FTC Pledges Loot Boxes Investigation In Video Games
Federal Trade Commission chairman Joseph Simmons on Tuesday said he would investigate video game loot boxes to ensure that children are being protected and parents are educated on the matter. In a Congressional oversight committee hearing yesterday, FTC chairman Joe Simons affirmed Sen. Hassan’s request that loot boxes be investigated. The exchange took place in a Senate Commerce subcommittee hearing that was mainly focused on data privacy issues, but which ranged into other territories.
Senator Maggie Hassan (D-NH), who brought up the issue of loot boxes in video games earlier this year, asked the FTC to launch the investigation and Simmons confirmed he would.
Sen. Maggie Hassan (D-N.H.) said that such revenue generators were predicted to be a $50 billion business by 2020.
She said that “loot boxes” are now “endemic” to the video game industry from smart phone apps to high-budget releases. She said children may be “particularly susceptible” to such purchases.
Games publishers often include loot boxes in their games, which offer in-game boosts and prizes, sometimes at a cost. The practice has flourished in recent years, particularly following enormous success in games like the FIFA series, but it has also been met with consumer resistance in the past year. In 2017, Electronic Arts retooled Star Wars Battlefront 2 following accusations that the game was designed around extracting cash from players through loot crates.
Hassan warned that children are particularly susceptible to loot boxes, and that they represent a “close link” to gambling. She pointed to moves in other countries, including Japan, the Netherlands and Belgium, to bring in legislation to control the use of video game loot boxes. Last year, Reps. Chris Lee and Sean Quinlan held a news conference in Hawaii that assailed loot crates for preying on children.
“Earlier this year, the confirmation hearing for most of you, I discussed the possibility of the FTC examining the issue of children in the video game space,” she said. “Specifically we discussed loot boxes, which allow end-game purchases with real currency for surprise winnings, and most of you agreed this is an area that could use additional oversight by the FTC.
“Loot boxes are now endemic in the video game industry and are present in everything from casual smartphone games to the newest, high-budget video game releases. Loot boxes will represent a $50 billion industry by the year 2022, according to the latest research estimates. Children may be particularly susceptible to engaging with these in-game purchases, which are often considered integral components of video games. Just this month Great Britain’s gambling commission released a report finding that 30% of children have used loot boxes in video games. The report further found that this exposure may correlate with a rise of young problem gamblers in the United Kingdom. Belgium, Netherlands, and Japan have moved to regulate the use of loot boxes in video games given this close link to gambling.
“Given the seriousness of this issue, I think it is in fact time for the FTC to investigate these mechanisms to ensure that children are being adequately protected and to educate parents about potential addiction or other negative impacts of these games. Would you commit to undertaking this project and keeping this committee informed about it?”
Simmons replied with a simple, “Yes.”
Despite news of the investigation, the Entertainment Software Association (ESA) continued to defend the use of loot boxes.
Polygon has requested comment from the Entertainment Software Association, and ESA Reply:
“Loot boxes are one way that players can enhance the experience that video games offer. Contrary to assertions, loot boxes are not gambling. 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.”