US government takes note: online games act like unregulated banks

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Recent findings from the United States Consumer Financial Protection Bureau (CFPB) have shed light on a concerning trend in the gaming industry: online games acting as unregulated banks, with notable titles like Fortnite and Roblox catching the bureau's attention.

In a comprehensive report published by the CFPB, the bureau expresses its awareness and monitoring of big online video games that are increasingly filled with in-app purchases, digital currencies, and third-party markets that function similarly to banks and casinos. Games like Fortnite, Roblox, and League of Legends, known for their lucrative revenue streams, have become virtual financial ecosystems, enticing players with microtransactions and in-game economies.

The CFPB acknowledges that these games, through their immersive virtual worlds, serve as an introduction to financial activity for many young players. However, it raises concerns about the vulnerability of these players to advertising and monetization tactics, highlighting the need for enhanced consumer protection measures.

One significant aspect highlighted in the report is the existence of third-party markets and websites that facilitate the sale and trade of in-game assets for real money. While most games officially prohibit such transactions, the report reveals a shadow economy where digital assets hold considerable value, sometimes surpassing that of fiat currencies.

For instance, the report mentions how in the virtual world of Habbo Hotel, plastic chairs designed for virtual apartments gradually became the de facto currency within the game's community. This phenomenon illustrates the malleability of in-game economies and the potential for virtual items to hold real-world value.

Despite the monetary worth of these virtual assets, the CFPB notes a glaring lack of bank-level security and user protections within most gaming platforms. Players who fall victim to hacking attempts, account theft, or scams often find themselves with limited recourse from game publishers. The burden of avoiding these pitfalls is often placed on individual players, leading to instances where players lose access to their valuable accounts without adequate support from publishers.

Furthermore, the report highlights instances where players faced account terminations when seeking recourse through their banks or credit card companies. This leaves players at risk of losing not just their in-game assets but also their investments tied to these virtual economies.

The CFPB points to "limited consumer protections" in the gaming industry, particularly concerning the storage and exchange of valuable assets within online games. The bureau hints at monitoring these non-traditional markets where consumer financial products and services are offered, including those provided by proprietary gaming platforms.

As the report gains attention, there's speculation about potential regulatory actions to address the growing concerns surrounding online video game banking and currencies. Whether game publishers and platforms take heed of these warnings to bolster security and user protections remains to be seen. The report serves as a wake-up call to an industry that has become a virtual Wild West, where player assets and investments are at risk in an unregulated financial landscape.