On August 28, the CFPB issued a Consumer Advisory warning that it believes video game companies are targeting children for monetary gain. With 45.7 million U.S. children engaged in video gameplay, the agency is concerned about the financial risks that games and virtual worlds pose, especially to young consumers. This Advisory highlights a growing focus on the game industry’s practices, which allegedly mimic traditional banking systems but lack corresponding consumer protections. 

In April 2024, the CFPB released a report titled “Banking in Video Games and Virtual Worlds,” which marked a significant step in identifying and addressing the financial vulnerabilities inherent in the game sector (covered by our blog here and here). This report revealed how billions of dollars in assets, including virtual currencies, are stored and exchanged in these platforms. Through its report, the CFPB claims that the video game industry uses design tricks, technology, and surveillance data to lure players into spending, often hiding the true cost of transactions. 

Following the report, the CFPB issued its latest advisory warning about the risks to children in video games and virtual worlds. It asserts video game companies often use manipulative tactics to encourage spending, resulting in unexpected charges and financial losses for families. The agency’s concerns are based on numerous parent complaints about scams, theft, and the lack of remedies. 

 The advisory highlights that many video games require linking a payment method to the user’s account, allowing the conversion of real money into virtual currency. This setup allegedly obscures the true cost of in-game transactions. It also notes that some games encourage the purchase of game currency outside of active play, potentially leading to higher spending by separating the decision to buy from the game experience itself. Moreover, it believes that certain games feature “gambling-like” design elements that conceal the likelihood of outcomes and promote excessive spending. 

The CFPB offers several recommendations to mitigate these risks. These include using gift cards instead of credit or debit cards, enabling parental controls, and choosing games without in-game purchases. The agency also advises limiting data collection and sharing to prevent privacy invasions and manipulation based on consumer data. 

One of the CFPB’s critical roles is providing a platform for consumer complaints. Accordingly, the agency is encouraging individuals to report issues related to financial products or services in video games to the Bureau’s consumer complaint database. The CFPB’s ongoing efforts in this area signal a clear stance: as video games and virtual worlds increasingly resemble traditional financial systems, they must also adopt the consumer protections that apply to the financial sector. 

Notably, the report fails to note the benefits of in-game purchases and the fact that many games are free to play and purchases are optional. Without in-game purchases, it would be hard to make games free to play. 

Putting It Into Practice: Given the CFPB’s focus on video games and virtual worlds, businesses should further prioritize transparency and fairness. This means reviewing practices that could harm gamers, including financial losses from theft, scams, or the trading of in-game assets. Companies must also comply with privacy regulations, ensuring transparency in data collection and usage. It is critical for consumers, especially younger audiences and their parents, to understand how their information is collected and used, particularly when data is monetized without explicit consent. 

Additionally, businesses should ensure they comply with various consumer financial laws, including the Electronic Funds Transfer Act, Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations, lending laws, and state-specific money transmission rules. By addressing these areas proactively, companies can reduce regulatory risk, build consumer trust, and align with the CFPB’s consumer protection goals. 

The CFPB is not alone in focusing on these concerns. Just this month, the European Consumer Organization (BEUC) and 22 of its members across Europe filed a complaint with the European Commission and the European Network of Consumer Authorities. The complaint alleges that various game companies mislead gamers into spending money. The action stems from concerns that games are intentionally designed to lead to gaming addiction among children. The complaint notes concerns that in some cases the real cost of in-game digital items is not clearly leading to consumers over-spending. Moreover, the report notes that gamers were often denied rights when using premium in-game currencies. 

Skylar Stoudt also contributed to this article.