dangerous areas. Owners or managers of specific sites who are concerned about players visiting a nearby PokeStop or Gym are able to use Niantic’s report system to request that the stop is removed from the game. Meanwhile, we are in touch with representatives of Niantic to discuss features of Pokemon Go and the advice they provide to consumers in the UK.
Barry Sheerman: To ask the Secretary of State for Business, Innovation and Skills, what assessment his Department has made of the effectiveness of legislation for protecting children from in-game selling and promotions when playing games online.
Nick Boles: The Government is committed to ensuring that consumers are properly protected and that children’s vulnerability and inexperience is not exploited by aggressive commercial practices. We welcomed the Office of Fair Trading’s (OFT) investigation into whether children have been unfairly encouraged to spend money in online games and apps, in breach of consumer laws. The OFT’s subsequent Principles for Online and App-based Games, which are based on the Consumer Protection from Unfair Trading Regulations (2008), were published in January 2014. The Competition and Markets Authority subsequently referred 3 games to the Advertising Standards Authority for further enforcement action. The Government continues to take a close interest in this issue.
Library briefing, Consumer Rights Act 2015
Library briefing, Consumer protection from Unfair Trading Regulations 2008
Library briefing, The role of the Advertising Standards Authority
Ofcom research, Adult’s media use and attitudes, 2016
GameTrack / Ipsos, GameTrack Digest, Q1 2016
Selected Newspaper Articles
Note: some links are to Nexis News – you need to access these via the Library’s subscription.
- Guardian, 1 October 2015, Could the new Consumer Rights Act spell good news for gamers?
- Financial Times, 26 August 2015, Watchdog raps online games over messages to children; Advertising code
- Independent, 9 August 2015, They’re only having fun but the cost could get out of control
- Daily Telegraph, 5 June 2015, Online children’s games investigated
- Guardian, 19 May 2015, Apps’ data collection from children comes under UK privacy review
- Telegraph, 30 January 2014, Apps ‘must warn parents on hidden charges’
- Guardian, 27 February 2014, European commission warn on in-app purchases in children’s games
Documents to download
Print Version (84 KB , PDF)
Dame Margaret Hodge and Kevin Hollinrake have secured a Backbench Business Committee debate on economic crime, scheduled for Thursday 2 December in the Main Chamber.
Further increases in prices may lead to slower economic growth as consumers’ purchasing power erodes.