In November 2022 the Consumer Rights Act 2022 (“CRA”) was made law in Ireland, transforming consumer rights in digital content and marking the biggest shift in consumer law in years. We consider how the gaming industry is impacted by the legislation. While certainly a win for consumers, the law raises practical concerns for traders. They face significant penalties if they fail to update terms and product specifications to deal with these rules.
An overhaul of consumer rights law in Ireland
The CRA modernises consumer rights legislation for the sale of goods and services in Ireland, which has long been playing ‘catch up’ with the digital age. Importantly, the CRA expressly addresses the sale of goods with digital elements, and digital services contracts. The provisions are particularly relevant to those selling or distributing games of all types in the Irish market, to Irish consumers.
The CRA delivers enhanced protections, rights, and remedies for consumers, alongside the increased penalties and sanctions for traders’ (sellers’) failure to comply with its terms. The CRA transposes the following significant EU Directives into domestic Irish law:
Also noteworthy is that the previous laws on unfair terms are revoked and replaced by the CRA. The CRA provides (i) a new list of standard contractual terms and conditions that are always unfair; and (ii) a list of contractual terms that are presumed to be unfair. While this is relevant to games developers and games engines, it is most relevant for games publishers, that create and distribute video games for different platforms, such as consoles, PCs, mobile devices, and online platforms. Changes to contracts, terms and product specifications need to be made by gaming services companies, that offer online platforms, subscriptions, streaming, cloud gaming, esports, and other services that enhance the gaming experience for consumers.
Key considerations for the gaming industry
With debates arising historically across a range of topics, from impact on minors, gambling and loot boxes, to online bullying and harassment, consumer protection in the gaming industry has been a hot topic for many years now.
Many in the gaming sector fall within the definition of ‘traders’ in the CRA, meaning all companies selling to consumers in Ireland, and so must comply with the legislation. From the sale of games into Ireland to every purchase of an in-game item within each game, companies in this industry must ensure that each interaction and transaction is compliant. Compliance is not a quick or inexpensive exercise. Here are some reasons why:
The CRA implements requirements around conformity of products and product descriptions. Any public statements made by the trader related to the relevant product, as well any trial versions released, will be considered in an assessment of conformity. Teasers, trailers and demos for new products / games are often released prior to the official release; any content or features contained in these will need to be taken account of when determining the official release.
Where personal data (as opposed to monetary consideration) is exchanged by a consumer as consideration for receipt of digital content or a digital service, contractual protections will generally apply to that contract. Often traders provide access to free games in exchange for, for example, a consumer’s name and email address, which are then used in targeted advertising. The CRA grants the consumer extensive rights which historically were not applicable to this kind of transaction. These rights include the right to a 14-day withdrawal period and the right to specified pre-contract information.
The CRA requires traders to supply digital content or digital services without undue delay after conclusion of the contract with the consumer unless the parties agree otherwise. If the trader fails to supply the digital content or digital service without undue delay, the consumer may call upon the trader to supply the digital content or digital service.
Where digital content or a digital service is supplied for a period specified in the contract, traders may only modify the digital content or digital service if certain conditions are met. In certain circumstances, where such modification negatively impacts a consumer’s access to the digital content or digital service, the consumer will have a right to terminate the contract and may have other remedies.
The CRA lists both ‘subjective’ and ‘objective’ product specifications which traders must apply to product descriptions and requirements. Games companies need to do an assessment prior to launch to ensure that their contract suite matches the CRA requirements.
The CRA provides that a trader must ensure that the terms of a consumer contract are “transparent” by making an assessment against a list of criteria in the CRA, including that the terms must be expressed in concise, plain, and intelligible language. If a consumer contract is directed at a particular group of consumers, any reference to the average consumer is read as a reference to the average member of that group. This means that publishers with games aimed at children will need to take account of their audience when drafting their contract terms.
One significant risk adjustment in the EU Omnibus Directive, which the CRA transposes, are the remedies and recourse made available to regulators and consumers. Regulators can impose administrative fines for breach of the CRA as high as 4% of turnover in the EU or up to €2 million.
A convicted person will be liable for the costs and expenses of the proceedings and investigation associated with the infringement, and a non-compliant trader may also be ordered to compensate consumers for any loss or damage caused by its offending behaviour.
Act now… or regret it later.
Given the increased scope of consumer rights provided for by the CRA, coupled with the significant penalties and remedies introduced for breach of its provisions, publishers, distributors, and platforms in the gaming sector must be clear on how the CRA applies to them. While the basis of much of the amendments introduced by the CRA is EU law, it’s also important to note that there are divergences between EU Member States in how the relevant Directives are transposed, so traders should also ensure they are compliant in the jurisdictions in which they operate. There’s all to play for, watch this space…
If you would like to discuss consumer protection regulation in Ireland, please get in contact with Deirdre Kilroy and Megan Kearns.