For the purposes of protecting consumer interests and preventing disputes arising from insufficient information, the Ministry of Economic Affairs (“MOEA”) has proposed an amendment to the Mandatory Provisions Item 6 of “Mandatory and Prohibitory Provisions of Standard Contracts for Online Game Connection Service” (“Amendment”). The Amendment, also known as “Loot Box Regulation”, after being reviewed and approved by the Executive Yuan Consumer Protection Committee and promulgated by MOEA, came into force on January 1, 2023.
Subparagraph 4, Paragraph 1 of the amended Mandatory Provisions Item 6 stipulates that: “[g]aming companies should specify the following information on the home page of their official websites, the login pages or the purchase pages of the game, and on game packaging:… (4) for products or activities that offer a chance to win a prize, whether directly or indirectly, partially or fully paid, the content of such activities, the prizes, the loot box drop rates, and the winning prize should be revealed The reminder of ‘this is a product won by chance. Purchasing or participating in activities does not guarantee acquisition of a specific product.’ should also be stated.” The Amendment also added Paragraph 2 to the above item, which stipulates that: “the drop rate in the preceding subparagraph 4 means the chances that the consumer will acquire the product or fulfill the conditions of the activities after purchase.” (Note: The underlined text is the newly added text in the Amendment which came into force on the January 1, 2023.)
The Amendment clearly defines those subject to disclosure of drop rates are “products or activities that offer a chance to win a prize, whether directly or indirectly, partially or fully paid.” In other words, as long as paid purchases are involved, no matter whether the consumer could acquire the product or fulfill the conditions of the activities after purchase, or whether the consumer has the opportunity to acquire such product or fulfill such conditions after purchase, or whether the consumer pays all or partial for the acquisition of such product or the fulfillment of such condition, , the drop rates should be disclosed. To prevent gaming companies from disclosing the drop rates briefly or vaguely, such as describing the rate as very high or low, the Amendment requires that the drop rates to be recorded in the form of “numerical percentages (%).” This allows consumers to understand clearer and make rational judgment before purchase. In response to the Amendment, gaming companies are obligated to ensure that their standard contracts comply with the requirements of disclosing the drop rates.
Regarding the audit of standard contracts, according to Paragraph 6, Article 17 of the Consumer Protection Act (“CPA”), the competent authority may audit enterprise on the use of standard contracts whenever necessary. As stated in Article 57 of the CPA, enterprises evading, obstructing or refusing any investigation conducted by the competent authorities in accordance with the Paragraph 6, Article 17 shall be administratively fined for NT$30,000 to NT$300,000. Such fine may be imposed consecutively. It is evident that the competent authorities of gaming companies, including the central competent authorities the Ministry of Digital Affairs, and the local competent authorities such as county (city) governments, have the right to examine standard contracts between the companies and consumers in accordance with the CPA. If the gaming companies evade, obstruct, or refuse such audit, administrative fines may be imposed.
In addition, according to Article 56-1 of the CPA, if the gaming companies do not comply with “Mandatory and Prohibitory Provisions of Standard Contracts for Online Game Connection Service” and fail to take corrective actions after being ordered by the competent authorities within a specified period of time, the gaming companies are subject to administrative fines of NT$30,000 to NT$300,000. Such fine may be imposed consecutively. Therefore, if the competent authority considers that the standard contract does not comply with the “Mandatory and Prohibitory Provisions of Standard Contracts for Online Game Connection Service,” it has the right to require the gaming companies to make corrections within a specified period of time and impose administrative fines on failure of corrections. The amount of administrative fine will increase and may be imposed consecutively for any further non-compliance.
To summarize, the impact of the Amendment is that gaming companies need not only to revise their standard contracts and cooperate with the competent authorities for audit, but also to implement the revised standard contracts. Although the Amendment only addresses the disclosure of the loot box drop rates in Mandatory Provisions Item 6, the competent authorities may review the entire contract to ensure compliance with legal requirements during the audit. For multinational gaming companies, standard contracts applicable to players in different countries often need to align with global operational policy. The core concern for these companies is how to efficiently revise standard contracts to ensure compliance with the requirements of mandatory and prohibitory provisions and to minimize discrepancies between the content of these contracts.
(The article is originally in Chinese which can be found here.)