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Microtransactions

Microtransactions  – Microtransactions, also known as in-game or in-app purchases, represent a special form of monetization in online games. These transactions involve players buying additional digital content for a small fee (micropayment).[1] They are primarily used in free-to-play games but are also found in pay-to-play titles. Some of this additional content is purely decorative, while others unlock new functions or provide gameplay advantages (pay-to-win).

Contract type

Microtransactions, where the player purchases digital content, are classified as sales contracts under German law.[2] Additionally, in the European Union, consumer contracts for digital content are governed by the Digital Content Directive, which member states were required to implement into national law by 1 July 2021.[3] These relatively new regulations grant, among other things, specific warranty rights for digital content.

Consumer Rights

Online contracts between a consumer and a company within the European Union are subject to a variety of strict consumer protection laws that pose challenges for publishers and provide comprehensive protection for players.[4] These regulations cannot be circumvented by a choice of law favorable to the publisher.[5] They include, among other things, extensive pre-contractual information obligations and the requirement for contract confirmation after the conclusion of an in-game transaction.

A particularly strong tool for consumer protection is the European consumer right of withdrawal, which allows consumers to cancel distance contracts within a statutory period, typically fourteen days, without compensation. This results in an unfavorable outcome for the publisher, as consumers could theoretically use provided digital content for fourteen days and then declare withdrawal.

The EU legislator has recognized this and provided a mechanism to exclude the right of withdrawal upon the provision of digital content, which – when properly implemented by the publisher – results in the consumer losing their right of withdrawal at the moment the digital content is provided.[6] This particularly requires appropriate information and an explicit waiver declaration from the consumer.[7] Therefore, publishers generally need to design the purchase process according to these specifications. Incorporating the waiver declaration via a checkbox extends the purchasing process, leading to fewer completions.[8] The individual design of this exclusion mechanism must be assessed on a case-by-case basis.

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Minors

Laws in various jurisdictions, such as the German Civil Code, provide special regulations to protect minors in legal transactions. In Germany, most contracts with minors depend on the consent of their legal guardians. Exceptions may exist if minors have pocket money at their disposal.[9]

This legal protection is complemented by further protective provisions, in Germany, for example, by regulations in the Youth Media Protection State Treaty (JMStV) and competition law, which, among other things, prohibits direct purchase appeals to minors. Consumer protectors have already successfully taken legal action against online game providers whose offers were characterized by child-specific and direct exhortation.[10]

Microtransactions can influence the youth protection rating of a game.[11] In countries under the Pan-European Game Information (PEGI) system, an indicator for in-game purchases (descriptor) is applied.[12] In Germany, a corresponding descriptor was introduced by the Entertainment Software Self-Control (USK) in 2023.[13] Moreover, many online platform providers offer parental control systems.[14] These systems allow parents to monitor and potentially restrict their wards’ gaming and purchasing behavior.

Loot Boxes

A particularly controversial form of monetization through microtransactions is the sale of so-called loot boxes. Numerous legal questions arise in connection with national gambling laws, youth protection law, and consumer rights aspects. For further information, please refer to the article on loot boxes.


[1] Schwiddessen, Lootboxen nach deutschem Glücksspiel- und Jugendmedienschutzrecht (Teil 1) [2018], CR, p. 444 (445).

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[2] Redeker, IT-Recht (8th edn, CH Beck 2023) marginal no. 1320.

[3] Article 24 para 1 Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services.

[4] For instance, Directive 2011/83/EU of the European Parliament and of the Council on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, better known as Consumer Rights Directive.

[5] Cf. Article 6 para 2 Regulation (EC) 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).

[6] Cf. Article 6a no. 12 ii) Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EU and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules.

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[7] LG Karlsruhe, MMR 2022, 413.

[8] Hentsch, Hoeren/Sieber/Holznagel, Handbuch Multimedia-Recht (60th edn., CH Beck 2023), chapter 22 marginal no. 54.

[9] For instance, Section 110 of the German Civil Code or Section 170 para 3 of the Austrian Civil Code.

[10] BGH, MMR 2015, 328 – Runes of Magic II.

[11] Cf. Section 10b para 3 of the German Youth Protection Act.

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[12] Video Games Europe, “PEGI – The European content rating system, Helping parents make informed decisions “ <https://www.videogameseurope.eu/responsible-gameplay/pegi-the-european-content-rating-system/>.

[13] USK, “In-Game-Käufe, Chats und Lootboxen: USK erweitert Prüfkriterien” (14 December 2022) <https://usk.de/usk-pressemitteilung-umsetzung-neues-jugendschutzgesetz/>.

[14] For instance, Nintendo, Epic Games, Sony and Microsoft.

Author

  • Daniel Trunk

    Daniel Trunk is Associate at ADVANT Beiten’s Frankfurt office and member of the IP/IT/media practice group. His areas of practice includes industrial property, copyright, IT and consumer protection law. He focuses on advising national and international clients from the computer games sector and the media industry. His activities include both out-of-court advice and litigation. Daniel Trunk studied law at the University of Gießen. He was admitted to the German Bar in 2022 and has been working with ADVANT Beiten since then.

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