Regulatory spotlight: virtual currency vs. consumer law (part 2)

We have written previously on the intersection between in-game monetisation and player protection. You can find our piece on the BEUC complaint here, as well as our 2025 Horizon Scan for Games and Esports here (where we used our crystal ball to predict future regulatory action in this space). Finally, see our note on digital content withdrawal rights here. 

What has happened?

In a 21 March 2025 press release (link here), the EU’s Consumer Protection Cooperation Network (the “CPC Network”) announced:

1. an enforcement action against Star Stable Entertainment AB (“Star Stable”) for unfair commercial practices in the context of virtual currency and minors; and 
   
2. the publication of a set of principles to promote transparency and fairness in the online gaming industry’s use of virtual currencies (the “Principles”).

We reported on the Principles on a breaking news basis here (part 1). This article (part 2) takes a deeper dive into the legal nuances (and practical implications) of the Principles. As gaming lawyers, we often advise clients on the legal issues that arise when using virtual currency as payment for in-game content. For those not so familiar with UK and EU consumer law, this is important because the consumer protection regulatory regime (granting enhanced rights to consumers) attaches to B2C contracts, and will vary in its application depending on the contract type (whether it is for digital content, digital services, subscriptions or goods). 

We will not restate the more self-explanatory items in the Principles below, but will instead use our experience to flag interesting new learnings and the practical implications for developers and publishers. We will also publish a short alert (part 3) on the Star Stable case, given it serves as a helpful reminder on rules around advertising to minors within virtual environments, before providing a more detailed overview of the enforcement regime in this area (part 4, to put this latest activity in context and enable publishers and developers to better understand the risks involved in operating virtual currencies and in-game economies). Part 4 will also consider the UK’s position in a little more detail, as distinct from that in the EU.

What are the Principles? 

To recap on the Principles at a summary level:

1. Price indications should be clear and transparent – real currency prices should be displayed when selling items via in-game shops.
   
   
2. Practices obscuring the cost of in-game digital content and services should be avoided – this means avoiding the use of (among other things) multiple virtual currencies in combination and exchange practices. 
   
   
3. Practices that force consumers to purchase unwanted in-game virtual currency should be avoided – practices like “odd pricing” should be avoided, so that consumers should be able to purchase the exact amount of virtual currency they need to obtain a particular in-game item. 
   
   
4. Consumers should be provided with clear and comprehensible pre-contractual information – the standard consumer pre-contractual information requirements should be complied with in the context of contracts involving virtual currencies. 
   
   
5. Consumers’ rights of withdrawal should be respected – 14-day withdrawal rights should be provided as required for all in-game purchases.  
   
   
6. Contractual terms should be fair and written in plain and clear language – the standard consumer ‘fairness’ rules should be applied to in-game purchase contracts. 
   
   
7. Game design and gameplay should be respectful of different consumer vulnerabilities – vulnerable consumers should not be exploited, particularly minors.

Do I need to consider the Principles if virtual currency is earned for ‘free’ (e.g. via gameplay)?

The Principles are stated to apply when virtual currency can be bought with real currency (i.e. “Hard VC”). If the applicable virtual currency can only be earned for free (e.g. through gameplay) (“Soft VC”), then the CPC Principles are said not to apply. This is the first point of interest. 

EU consumer law introduced the flagship concept of “payment with data” (under EU Directive 2019/770). The principle is that a consumer will be considered to have paid for ‘free’ digital content or services if the consumer provides data in excess of what the seller requires in order to supply the content or uses that data other than to provide the applicable content or services (unless the seller is required to do so under law). The Principles fleetingly refer to this concept in the withdrawal rights section. Separately, there is also an argument that committing a significant amount of time and effort (i.e. playing a game) to earn Soft VC could constitute payment and create a binding B2C contract. In each case, the end-result is a contract that triggers fundamental EU consumer law rights: pre-contract information obligations, warranty rights, withdrawal rights and more. However, it is interesting to note that implementation of the “payment with data” concept across EU Member States has varied in practice. Some have fully integrated it, while others remain cautious due to concerns around privacy and data protection. The European Data Protection Supervisor has also raised concerns about treating personal data as an economic device, emphasising its status as a fundamental right under the EU Charter. This highlights the ongoing debate between digital innovation and individual rights, and we expect EU courts to approach this concept with scrutiny. 

In any case, whilst the Principles cover these obligations in the context of Hard VC, we would remind publishers that some consumer rights considered in the Principles could certainly apply to Soft VC and other free in-game items. Taking a practical example, if an EU consumer pays for an in-game item with personal data by signing up to marketing communications in return, that consumer has conformity rights in relation to that item – the item must be provided in line with its description, be fit for purpose and of the required quality, as well as being updated to maintain conformity. Consumer remedies also exist for breaches of these rules. This may come as a surprise to some publishers who seek to disclaim all liability for Soft VC and ‘free’ in-game items. 

It is possible that the CPC Network’s narrowing of the definition of Hard VC in the Principles to exclude virtual currency acquired other than with real currency is: (a) deliberate because the Principles are focused on activity resulting in more serious consumer harm (i.e. where real-world money is involved); or (b) accidental, as might be suggested by the fleeting reference to contracts involving the provision of personal data in the withdrawal rights section. In any case, though, given the Principles are quite explicit on this point it seems that for now publishers and developers can discount Soft VC when assessing compliance with the Principles, although they should still be mindful of broader consumer law issues relating to Soft VC.

How should I present prices for in-game items? 

If an in-game item can be bought with Hard VC, the Principles explain that the real price must be clearly and prominently disclosed. This is not particularly surprising, nor is it new law. We have reported on this previously in our BEUC complaint article (see item #3). The concern is that Hard VC prices can cause confusion as to the true cost of an in-game item, in breach of consumer law. However, market compliance with this obligation tends to be mixed. Interestingly, the Principles take this several ‘transaction steps’ further, and expressly state that the following in-game store listings must also have a real price:

• Virtual currency that can be bought with Hard VC
  
• Any in-game items that can be bought with virtual currency that has itself been purchased with Hard VC 

This would significantly impact many in-game stores that sell Hard VC, requiring a wholesale update to include real prices across the board. This is also challenging where Hard VC is sold on a discounted or bundled basis (very common in the market), particularly if there is no simple conversion rate to calculate real pricing, or when Hard VC has been purchased a considerable time in the past and the price has since changed (e.g. due to general inflationary pressure). The Principles address this to an extent by requiring publishers to exclude all discounts and promotional offers when calculating a real price. However, the result is that: (a) compliance with this principle would require significant developer time and resource to calculate and disclose real pricing; and (b) the result might be real world prices that are very difficult to understand for consumers given the multiple factors (such as discounts or the simple passage of time) that will have affected the value of their Hard VC. As such, there is a real risk that in an effort to comply with the Principles some publishers adopt pricing practices that become more (rather than less) misleading. 

It is worth noting that various EU bodies have published criticisms against existing pricing practices. In France, UFC-Que Choisir and CLCV (alongside 20 other European consumer associations) filed a complaint against seven game publishers for misleading commercial practices. These bodies called for EU and national authorities to impose stricter consumer information requirements for in-game purchases. According to UFC-Que Choisir, virtual currencies encourage players to purchase digital content when they do not have a clear understanding of its real value. Since these virtual currencies are only available in bundles (with prices varying based on quantity and discounts), they consider that this practice obscures the actual cost of digital content, making it difficult for consumers to assess their purchases. This is clearly quite relevant to the Principles, but we will have to see whether the Principles have the desired effect in practice (given the aforementioned complications with implementing them in practice). 

What is the position on contract formation when spending Hard VC? 

Distinguishing exactly when a contract is formed or not is difficult in this context. A commonly adopted industry position is that once the Hard VC is purchased, any subsequent transaction using that Hard VC (a “Hard VC Transaction”) is not a new contract to which consumer law rights apply. Rather, the use of Hard VC reflects the exercise of a contractual right under licence in relation to the original purchase contract. BEUC takes the view that a Hard VC Transaction should be considered a new B2C purchase contract (attaching consumer rights). Turning to the Digital Fairness Fitness Check, the European Commission stated that the determination of the existence of a new B2C purchase contract (thereby triggering consumer rights) is subject to national law requiring a case-by-case assessment: “i.e. the legal status of these transactions is not certain”. 

The CPC Network seem to side with BEUC and takes a fairly definitive view on this point, which would seem to expand significantly upon the more cautious approach taken by the European Commission. In the Principles, they advise against denying a consumer’s statutory withdrawal rights in the context of Hard VC Transactions. If it is true that each Hard VC Transaction (going down the chain of transactions from the original purchase of the Hard VC through to the ultimate purchase of an in-game item) is a new B2C purchase contract, this would have seismic consequences for the industry. Publishers and developers would need to engineer in digital content withdrawal waivers and tick boxes across their in-game stores in order to waive refund rights (see our previous note on what a digital content waiver is here). To make matters more complicated, many developers and publishers operate within the confines of intermediary platforms (say, the Apple App Store) who control (at least the final stages of) the purchase environment and who implement their own refund policies that must be respected. Unless those platforms embed these processes in their transaction flow, compliance in practice might not be technically possible for mobile publishers.

It is clear that the CPC Network believes that consumers are exposed to harm when publishers assert that a consumer has no statutory rights in relation to an in-game item that is acquired using Hard VC (their consumer rights having been exhausted on purchase of the Hard VC). However, it is not absolutely clear on what basis the CPC Network believes that a single transaction involving real-world money (the original purchase of Hard VC) can lead to several subsequent, distinct consumer contracts (each with cancellation rights attaching to them). It is, at the least, a bold interpretation of Articles 9-16 of the Consumer Rights Directive (being the supporting legislation that the CPC Network cites).

But is it a digital content contract or a digital services contract? 

This is a hotly discussed topic amongst lawyers in the games sector. Turning to the Principles, we note they advise against denying withdrawal rights for in-game currency that remains unused. If the purchase of Hard VC constitutes a digital content contract, then if the withdrawal right has properly waived using the respective process, there is no obligation for a publisher to refund any amounts under those rights. The withdrawal right is simply disapplied in full. However, the position under the Principles is more indicative of a digital services contract. If a consumer exercises their withdrawal right in connection with a digital services contract, they should be refunded - on pro rata basis - an amount which reflects the proportion of services performed during the withdrawal period.

As such, it seems the CPC Network is proposing that a purchase of Hard VC is actually a purchase of a digital service. The European Commission guidance on the Consumer Rights Directive (“CRD”), is less clear on this point, and is arguable either way: “In-game micro-transactions (in-app purchases) in such games that enhance the playing experience of the respective user, such as virtual items, would normally qualify as contracts for online digital content […]  In contrast, the purchase of premium content that expands the online gaming environment would represent a new digital service that complements the original one”. If we accept that purchasing Hard VC creates a digital services contract, this again could significantly impact the industry. It would adjust the withdrawal right and refunds position, meaning UX changes, T&Cs updates and adjusted refund mechanics for developers and publishers. Moreover, it would alter the position on statutory warranty rights, requiring the digital services position as opposed to digital content position to be adopted.

This then raises an interesting question as to the status of a contract for a subscription for an ongoing supply of virtual currency and other in-game items, but that might need to wait for a further article… 

Recommendation to avoid use of multiple Hard VCs and exchange processes

The Principles advise against the use of multiple Hard VCs or conversions of Hard VCs when selling in-game content. It is worth bearing in mind that there is no outright prohibition on incorporating these features. However, implementing such mechanics in a manner that is compliant with the Principles and does not result in an overly cumbersome UX (and, importantly from a legal perspective, is straightforward for consumer to understand) is likely to be challenging in practice – publishers and developers would need to re-assess their virtual currency ecosystem to ensure it affords appropriate transparency. For example, where users are able to ‘craft’ items using a mixture of real currency, Hard VC, Soft VC and/or other digital content, pricing such items could become extremely problematic, compounding the issues raised above in relation to having to price using real currency.

Recommendation to avoid ‘odd-pricing’

This refers to the practice of selling Hard VC in bundled increments which do not align with the costs for Hard VC Transactions. The Principles recommend allowing players to purchase the exact amount of Hard VC required for a transaction, such that the player is not left with unspent Hard VC following conclusion of the transaction. You can see an illustrative example in our BEUC complaint article (see item #2).  

It is challenging for the CPC Network to show a consumer law breach in relation to this aspect. There is no specific prohibition on odd-pricing. The CPC Network suggests that this is a form of unfair commercial practice (which is possible) but they also include a reference to the prohibition on aggressive commercial practices. The latter is a fairly high threshold prohibition to meet, and it could be argued that odd-pricing is unlikely to meet that threshold unless there was a true element of harassment, coercion or undue influence which significant impaired the consumer’s freedom of choice. This is particularly the case if these transactions are now to be considered digital services contracts to which pro-rata refund rights apply, meaning a consumer could get a refund of their unspent balance if they wish (thereby helping to mitigate the supposed harm to the consumer).

What are the key consumer laws underpinning the Principles?

The Principles refer to various EU consumer laws, such as the CRD, the Unfair Commercial Practices Directive and Unfair Terms in Consumer Contracts Directives. The principles-based approach of EU consumer law, particularly in the realm of unfair commercial practices, means there is a significant degree of interpretation when deciding whether a particular virtual currency-related practice is permissible or not. This means that views can diverge between regulators, the industry and even amongst lawyers. A point to remember is that players sit at the heart of this issue. Whilst they should be afforded their rights under consumer protection laws, equally the in-game environment should be engaging, frictionless, easy to understand and not over-encumbered* with information and unnecessary tick box functionalities.

Moving to the UK, the consumer law landscape still largely derives from EU consumer laws, meaning similar principles-based interpretations apply. To put the above concern into a practical example, this has led to some unique guidance materials in the UK, such as the advertising guidance on virtual currencies and in-game stores (see here). In that guidance, the UK advertising regulator is of the view that its rules do not apply to in-game ads and store fronts if an in-game item can be purchased with both Hard VC and Soft VC. The Principles do not seem to address this particular scenario, despite the fact that it is very common in practice to see such ‘mixed’ pricing. We will delve into the UK position in more detail in part 4 of this series. 

Conclusion 

It is clear that EU regulators are turning their attention to in-game monetisation amidst concerns of a lack of (amongst other things) transparent pricing. To quote the CPC Network’s introduction to their Principles, they have “seen the need for European consumers to be better protected when playing video games”.  If the Principles have interpreted consumer laws correctly – and we expect to see challenges to this on a number of fronts from the industry – then becoming compliant could lead to significant changes in market practice when it comes to designing in-game economies and managing in-game store fronts, in-game ads and refund processes. 

If any of the issues in this article (or any of the other articles linked to from it) raise any concerns or questions, please don’t hesitate to get in touch with us.


*a nod towards our RPG player-readers.