Console makers being investigated over online gaming contracts

UK competition watchdog examining fairness of auto-renewal policies

The Competition and Markets Authority (CMA) has launched an investigation to determine whether Sony, Microsoft and Nintendo’s online gaming contracts are breaching consumer protection laws.

The UK competition watchdog says it’s concerned about the legality of some of elements of the companies’ business practices, such as their use of auto-renewals for online subscription services, their cancellation and refund policies and their terms and conditions.

The CMA has written to the platform holders requesting information about their practices to assist its investigation. It has also called on consumers who use PlayStation, Xbox and Nintendo online services to get in touch with it to share their experiences.

It said its investigation will focus on 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?

If the CMA finds any of the companies’ practices to be misleading or their terms to be unfair, it could take enforcement action.

CMA chief executive Andrea Coscelli said: “Roll-over contracts are becoming more and more commonplace and its essential that they work well for customers.

“Our investigation will look into whether the biggest online gaming companies are being fair with their customers when they automatically renew their contracts, and whether people can easily cancel or get a refund.

“Should we find that the firms aren’t treating people fairly under consumer protection law, we are fully prepared to take action.”

Sony recently introduced a new PlayStation Store refund policy giving users 14 days to cancel their PS4 digital purchases.

The new terms cover pre-ordered content, as well as released games and DLC that players have not yet started to download or stream.