Online games design and reverse withdrawals
Prohibition of reverse withdrawals for all remote operators
Q28. Do you agree with our proposal to permanently ban reverse withdrawals for all consumers?
In the consultation, we proposed that the ability for players to ‘reverse withdrawals’ be prohibited for all remote operators. Reverse withdrawal is a function that allows consumers to change their mind about withdrawing funds from their gambling account by cancelling a withdrawal of part or all of their funds before the transfer to their bank or wallet is completed. We accompanied this with proposed implementation guidance that withdrawals should be as frictionless as possible.
Our proposal was based on evidence that shows that the reverse withdrawal function presents a risk to engaged and vulnerable gamblers, from research, evidence from our casework, and information provided by people with lived experience. The proposal followed the additional guidance issued to remote operators on 12 May 2020, which stated that operators should prevent reverse withdrawal options for consumers until further notice.
The majority of respondents agreed or strongly agreed with the proposal to ban reverse withdrawals. Some respondents agreed that there were risks associated with allowing reverse withdrawals but considered the risk was for consumers to manage, or that the risks should be managed by restricting the functionality rather than banning it.
One respondent commented that banning reverse withdrawals is disruptive for the consumer and results in more frequent transactions on customer bank statements, which in their view could affect the consumer when applying for credit. Some respondents noted that there may be increased payment processing fees for the operator as a result of the inability to reverse withdrawals.
Some respondents suggested that the guidance that operators should prevent reverse withdrawal options remain in place temporarily while the Commission conducts an evaluation of the impact on consumers and operators. This would then fully inform whether a permanent ban on reverse withdrawals was needed.
One respondent stated that in their view it was inappropriate to include the consultation on reverse withdrawals (which affects all remote gambling) alongside the game design consultation (which primarily related to the provision of online slots games).
Following the consultation, the new requirement RTS14B to ban reverse withdrawal functionality will proceed, as well as the implementation guidance that operators should make the process to withdraw funds as frictionless as possible.
We note the suggestions that further restrictions of reverse withdrawal functionality would be possible, rather than a ban, and that some of the relevant research also considered or pointed to these options. However, some of these options would require the consumer choosing the restrictions and, as the evidence (from research and people with lived experience) suggests the functionality impacts on the most vulnerable and engaged gamblers, who may be least likely to apply voluntary restrictions or to maintain that voluntary application.
Where the further restrictions would rely on the operator to identify and take action, we have seen no evidence of operators actively taking this step for individual consumers in spite of the fact that use of reverse withdrawals has been widely recognised as an indicator of harm for many years. This would also risk inconsistent application of individual restrictions and the most vulnerable consumers slipping through the net.
We carefully considered respondent proposals that further evaluation of the impact of the guidance issued during lockdown should be conducted before proceeding with the new requirement. However, we consider that the evidence to date on the impact of reverse withdrawals on vulnerable and engaged gamblers is sufficient to take action as a requirement now. An inconsistent application of the guidance risks confusing customers and having a disproportionate impact on operators implementing the guidance properly.
This is also balanced against the relatively low benefits which the functionality brings to operators and some consumers. Since the guidance was issued that operators should prevent customers from reversing withdrawals, we have had positive feedback both as part of the consultation, and from some consumers that operators have streamlined the process of a customer withdrawing funds from their account, and that this has supported consumer choice and decision-making.
We have not identified significant unintended consequences on consumers of the guidance issued in May on reverse withdrawals. Although this feedback does not constitute a formal evaluation of the guidance, it does provide added weight to the value of the proposed ban, and on making it a requirement so that it is implemented effectively and consistently across the industry.
Some operators raised a concern that the removal of reverse withdrawals may lead to consumers conducting more deposits and withdrawals, and operators consequently incurring greater payment processing fees. However, no significant increases in payment processing costs as a result of implementing the guidance during the initial Covid-19 lockdown period was reported and most industry respondents did not share this concern in the consultation responses. In addition, for reverse withdrawals to take place, a delay in payment processing is required which has a negative impact on all consumers, including those that do not use the reverse withdrawal function.
Although the consultation on reverse withdrawals was conducted alongside the consultation on game design, we took care to ensure that both topics were listed in the title of the consultation, that we explained the proposals in the summary of the consultation, and that we drew attention to the consultation to trade associations and relevant parties. We are content that the consultation presented an appropriate opportunity for stakeholders to provide comments and input to the proposals.
This requirement will come into force on 31 October 2021.
In May 2020, the Commission issued additional customer interaction guidance to state that operators should prevent access to reverse withdrawals. This guidance to operators will remain in force until October 2021.
RTS requirement 14B
Consumers must not be given the option to cancel their withdrawal request.
RTS implementation guidance 14B
Once a customer has made a request to withdraw funds, they should not be given the option to deposit using these funds. Operators should make the process to withdraw funds as frictionless as possible.
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