[co-author: Chris Hennigar - Articling Student]
"Loot boxes" are mystery boxes in a video game that pay out prizes or other items for in-game use. Players can earn loot boxes, but often purchase them with real-world money. The loot obtained varies in value considerably. For example, some loot boxes contain special characters, powerful weapons or faster cars. Such rare and valuable items can be traded for large sums on secondary trading platforms. Other loot boxes contain much less valuable prizes.
The plaintiff in Sutherland v Electronic Arts Inc., 2023 BCSC 372 (Sutherland) alleges that the defendant game developers violated the British Columbia Business Practices and Consumer Protection Act (BPCPA) by encouraging players to purchase loot boxes without disclosing that valuable items were difficult or nearly impossible to acquire from such purchases. He seeks to certify a class action on behalf of potentially millions of players.
The defendant game developers argued that the plaintiff's claim did not disclose a cause of action under the BPCPA, including because the claim alleges that players knew some loot box prizes were rare. The Supreme Court of British Columbia disagreed. It held that it was not plain and obvious that the plaintiff's claim for deceptive practices would fail. However, the Court struck the plaintiff's claim for unconscionability with leave to amend.
Cause of Action for Deceptive Practices
Under the BPCPA, deceptive practices include representations or conduct which have the "capability, tendency or effect of deceiving or misleading a consumer." The remedies available to a consumer who has been subject to deceptive practices include a restoration order, a declaration, or injunctive relief, all of which the plaintiff pleaded in Sutherland.
The Court concluded the defendants' alleged failure to disclose that players have a low chance of obtaining valuable items through loot boxes could constitute a deceptive practice. The Court rejected the defendants' argument that the plaintiff's knowledge that valuable items are "rare" precluded any potential deception about the probability of obtaining such items from loot boxes.
Cause of Action for Unconscionability
The BPCPA also prohibits unconscionable acts or practices. To establish unconscionability, a plaintiff must demonstrate (1) inequality of bargaining power, and (2) an improvident bargain. As the Court in Sutherland put it, the plaintiff must demonstrate that the potential for undue advantage or disadvantage created by the inequality in bargaining power was realized.
The Court held that improvidence resulting from an inequality in bargaining power requires sufficient pleadings of material facts. The plaintiff's allegations did not meet the improvidence threshold—the allegation that the defendants encouraged the plaintiff to purchase loot boxes was not sufficient. However, the Court granted the plaintiff leave to amend the claim to plead material facts that could sustain an allegation of improvidence.
Conclusions & Implications
Unless successfully appealed, Sutherland may open a Pandora's box for game developers who increasingly depend on generating revenues through in-game purchases. The exact contours of how liability may be established remain unclear:
- How difficult must it be to obtain valuable items for players to be deceived?
- How valuable must the items be?
- How much disclosure of the "odds" must be provided?
- Must the disclosure of odds be precise (e.g., one in a million) or descriptive (e.g., rare, very rare, ultra-rare, next-to-impossible, etc.)?
Fortunately for electronic game developers, although not for players in the rest of Canada, Sutherland may have limited application outside of British Columbia, given different, albeit potentially comparable, provincial consumer protection legislation. As well, the case may not survive the eventual certification hearing where the plaintiff will have to show commonality across 70 different video games which may have different loot box practices.
Much like a loot box itself, whether this case's prize will be valuable or worthless remains to be seen.
