110C. How to Come into Compliance with EU Virtual Currency Rules
Here I explain the first 6 "Key Principles" and how to comply with them. I also give advice on how to modify your business model if that's in your best interest.
In 2024 the EU’s Consumer Protection Cooperation Network (CPCN) published an outline of their forthcoming “Digital Fairness Act”. That is expected to be ratified in 2026 after approximately two years of refinement. The CPCN has made it clear they can start enforcing elements of the DFA right now under existing consumer protection law, and they are. Part of this is driven by frustration across the spectrum of society from an apparent lack of consumer protection over the last 12 years since the ICPEN attempted to start this process (that’s also when they recruited me to assist them). This current enforcement is also a tool to refine the more aggressive regulatory instruments proposed for DFA.
The CPCN has articulated their intentions for Virtual Currency regulation (a subset of the sweeping and unprecedented DFA) in their “Key Principles” document. In the previous instalment of this 3 part series I went into great detail as to what the CPCN’s intentions are in the 7th of the 7 Principles. The focus there was defining “Vulnerable Consumers”. Here in this article I address the first 6 Key Principles which are a bit more straight forward.
Principles One and Two: Price Transparency
Developers are directed to show the price of any purchase in the consumer’s native fiat currency. Those purchases could be another currency, or a content pack (DLC), a game item (microtransaction), or some service (battle pass, VIP program, 30 day currency/item distribution, etc).
If multiple layers/currencies (as described in Systems of Control in F2P) have been deployed, you must use the most expensive possible conversion combination in describing the price. Yes this is going to have the maximum chance of discouraging the consumer. This is the intent. You put all those currencies in there to obfuscate the price and the CPCN is going flip that on you if you don’t remove those systems entirely.
If possible, you should just remove those premium currencies to come into compliance with these Principles. That would require a fresh transaction each time since the consumer would not have extra currency banked. That’s going to create additional friction as each time the consumer has to make a purchase decision they could decline.
Allowing players to earn in-game currency does not remove any of these conditions if the player can also buy “extra” currency. The only way to remove Principle 1/2 conditions is to completely eliminate in-game currency purchases. I got around this in 2014 on my Wargaming titles (in anticipation of this regulation) by having players earn in-game currency but also earning more in-game currency if they were subscribed. Wargaming also allows gold purchases so they could come into compliance by turning that off.
If you want to increase discriminatory pricing, you can do that by offering multiple tiers of subscription. Of course subscriptions have to be sold in fiat currency.
Principle 3: No More Forcing an Overspend
You have an item in your store that costs 1300 premium currency but you force the player to choose a 1000 or 2000 currency purchase? The CPCN is up to speed on this and will be looking for this specific exploit. If your system is this rotten then you probably should just delete your premium currency purchase options entirely and charge fiat. You might have to convert players’ legacy premium currency to fiat credit, which will be painful for you if you had to do refunds. So far I don’t see anything in the Principles that requires you to give legacy refunds.
Principles 4 and 5: Clearly Stated Contractual Conditions
Most of this sounds simple. The price in real-world monetary value is already covered in Principles 1 and 2 above. The “existence and conditions of the consumer’s right of withdrawal” sounds very complicated in regards to a game:
This condition could be ruinous for game developers if implemented at this level. Steam used to give an unconditional 2 hour withdrawal/refund period. Now it has a lot of conditions and I’ve been refused a refund on a product that didn’t even run on my computer. Two weeks seems an impossibly long reward period to me, so if regulators contact me I will bring this up as a red flag.
Anticipating these concerns, the CPCN has added these conditions:
Virtual/Premium currencies are not considered digital goods. They are real world goods under the law in the EU. Thus after the purchase you have to wrap/partition these goods from the rest of their inventory/wallet and then push a “consent to void their right of withdrawal” to the consumer as soon as they try to access that currency or horse or hat or whatever.
Note that this condition might be complicated or impossible with Web3 games the way they are currently designed as once something goes to a crypto wallet, the consumer owns that and you can’t claw it back. Perhaps those items could go into some sort of 14 day escrow until they give consent to waive withdrawal.
Principle 6: Contractual Terms in Fair and Clear Language
This might be one for the lawyers:
What if you had a game called Star Atlas and you sold a FIVE MILLION USD ship for only… 5 dollars by accident? I guess if you sold it to someone in the EU, you’d be screwed.
I stopped buying games from Electronic Arts because they are blocking me from playing Dragon Age Inquisition which I bought on Steam. They can get off my blacklist when they let me have access to the games they took my money for. I’m well aware that companies just turn off games (even games that are not online), and that stinks.
If a player gets banned for a breach of Terms of Use, like they are engaging in gold farming or such, okay. But if someone promotes civil rights or just was in the neighborhood when someone else did, that seems unfair to ban the content they paid for. I realize the idea of civil rights or freedom of speech varies a lot from region to region, but I guess in the EU you will have to use their version.
General Advice
I understand all of that is a lot to process. Since I started complaining about gaming companies worldwide becoming increasingly consumer antagonistic in 2013 or earlier, unfair business practices have become the norm in the gaming industry. Consumers complained eternally and have largely lost hope that they will ever be treated fairly.
Word of the CPCN’s plans for DFA have gotten to gaming influencers, and gamers are quite excited about maybe finally getting some protection. Trust me, no one on this planet is more excited for that than I am. I’ve been building the tech for DFA since 2013, and the rest of the industry has been trying hard to pretend I don’t exist. Thus my malus is about to be my boon, and the industry’s boon (at the expense of consumers) is about to be their malus. This isn’t Schadenfreude, it’s just reality. In my reality, DFA was passed in 2013 and I’ve been furiously designing models for that for 12 years.
But I realize that doesn’t help the vast majority of my readers, so here is some advice:
If you have less than 30 days of content in your game, or you’ve stretched less than 30 days of content into 47 years of content like with Clash of Clans, your product should be converted to a retail game. You aren’t providing enough service to survive under the post DFA conditions as a Game as a Service (GaaS). You could try floating a $5 monthly subscription but these games are all going to be replaced soon with games that consumers actually want. Thus I recommend cutting your losses.
If you have a crippled version of your game that is free, and are calling that “Free to Play”, the trend is to call that a “Demo”. There are a lot of demos on Steam these days, it’s great. If your “Demo” costs $70 USD and the full game costs hundreds of dollars, with the prices hidden from consumers, we call that “Assassin’s Creed Shadows”. The CPCN will call that “Shut Down”, or even “Consumer Enforcement Action”.
If you rely on premium currencies in your game, and it doesn’t at least follow my 2012 guidelines from Supremacy Goods, it might be time to start winding that service down.
If you want my help coming into compliance, that would be great. Assuming your company has a neutral or better relationship with me. If it’s negative, you are going to run into the same problem that Disney did when they tried to buy 21st Century Fox. I describe that in the first paper in this series.
If you don’t want my help, and you don’t like my above suggestions, then you should figure out who I am helping and try to copy what they do.
Converting your game economy to a common (non premium) currency with a subscription booster as I describe earlier in this paper is a reliable proven-good business model from my previous Web2 titles. That might not be easy, and if your game isn’t very good it just might be a waste of money compared to shutting your service down.
I will update this document if these conditions change, and I will write new articles on DFA if there are major changes as it advances to implementation.