Federal Trade Commission Vows to Investigate Loot Boxes During Congressional Hearing

Posted on: November 29, 2018, 04:29h. 

Last updated on: November 29, 2018, 04:29h.

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Expertise: Commercial Gaming.

Federal Trade Commission chairman Joe Simons told a Senate Commerce subcommittee on Wednesday that the FTC would launch an investigation into loot boxes and similar in-game purchases that have become commonplace in the video game industry.

Loot boxes have become a regular inclusion in many video games, providing an ongoing revenue stream for publishers after the initial release of a game. Players can purchase a box – either with real money, or sometimes through virtual currency earned in the game – and receive a random item, with some rewards being much rarer than others.

Hassan Calls for Federal Investigation

However, the practice has been controversial, with some psychologists and critics suggesting that these purchases constitute a form of betting, or at least offer a similar experience that could lead to problem gambling issues for players.

“The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those found in casinos and games of chance,” Senator Maggie Hassan (D-New Hampshire) wrote in a February letter to the Entertainment Software Rating Board (ESRB).

It was Senator Hassan who raised the issue once again during Wednesday’s hearing, which was primarily about data privacy issues.

“Loot boxes are now endemic in the video game industry and are present in everything from casual smartphone games to the newest, high budget releases,” Hassan said. “It’s time for the FTC to investigate these mechanisms to ensure that children are being adequately protected and to educate parents about potential addiction and other negative impacts of these games.”

Hassan followed this up with a request to Simons, asking if the FTC would further investigate the issue and report back. He replied with a simple “yes,” after which the hearing moved on to other issues.

Governments Take Interest in Video Game Purchases

The request for an investigation comes after several nations have taken steps to look into how in-game purchase mechanics should be classified. In the most dramatic example, Belgian authorities declared some loot boxes to be a form of illegal gambling, ordering companies to remove them from games or potentially face criminal charges.

In response to Hassan’s request, the Entertainment Software Association sent a statement to Polygon defending loot boxes, saying they “enhance the experience that video games offer.”

“Contrary to assertions, loot boxes are not gambling,” the statement read. “They have no real-world value, players always receive something that enhances their experience, and they are entirely optional to purchase. They can enhance the experience for those who choose to use them, but have no impact on those who do not.”

The ESRB has taken minor steps to self-regulate, including adding a rating descriptor that alerts consumers as to when a game includes in-game purchases and starting a program designed to educate parents about loot boxes.

Hassan told Variety that while she was happy to work with industry groups, government oversight may also be necessary in this area.

“While I have appreciated working with the ESRB on this issue, I have also said that the Federal Trade Commission has a responsibility to look at this issue,” Hassan said. “I hope the FTC will move quickly to begin their investigation and look forward to working with all parties on this issue.”