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On November 9, 2020, a new lawsuit appeared, targeting Electronic Arts (EA). This popular video game developer’s catalogue includes some of the world’s biggest sports franchises, such as Madden, NHL and FIFA.
Filed by two California based law firms, the suit alleges that Electronic Arts has violated various California Laws. The crux of the plaintiffs’ allegation is that EA has made their sports video games intentionally too difficult, in order to get consumers to purchase in-game loot boxes in the hopes of boosting their performance.
Around 2018, a number of jurisdictions began to look very seriously at video game loot boxes. There were investigations by the Federal Trade Commission, as well as other regulatory bodies in Washington state and across the Atlantic in Europe.
The concern centered on the gambling-like appearance of the loot boxes. These are sometimes presented as literal boxes, other times as packs of cards or in other forms. Players collect these in game or purchase, then click to “open” them to receive an assortment of cosmetic or useful items of varying rarity and value.
The algorithms used to award the items vary from game to game. In some, the rarest and most useful or desirable items can be exceedingly rare and require either a lot of luck or a high amount of spending to obtain.
There are three elements that determine whether an activity is gambling. The first is that the outcome is depends to large degree on chance. The second is that there is some consideration (i.e. money or other item of value) paid in order to participate. Finally, there must be some sort of prize at stake, which must also be something of value. Loot boxes that are available for purchase with real money meet this definition, provided the contents are also considered to be a “thing of value.”
Previous lawsuits have examined whether loot boxes in general — and particularly those in EA’s games — meet this definition. They’ve been met with varying degrees of success. The present lawsuit is only the most recent in this procession, though it differs from the others in its emphasis.
A study back in 2019 revealed that that there was a correlation between problem gambling and some loot boxes, though a causal link was not identified.
Despite the relatively early stage of research into loot boxes, the potential relationship to problem gambling disorders creates a reason to be cautious. Various European countries have implemented total bans on loot boxes and some game makers have removed paid loot boxes of their own volition.
The plaintiffs in the latest class action, Zajonc v. Electronic Arts, are seeking more than $5 million in damages.
The filing notes that the proposed class of Plaintiffs will include all persons in the United States who purchased a Madden, FIFA, or NHL game on or after November 9, 2016.
The Plaintiffs allege violation of three California statutes. First is the California Consumers Legal Remedies Act, which prohibits deceptive business practices. The second is the California False Advertising law. Finally, the plaintiffs argue that EA has violated California’s Unfair Competition law. The plaintiffs finish with a common law claim alleging that EA is unjustly enriched and should not be entitled to retain the profits gained by the sale of Player Packs, due to the other violations.
The new lawsuit comes on a wave of legal settlements stemming from a series of lawsuits against social game makers in Washington State. The settlements saw Churchill Downs and Aristocrat Technologies pay $155 million to users. Meanwhile, Playtika agreed to pay upwards of $38 million to its customers. The money is to be distributed proportionally based on the amount consumers spent on the games, after attorney’s fees were deducted.
In addition to the settlement the social game makers also agreed to make changes to their games. These included added the ability to self-exclude from in-game purchases. Significantly, the settlement allowed the companies to avoid letting the court establish a binding precedent. This could have been even more costly to the companies in the long run.
The claims laid out in Zajonc v. Electronic Arts concern the design and marketing of games from sports franchises in question, starting from the 2017 editions and running up to the most recent installments.
The lawsuit states that the most popular game mode for all three franchises is the Ultimate Team mode. This mode is uses the Player Pack product, which is effectively the same as a loot box.
The lawsuit explains:
Once a gamer purchases a Player Pack and unlocks a Player Card, the gamer can use the unlocked player on his or her Ultimate Team. Loot boxes are games of chance, and gamers who purchase Player Packs hope to get lucky and receive highly-rated players for use on their Ultimate Teams, so as to be more competitive in Ultimate Team Mode matches.
The suit alleges that EA utilizes artificial intelligence based technologies. These are not disclosed to players, but dynamically adapt and adjust the difficulty of matches.
The argument is that these dynamic adjustments create “heightened gamer engagement” which correlates to higher in-game spending.
The lawyers argue that the dynamic adjustments create two problems. First, they say that “Difficulty Adjusting Mechanisms make gamers believe their teams are less skilled than they actually are, leading them to purchase additional Player Packs in hopes of receiving better players and being more competitive.”
The second argument is that EA has injured game purchasers even if they did not purchase Player Packs, simply by virtue of not disclosing the dynamic difficulty adjustments.
This lawsuit is new and neither party has yet presented its arguments. At such an early stage, there is still a lot that can happen, so it’s hard to make any predictions.
However, a settlement of some sort remains a likely outcome, as was the case with Playtika and the other social games companies. There are enough differences between this case and those that EA may feel it has a good chance of winning. However, it will above all want to avoid establishing a legal precedent that would affect its future business. If it fails to get the judge to dismiss the case, the court proceedings may simply serve to determine the size of the settlement it offers.
In the immediate future, the next step is for the defendants to answer the complaint. That response would originally have been due on December 1, based on the date of the filing. However, the plaintiffs and defendants jointly agreed on an extension until January 11.
This case is certainly one to watch. Depending on how far it goes, it has the potential to affect the entire industry, not only EA’s titles.