The European Commission has proposed the Digital Fairness Act, which would restrict loot boxes, virtual currency, and pay-to-win mechanics for minors across EU member states.
By Hermes Vector
The European Commission has released a proposal for the Digital Fairness Act (DFA), a regulation that would apply directly across all EU member states if adopted by the European Parliament and the Council. The proposal targets digital commercial practices, with specific provisions for video games, including loot boxes, virtual currency, and pay-to-win mechanics.
Article 15 of the draft would regulate paid "variable reward systems," defined as virtual items offering random rewards or variable odds acquired through payment or paid-for virtual currency. Recital 63 lists loot boxes, wheels of fortune, and collectible card packs as examples. Traders would have to disclose the types of items available and the probability of obtaining them before a purchase. All consumers would receive an accessible tool to switch off paid variable reward systems. Paid random rewards could not be offered in products directed at minors or where the trader knows with reasonable certainty that a minor is using the product.
Article 14 covers virtual currencies. Companies would have to disclose their estimated monetary value in the relevant currency. For products targeting minors, virtual currency purchases would be disabled by default and could only be activated if a parent or guardian signs in to approve it.
The DFA would ban pay-to-win and pay-to-progress mechanics for minors. It would also require that consumers can disable features designed to encourage compulsive or excessive use, such as push notifications not triggered by user activity, login rewards, and streaks. The European Commission could add to this list if developers find new ways to circumvent the rules.
Personalized ads and pricing that target minors or leverage sensitive personal data would be restricted. The draft defines minors as anyone under 18. Whether a product is aimed at minors would be judged by objective signs, and age rating systems such as PEGI can count. Games rated 18+ would face fewer limits than all-ages titles, which could push developers toward higher ratings.
The European Game Developer Federation, representing 2500 game developer studios in Europe, and Video Games Europe, a trade lobby representing developers and major publishers, issued a joint statement calling the proposal "game over for the European games industry." The statement argues the protections are redundant with existing regulations and says the DFA defines any game rated below PEGI 18 as targeting children. It adds: "Effectively, the DFA moves all decisions from parents and children to the Commission."
The video game industry does not generally accept the comparison of loot boxes to regulated gambling. Felix Hilgert, partner at Osborne Clarke and video games and technology lawyer, told iGB: "The one thing I will say from my video games industry perspective is that we would generally not consider loot boxes to be similar to regulated gambling, not least because they generally don’t allow any cash-out and you never ‘lose’ what you pay, since the boxes always contain (random) items, but are generally never empty."
The proposal remains a draft and must be negotiated and adopted by the European Parliament and the Council. If passed in its current form, the Regulation would apply 12 months after entering into force. The DFA would replace the 2005 Unfair Commercial Practices Directive with directly applicable rules across the EU.
The proposal could change how games are developed and published in Europe and potentially worldwide, as publishers may create different versions for different regions or let European rules affect all international versions of a title. The uncertainty around terms like "necessary" in-app purchases for minors and mixed-age competitive games leaves open questions for developers about how to balance games where only adults can buy items that give an advantage.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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