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April 15, 2019
The CMA has launched a consumer law investigation into the services offered by the major online gaming companies to find out whether their auto-renewal terms are fair.
The CMA says that it is concerned about whether some of these companies’ business practices comply with consumer protection law, such as their use of auto-renewals for online gaming contracts, their cancellation and refund policies, and their terms and conditions.
As well as buying consoles and games, people can pay for online services such as playing against other gamers, communicating with other players, and extra games. These services can involve a membership which is often entered into on an auto-renewal basis. This means that money will be automatically taken from a person’s account as the membership rolls over.
The CMA has written to Nintendo Switch, PlayStation and Xbox requesting information about their online gaming contracts to help better understand their practices. It is also calling on customers who use these services to get in touch with the CMA and share their experiences in order to assist the investigation, which will examine several issues, including:
- are the contract terms unfair? – do the companies’ terms give them wide discretion to change the quality of the deal, for example, by reducing the number of games included or increasing the price?
- how easy it is to cancel or obtain a refund? – are there any factors that make it difficult for people to cancel their contract or get their money back?
- how fair is the auto-renewal process? – are customers clearly told that their membership will be rolled over, are they regularly reminded that they are on a roll-over contract before further payments are taken, and is auto-renewal set as the default option?
At this early stage, the CMA has not reached a view as to whether or not companies’ terms of business are fair. However, if the CMA thinks the companies’ practices are misleading or their terms are unfair it could take enforcement action. To read the CMA’s announcement in full, click here.