Microtransactions: Small Payments With Huge Consequences

By Christopher Campise (Rutgers Law Student) A microtransaction occurs when a customer, usually the owner of an internet capable app or game, makes a small purchase within the medium to unlock more content. Often, this business model is employed by developers in freemium contexts, where the initial download is free, but more extensive features and content can only be unlocked after the payment of real-world currency. However, advancing technology has resulted in microtransactions being employed in an ever expanding array of settings, including education. This is troubling as gamers, users, and students frequently lack basic ownership rights in the virtual property they purchase.   The use of microtransactions is not exactly a new practice. Decades ago, microtransactions arguably appeared in phone booths, where quarters were inserted to purchase minutes, and in arcades, where coins and tokens were used to purchase extra races or lives. In these situations, microtransactions were benign, real currency was exchanged for an immediately used temporary and tangible benefit.   Unfortunately, the situation is much different today. Rather than simply place a coin in a machine, customers must now assent to complex boilerplate clickwrap and browsewrap agreements. In short, these are contracts whose terms a user must accept before accessing the product. A common example would be the terms and conditions Apple forces all iPhone users to accept in order to update their devices. Nevertheless, despite their widespread use, the average consumer of digital content often fails to even read these agreements. For example, retailer GameStation added language to its terms and conditions stipulating that whoever bought games from their site after a certain date, agreed to relinquish ownership of their “immortal soul” to GameStation should the retailer exercise the option. Of course, this was an April Fool’s prank by the retailer, but it was intended to send a serious message, as over 7,500 people had essentially willingly signed away their souls. Additionally, these agreements are usually strikingly biased in favor of the developers and control customers’ rights within the applications in almost every way. Furthermore, assent to such contracts does not necessarily result in direct ownership of the product. Although many customers likely believe that they are granted a vested property right when they purchase an app or game, they instead often receive only a revocable license. This does not mean that agents of the developer will be dispatched to repossess the licensed property, but in the context of applications with online capability, it could mean that support is legally revoked, sometimes resulting in lost purchases, gameplay functions, or progress. An example of such a contract is the end user license agreement (basically a type of clickwrap) applicable to enablegames’s games for players with disabilities. This agreement states in part that users are entitled to a “revocable right and license…to use one copy of the [g]ame software.” With regard to microtransactions, many concerning issues arise from the use of these agreements. Many of the contracts even state that users have no legal rights in the virtual content they purchase. Thus, in theory, substantial amounts of real world currency could be stolen or lost if the developer decided to seize or otherwise dispose of the virtual assets. Additionally, the lack of a vested property interest in the virtual content means that a user would have no legal recourse if the property were stolen by a third party via hacking or otherwise. Ironically, even if there were legal rights in the virtual content, there would still be highly limited legal recourse against the developer, as the initial agreements usually mandate that arbitration be employed in the event of a dispute. Basically, developers are subjecting their customers to their own self-serving legal regimes. Regardless of how much money is spent via microtransactions, in-app content and sometimes even the applications themselves, can be seized or revoked at will. No court order, warrant, due process, or other legal protections are applicable. The developers can also amend these self-contained legal systems at will, with no repercussions or user input. For example, Steam, a popular entertainment platform where games can be bought and played, recently informed one customer that should he not accept the updated clickwrap agreement, his account and all of its content could be permanently deleted. In almost no other area of law can one’s property rights, achieved through a legal exchange of currency, be instantly and arbitrarily extinguished by a private party. Fortunately, there are signs that courts will begin to protect the rights of the digital consumer, as users begin to invest ever greater amounts of time and real-world currency into an increasingly diverse range of applications. For example, in Bragg v. Linden Research, the District Court for the Eastern District of Pennsylvania ruled that a user was not compelled to participate in mandatory arbitration with a developer, despite his accepting of the terms and conditions which provided for it. This was significant since Bragg was one of the first decisions of its kind, and the player stood to lose the equivalent of thousands of dollars of in-game assets. The court ruled in favor of the user, stating that the developer’s terms and conditions were unconscionable. Regrettably, courts have also ruled against the consumer in such contexts. For example, in ProCD, Inc. v. Zeidenberg, the Seventh Circuit upheld a physical form of clickwrap, called a shrinkwrap, on the theory that usage of software is sufficient to constitute acceptance of the agreement’s terms. However, the ProCD court did note that such agreements could still be voided under established doctrines such as unconscionability. Hopefully, with the increasing prevalence of microtransactions, courts will err on the side of user protection, as in Bragg. Generally, unconscionability is a defense against enforceability of contracts broken into two parts, procedural unconscionability, and substantive unconscionability. Procedural unconscionability primarily addresses problems in the bargaining process. On the other hand, substantive unconscionability is focused more on issues with the terms of the contract itself, such as gross bias. Unconscionability seems well-suited to challenge the traditional agreements governing applications and their content due to the increasing use of microtransactions. From a procedural unconscionability standpoint, users with little to no negotiating power must accept the often buried, almost concealed terms of these agreements, if they want access to their device or app. Thus, given the ubiquity of these apps and other mediums, users are essentially forced to accept their surprising terms, potentially forfeiting their content, if they want to remain current with modern society. Speaking to a similar line of reasoning, Justice Sotomayor once stated that courts must, “reconsider…premise[s]…ill suited to the digital age.” Certainly, the law up to this point had not conceived of digital property, paid for with microtransactions, being unfairly seized in a virtual world. Similarly, from a substantive unconscionability standpoint, the rights granted to the users are wholly biased and insufficient. As it stands now, users have virtually no protection under the terms of the agreements they are forced to accept, which can usually be amended at any time. Some courts find substantive unconscionability is present when the contract terms “shock the conscience.” Surely, it would be difficult to find a situation more shocking to the conscience than people’s assets being seized, lost or stolen on a whim, with no legal recourse. The fact that this property only exists in the digital realm is relatively meaningless considering that the virtual property carries just as much, and sometimes more, real monetary worth than more tangible assets. In short, as technology develops, so too does the scope of microtransactions, which raises many concerns. For example, one newer virtual reality application designed to increase students’ familiarity with human anatomy, appears to be a useful pedagogical tool. However, the app initially only includes the skeletal system, with each new module of human anatomy requiring an extra purchase via microtransaction. It is difficult to imagine struggling students investing in an app, when their rights of use and microtransaction purchases could be extinguished at any moment via the terms of service. Rather, students would likely opt to pay the one-time fee to purchase a textbook, where ownership rights are not ambiguous and terminable. Such possibilities are unfortunate as the application of virtual reality could provide a more intuitive experience than reading from a textbook. Another grim possibility is that wealthier students, not as concerned with potential loss and attending private schools with greater resources, will avail themselves of these new mediums, putting their peers at a disadvantage in an increasingly competitive job market. In addition, if educators become aware of this potential disparity, they might prohibit such tools, stifling the implementation of new educational methods. Similarly, in the gaming realm, users often enter virtual worlds as an escape from real life; little do they know that they are often escaping into a totalitarian regime, in which they lack even the most basic property rights. In sum, the increased attaching of real monetary value to virtual assets through the use of microtransactions, means that greater safeguards must be imposed to protect users’ investments.