By Jason Re, Esq.
One of the most prevalent, and some may say invasive, trends in modern videogaming is the rise of the “microtransaction.” In video games, a microtransaction is a payment of (usually) a small value for a special item, feature, or privilege in a video game, giving the player-purchaser virtual goods of some kind in exchange for real-world currency. This microtransaction is in addition to the price already paid for the video game – which has risen to between $60-$70 for new games on the most modern consoles. For example, in the wildly popular battle royale game Fortnite, a player may pay money for cosmetic items for their character. In the worldwide hit game EAFC, a soccer video game, a player may use real money to purchase customizable items for their player or club, as well as buy randomized players to be used against other real-world opponents. Microtransactions have received harsh criticism since their introduction into the gaming world, with critics now citing that these transactions foster a “pay-to-win” environment in online multiplayer spaces, discourage gaming meritocracy, encourage poor releases that can simply be fixed afterward by sinking more money into a game, and more.
Another common element of modern videogaming is dedicated servers hosted by the game publisher. These servers save player information and host playing spaces for multiplayer games so that two people from across the world can connect to compete virtually. Server-based games are games that, at least in some component, rely on the company distributing the game to maintain dedicated servers for all, or some, features of the game. Most sports video games, for instance, rely on servers to maintain the multiplayer features and modes of the game. Sports video games are typically released annually, requiring new servers to maintain the different multiplayer modes, features, and massive player base for each successive game. Some companies leave servers for older versions of games up for years, while others shut them down in a shockingly short period of time, disabling access to content and game modes for those still using the older version. Combining these two concepts of microtransactions and server-based games, causes a particular question to arise: What happens to all of the digital items, features, and bonuses that a player paid for in an older version of the game when the new version is released, and the servers for the old version are shut down?
This question may be addressed in a consumer class-action lawsuit, originally brought by a minor, simply listed as “J.A.,” represented by his mother, filed on November 17th of 2023 in Federal Court in California. Attorneys from Erickson Kramer Osborne, a San Francisco law firm, are counsel for the plaintiff and are actively seeking further injured persons in similar situations to join the class. The defendant in the class-action complaint is 2K Games. 2K Games is an American-based video game publisher – originally founded as a subsidiary of Take-Two Interactive, a video game software and holding company. 2K Games has a massive catalog of action and adventure, shooters, turn-based strategy, and racing video games, but is commonly known for its various lines of sports video games, such as NBA 2K, PGA Tour 2K, and WWE 2K, each followed by the year of their release, respectively.
The complaint focuses on 2K Games’ sale of virtual currency through microtransactions, and the inability to transfer this currency or any digital goods purchased to the next version of the game. Moreover, it alleges that 2K Games constantly shows gamers marketing to get them to spend real-world currency to purchase in-game virtual currency through microtransactions. Further, it alleges that it releases a new version of the game annually, notifies users that it will shut down its servers for the older games, and deletes any data (including, most notably, the digital currency) remaining in the gamers’ accounts. The class-action complaint further suggests that while some video game publishers allow players to transfer their in-game virtual currency (paid for with real-world money) to new versions of their game, or keep those old versions active and playable for years, 2K Games does not. The complaint claims that 2K deactivates the servers for the old versions of the games relatively rapidly compared to the industry standard and leaves huge sums of virtual currency and goods inaccessible. Specifically, the complaint mentions the basketball series of sports video games published by 2K Games – NBA 2K – but also points to “similar franchises published” by the company. Ultimately, the essence of the complaint is that 2K Games accepts payments from players for virtual currency or vanity items, but then has no procedure in place to offer refunds or transfers in the scenario that this virtual currency or digital content can no longer be used, more so as to when the servers for a game go down. The class action goes even further to equate this practice to “theft,” and calls 2K Games’ approach “unfair, illegal, and greedy.”
The class action lawsuit accuses 2K Games and its parent company Take-Two Interactive (“Take-Two”) of unfair business practices, and violating California’s civil theft statutes, stating in pertinent part that, “By removing Plaintiff and the Class members’ [virtual currency], Defendants took and stole their personal property, or fraudulently appropriated property that had been entrusted to the Defendant.” In California, one statutory based consumer claim is under Unfair Competition Law (“UCL”), found at Business and Professions Code § 17200. Despite the use of the word “competition,” the UCL covers the individual consumer’s right to protection form fraud, deceit, and other such unlawful conduct in the marketplace. The analysis partially focuses on some vague terms – “fraudulent,” “unfair,” “fraudulent,” and, of course, the allegedly violative act must be “unlawful.” As noted, the complaint alleges that 2K Games and Take-Two committed conversion, and violated the state’s civil theft statute, requiring a showing of criminal intent, actual taking, and damages.
When considering if a business practice is “unfair,” California courts may find that a practice is unfair if it “offends established public policy, that is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers, or that has an impact on the victim that outweighs defendant’s reasons, justifications, and motives for the practice.” The “fraudulent” prong of the analysis focuses on whether the business conduct is likely to deceive or confuse members of the public, using a reasonable consumer standard. In order for this to be “likely,” the conduct must rise above a “mere possibility” that the practice or advertising confused or mislead, but rather reasonably acting consumers are probable to be misled. Additionally, there must be some showing of reliance on the fraudulent, misleading, or unfair business practice, leading to some material injury.
The basis for the class-action lawsuit at hand is that, as the complaint states, “when terminating an older game, 2K Games also terminates gamers’ access to the funds that remain in their in-game wallets.” The funds cannot be transferred to another game or redeemed in any way. Further, the complaint states that gamers, who are largely minors susceptible to misleading or unfair tactics, are given no warning when they purchase this in-game currency that it can and will be destroyed whenever 2K Games sees fit. Additionally, some of the marketing for these microtransactions specifically target children through partnerships with kid-friendly brands, like Chips Ahoy and Reese’s Puffs Cereal. Video games generally are a hundreds of billions of dollars business, and microtransactions alone account for billions of dollars of revenue for game publishers, largely by underage participants. Regardless of how the class-action complaint progresses, it is undeniable that minors need protection from malicious, greedy, and unfair business practices of video game publishers. Safeguards, such as warnings, parental controls, or general education will be necessary to better protect minors (and their wallets) from microtransactions that may be lost to time in just a matter of years.
