Game studios would be banned from selling loot boxes to minors under new bill

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On Wednesday, Sen. Josh Hawley (R-MO) announced that he would be introducing a bill banning “manipulative” design features in video games with underage audiences, including the sale of loot boxes.

The legislation would, if approved, prohibit the sale of loot boxes in games targeted at children under the age of 18. Games marketed toward wider audiences could also face penalties from regulators like the Federal Trade Commission if companies knowingly allow children to purchase these randomized crates.

“Social media and video games prey on user addiction, siphoning our kids’ attention from the real world and extracting profits from fostering compulsive habits,” Hawley said. “No matter this business model’s advantages to the tech industry, one thing is clear: there is no excuse for exploiting children through such practices.”

Regulators would determine whether a game is targeted at minors by considering similar indicators that they already use under the Children’s Online Privacy Protection Act (COPPA). Subject matter and the game’s visual content would help regulators determine who the game is marketed toward.

Pay-to-win mechanics in games targeted at minors would also be outlawed under this legislation. This includes progression systems that encourage people to spend money to advance through a game’s content at a faster pace.

These games are often available for free, and certain levels or tasks are more easy to overcome with a stronger weapon or ability that can only be obtained through microtransactions. It would also apply to multiplayer games that empower players who spend more in microtransactions to more easily compete against those who don’t.

“When a game is designed for kids, game developers shouldn’t be allowed to monetize addiction,” Hawley said. “And when kids play games designed for adults, they should be walled off from compulsive microtransactions. Game developers who knowingly exploit children should face legal consequences.”

Loot boxes and microtransactions are prominent features in mobile games, but the trend has made its way into big-budget games like Overwatch, PUBG, and FIFA from triple-A studios like Blizzard and Electronic Arts. Fortnite sold loot boxes for some time in its “save the world” mode, but they were removed earlier this year.

The leading video game trade industry, the Entertainment Software Association responded to the proposal saying that other countries have determined that loot boxes do not constitute gambling, something they have been criticized for resembling in the past.

“We look forward to sharing with the senator the tools and information the industry already provides that keeps the control of in-game spending in parents’ hands,” ESA’s acting president and CEO Stanley Pierre- Louis said. “Parents already have the ability to limit or prohibit in-game purchases with easy to use parental controls.”

These new rules would be enforced by the Federal Trade Commission, which has already reportedly opened an investigation into the sale of loot boxes after Sen. Maggie Hassan (D-NH) questioned the commissioners over the practice last fall. In a February letter, FTC Chairman Joe Simons would not confirm the existence of an investigation, but he told Hassan that the commission would hold a series of workshops with both consumer advocates and the game industry on loot boxes later this year.

When asked if Sen. Hassan would be interested in co-sponsoring the bill, a spokesperson for the her said that she “is still reviewing Senator Hawley’s legislation” but, “she is encouraged that there is bipartisan interest in the issue of loot boxes and the importance of protecting young gamers.”

State attorneys general would also be empowered under these new rules to file suits against gaming companies on behalf of the residents of their states on issues like loot box sales.

Outside of these actions by and interactions with the FTC, United States officials haven’t acted as aggressively on loot boxes as regulators abroad. Last year, the Belgian Gaming Commission ruled that loot boxes fall under the jurisdiction of its gambling laws. Concern spread across Europe, and this pushed studios like Blizzard and EA to pull the sale of loot boxes from their games in those countries.

Throughout his first few months in the Senate, Hawley has cast a critical eye on social media companies and how they maintain user privacy, especially belonging to children. In March, Hawley teamed up with the author of COPPA, Sen. Ed Markey (D-MA), to introduce updates to the children’s privacy law that would allow parents to delete the data companies have on their children under 15 years of age.