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Guidance

Lootboxes: Advice to the Gambling Commission from ABSG

ABSG has given advice to the Gambling Commission in regards to lootboxes. This advice outlines what lootboxes are, concerns around them, and how to protect consumers.

Published
13 August 2021

Last updated
13 August 2021 - Changes

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High levels of unplanned expenditure

A key area of concern includes instances of high levels of expenditure – particularly when this was unplanned or based on unclear information about the product. Of even greater concern is when the expenditure is by a child without parental permission.

Instances of these types of expenditure have been widely reported in the media – as demonstrated in the following case studies. The Government’s call for evidence should provide greater clarity on the instances of this type of issue. This should move us from an anecdotal understanding of this type of consumer detriment to a more evidence-based picture.

Case studies involving children

  • a five-year-old boy with autism was able to spend £300 on in-game items in a Mini Golf game rated as suitable for children aged 3 and above after the game was installed on a parent’s phone24
  • four children under the age of 10 spent nearly £550 in three weeks buying player packs in a FIFA 19 (rated suitable for children aged 3 and above) after seeing how a parent made the purchase. Their parents only realised when their bank card was declined elsewhere because their account had been emptied25
  • an eight-year-old and a nine-year old spent over £600 on an online gaming platform when a parent did not realise that their bank details would be linked to their children’s devices. The platform refused to refund the money and terminated their accounts on the grounds of fraud.26

Case studies demonstrate that:

  • there is a high-risk that consumers spend amounts of money, leading to financial harms. This often occurs at a rapid pace over a short period of time – meaning that online lootboxes are distinctly different to products such as Panini stickers or Kinder Eggs, which are not typically linked with similar harmful patterns of consumer behaviour
  • there are frequent examples of this expenditure being carried out by children. In these examples the child may be too young to fully understand what they are purchasing or the consequences of their action. There seems to be few comparable examples of products which facilitate high-levels of expenditure directly by children. Although parental responsibility has an important role to play, this characteristic of lootboxes suggests lootboxes are offered in ways which are unclear to parents
  • consumers – including adults - frequently report being unclear about the nature of the product they are spending their money on27 – e.g., a lack of information about the probability of successfully obtaining a rare item. We know from research on gambling that information on Return to Players (RTP) is poorly displayed and poorly understood compared with much less common but more accessible information such as theoretical loss statements.28 Although it is unrealistic to expect information to solve this problem itself, consumer protection law means that consumers should be clear about the nature of the product they are buying before a purchase is made
  • harm caused by lootboxes will disproportionately effect people from lower-income households who are less able to absorb the financial impact if their children spend large amounts on lootboxes.

References

24 My son spent £3160 in one game (opens in a new tab) BBC News, 15 July 2019

25 'The kids emptied our bank account playing Fifa' (opens in a new tab) BBC News, 8 July 2019

26 My kids spent £600 on their iPads without my knowledge (opens in a new tab), Guardian, 11 March 2020

27 “Lootboxes in digital games” – a gamble with consumers in need of regulation, an evaluation based on learnings from japan, Koeder Tanaka, et al, Research Gate June 2018

28 Statistical risk warnings in gambling (opens in a new tab), Newall et al, Behavioural Public Policy, Cambridge University Press, 2020

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