Well done! You’ve successfully managed level 1 (if not, it would be best that you cross level 1 before proceeding further) and now know how to navigate the choppy waters of gambling law(s) when sailing in a ship full of loot boxes. Unfortunately, the voyage is not yet over and up ahead lies the consumer law passage – possibly treacherous and certainly untested for a vessel carrying loot boxes.
In this second level, we analyze best way(s) to traverse through the potentially choppy waters of consumer laws unscathed.
All aboard (the introduction)!
Gambling laws and consumer laws are, arguably, two sides of the same coin since they are both predominantly concerned with the welfare of the society and aim to protect consumers / users from harm. However, the two are substantively different in that they both have different remedies and recourses to address consumer concerns. Globally, the general concern so far regarding loot boxes has been – (a) the perception that it could serve as a gateway to the more stereotypical gambling and, (b) the potential for harm to children / minors since they are usually the largest demographic involved in gaming.
It therefore becomes imperative to analyze the impact that the current consumer laws in India may have on the provision of loot boxes in online games, particularly considering that India is a nation of over 450 million gaming users / players (as of 2023) and therefore consumer protection laws are of particular importance and interest to the Central Government.
Is Loot Box an Unfair Gaming Practice?
Section 2(47) of the Consumer Protection Act, 2019 (“the Act”) defines an ‘unfair trade practice’ as a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice. Section 2(47) thereafter enumerates, on an illustrative basis, various practices which tantamount to such prohibited unfair methods or unfair or deceptive practices. A few notable illustrations of such practices include:
- conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest (Section 2(47)(iii)(b)).
- manufacturing of spurious goods or offering such goods for sale or adopting deceptive practices in the provision of services (Section 2(47)(vi)).
Insofar as the first limb above is concerned, it could be argued that the conduct of a ‘game’, i.e., a loot box, has the purpose and direct effect of promoting the sale and use of another product / business interest, i.e., the online game within which the loot boxes can be purchased. As such, a violation of Section 2(47)(iii)(b) of the Act may perfunctorily be made out.
However, this argument, when looked at in detail, is not as watertight as it may appear at first blush. This is specifically because loot boxes are merely one component / feature within such online games, which comprise a myriad of other features, and the game itself is nonetheless enjoyable even if one were to not purchase such loot boxes. For instance, loot boxes, in the form of randomized ‘player packs’, are a long-standing, relevant and arguably attractive part of the ‘Ultimate Team’ feature in the erstwhile-FIFA (now, EAFC) series of games, as users can strengthen their respective teams by ‘packing’ a rare and powerful player which is not otherwise readily or easily procurable. However, this series of football simulation game also simultaneously provides users the option to play and enjoy numerous other features involving no loot box elements. Likewise, a user may even play and succeed in the said ‘Ultimate Team’ feature without availing / expending monies on loot boxes. As such, loot boxes are arguably not the sole, or even predominant, driving factor in users’ decisions to purchase the erstwhile-FIFA series of games, thereby rendering Section 2(47)(iii)(b) of the Act inapplicable. It would amount to putting the cart before the horse in arguing that loot boxes, which form a part of the larger gaming ecosystem, acts as a promotional vehicle for the game itself of which it is a small element. Thus, to say that a loot box element of a game promotes the game itself is a fallible argument.
The Dark Pattern(s) of It All
The second limb highlighted above (i.e., Section 2(47)(vi)) comes into the fold as one may argue that the provision of loot boxes amounts to adoption of deceptive practices or patterns in the provision of services. This school of thought, which essentially seeks to classify loot boxes as a deceptive design or “dark pattern”[1] and calls for their regulation under consumer protection laws as opposed to clubbing them under the gamut of gambling, has increasingly gained traction across other jurisdictions.
Specifically, this school of thought argues that loot boxes are a subset of monetary dark patterns, i.e., instances of players being deceived into spending more money than they expected or anticipated.[2] In this regard, the following illustrative questions may serve as guideposts to ascertain whether a practice constitutes a monetary dark pattern:[3]
- How likely is the player to regret having spent money to play the game?
- How likely is the player to “lose track” of how much money they spent while playing the game?
- How likely is it that the player will inadvertently spend money in the game?
- Is the player aware of how much money they will have to spend to achieve their goals in the game?
It is from this fountain that the dark pattern of ‘monetised rivalries’ has evolved and come to the fore, with some[4] asserting that loot boxes, to the extent that they provide rewards which have in-game utility, are a ‘pay to win’ mechanism. This dark pattern of ‘monetised rivalries’ thus brings within its fold the act of pitting users against one another and exploiting the resultant competitiveness by offering paid-for upgrades or rewards to enable users a better or stronger competitive edge within the game. The crux of this argument is that by preying on users’ innate competitiveness and through audio-visual cues which heighten the excitement and adrenaline rush associated with opening a loot box, online game developers are openly and brazenly manipulating users in a manner which maximizes revenue in ignorance of users’ interests.
Other dark patterns often cited in the context of loot boxes include ‘grinding’[5] and ‘currency confusion’[6]. The former (a temporal or time-oriented dark pattern) is argued to be a way of coercing the player into needlessly spending time in a game for the sole purpose of extending the game’s duration (often used in the context of free-to-play games), whereas the latter refers to forcing players to convert real money into in-game currency for use in in-game microtransactions with the intention of confusing the user as to how much money they actually spent.
However, the strength of anti-loot box arguments based on anticipated existence of these dark patterns is questionable, insofar as investment of time is a natural aspect and consequence of most games nowadays, of which users are well-informed (through, for instance, extensive game reviews charting out the total number of hours required for completion of a game or to unlock key milestones, information about the game available publicly, etc.). Thus, the provision of a loot box, the rewards of which may in some (and not necessarily all) instances serve to expedite the game completion, would arguably not amount to a deceptive practice having the effect of subverting user / player autonomy and causing player harm. Likewise, insofar as the dark pattern of ‘currency confusion’ is concerned, game developers may argue that a virtual or in-game currency merely seeks to implement a uniform (in terms of maintaining one standard virtual currency format, as opposed to online / in-game transactions being conducted through various fiat currencies) in-game payments system for all players, thereby holistically serving users’ interests as opposed to causing user harm. Firstly, the argument of ‘monetised rivalries’, when contextualised and considered in the larger context, falls flat since it is akin to saying that just because tools are being made available to players to purchase so as to better enable them to play the game, the same is an unethical ‘dark pattern’. Secondly, there is no ‘pattern’ prevalent in such actions by the game developers – it is simply an accessory service being provided to players. Lastly, such an argument would be akin to saying that a shop providing football gear is set up in a football academy and players competing against each other have the option to pay and get better gear to improve their game or skill. Merely because an act or activity has the potential to be abused or used incorrectly would not by and in of itself render the activity as bad in fact or in law.
Thus, so long as the player is amply and clearly informed of the nature of the loot boxes, the costs thereof (if any), the potential rewards and the fact that such reward(s) are not assured, then there would not be any basis to label loot boxes as a deceptive practice or a dark pattern falling afoul of the Indian consumer laws.
But Are Dark Patterns Even a Concept in India?
Keeping aside the merits (or lack thereof) of the aforementioned attempts to paint loot boxes as monetary (or even temporal) dark patterns, we are aware that a question quivering on the tongues of a fair few of our readers (especially those outside of India) is regarding the recognition and regulation of dark patterns in India, including the specific dark patterns highlighted above.
Dark patterns have recently been recognized and sought to be governed by the Government of India by way of the Guidelines for Prevention and Regulation of Dark Patterns, 2023 (“the Guidelines”), issued by the Central Consumer Protection Authority (a statutory body formed under the Indian Consumer Protection Act, 2019). These Guidelines define a ‘dark pattern’ as any practice or pattern designed to mislead a user into doing something he/she did not originally intend by subverting autonomy and decision making. The Guidelines also place a clear and outright prohibition against engaging in dark patterns, be it in the course of trade (i.e., ‘unfair trade practices’), advertisement (i.e., ‘misleading advertisements’) or generally in violation of consumer rights (i.e., the right to ‘consumer awareness’, ‘to be informed’, etc.).
However, while the Guidelines evidently include a broad and categorical prohibition against engaging in any dark pattern, this prohibition is qualified to extend only to those dark patterns as identified in Annexure 1 of the Guidelines. Annexure 1 lists dark patterns such as ‘false urgency’, ‘basket sneaking’, ‘confirm shaming’, ‘forced action’, ‘subscription trap’, ‘interface interference’, ‘bait and switch’, ‘drip pricing’, ‘disguised advertisement’ and ‘nagging’. However, monetary dark patterns such as ‘monetised rivalries’, ‘currency confusion’, or any temporal dark pattern such as ‘grinding’ have not been listed in Annexure 1 to the Guidelines, nor do they appear to be covered under the definitions of any of these dark patterns listed in Annexure 1. As such, it is arguable that, as on date, the provision of loot boxes in games made available in India does not fall afoul of the notified Guidelines vis-à-vis dark patterns. However, this does not account for the possibility of future amendment(s) to Schedule 1 to include forms of dark patterns that may be argued to interdict loot boxes.
Land Ahoy(?)
There is no clear signs of land up ahead purely for the reason that loot boxes, as a concept, have not yet caught the eye of either the Indian regulators or the government. As such, neither consumer laws generally nor gaming laws specifically have evolved just yet in India to cater to and regulate loot boxes, resulting in gaming companies finding themselves in a potential regulatory doldrum when it comes to loot boxes and consumer laws.
Notwithstanding the present lack of regulatory or legislative disinterest on this, all gaming companies can keep the following general principles in mind when it comes to consumer laws and navigating them with loot boxes:
- Transparency is key – ensure that there are no “hidden” terms & conditions, costs, etc. This could also include disclosing the nature of the potential rewards (i.e., aesthetic, functional, etc.), probabilities / odds of receiving a specific reward, etc.
- Upfront and clearly visible information is necessary – it is best if the user / consumer is made aware, at least generally, of the nature, purpose, cost, and risk/reward implications of the in-game loot boxes beforehand, through, for instance, clearly visible and easily accessible terms of use.
- Simple language for millions – Considering that India is a large demographic with multi-lingual players, gaming companies would be best placed to ensure all terms & conditions, information about loot boxes, etc. is drafted in the English language (unless the target audience is from a specific sub-region of India where a particular language is more prevalent) and is worded in an easy-to-understand manner (i.e., avoiding using convoluted, winding, or legal jargon).
- Tools for protection of minors / parental control – Enabling tools and mechanisms that can not only protect minors against potential online harms, but also provide ability to parents and guardians (including spending limit locks, etc.) would go a long way in projecting a gaming company as a responsible one in the Indian market.
- Wider choice of loot boxes – Gaming companies can also consider expanding the scope and form of access to loot boxes beyond the traditional form of real money payments (for e.g., accumulating in-game points, completing mini game challenges, skillful play, etc.).
The observance of these broad principles will hold the ship, full of loot boxes, steady while passing the consumer laws passage in India, and atleast until more specific or clearer laws and regulations are in place.
Tacking forward, but what’s next?
In level 1, we’ve put forth the argument that ‘loot boxes’ cannot be treated as gambling whether under India’s existing gambling laws or under the common public understanding of gambling, and that the term ‘loot box’ itself is a misnomer continuing on from the early days of the ‘gachapon’ in Japan.
In level 2, we have navigated the dark pattern maze in India and considered the impact of consumer protection laws in India on the provision of loot boxes. While there appear to be certain aspects of loot boxes which may be considered monetary or temporal dark patterns as highlighted above, loot boxes may not technically (due to the restrictive nature of the Guidelines) or even substantively (due to the overbroad and sweeping nature of some of the identified dark patterns) fall afoul of the current framework on regulation of dark patterns in India. With that said, given the ever evolving and adaptive nature of pro-consumer regulations (such as the Guidelines), the dark patterns space in India is definitely one to keep track of going forward.
Level 3 awaits you now, in which we confront the potential issues stemming from India’s leap into the data protection regime, the digital competition regime and the rising concerns of minor safety.
[1] Scott Goodstein, When The Cat’s Away: Techlash, Loot Boxes, And Regulating “Dark Patterns” In The Video Game Industry’s Monetization Strategies, 92 U. COLO. L. REV. 285 (2021). Available at: https://scholar.law.colorado.edu/lawreview/vol92/iss1/6
[2] Chris Lewis, Staffan Björk, & José P. Zagal, Dark Patterns in the Design of Games, FOUND. OF DIGIT. GAMES 2013, 39 (2013), http://www.fdg2013.org/program/papers/paper06_zagal_etal.pdf [https://perma.cc/7QQD-SKX2].
[3] Id.
[4] Id.
[5] Id.
[6] Supra n1 (Goodstein).
