Digital Disregard: A Case for Amending Quebec’s Children Advertising Legislation
[Accepted for Presentation at the 2023 Annual CCA Conference at York University]
Sydney L. Forde
Erika Solis
Yasemin Beykont
ABSTRACT: In 1978, Quebec introduced the first wide-reaching advertising ban of its kind in the Consumer Protection Act (CPA), which prohibited advertising to children under 13. Through a case study that contextualizes the persuasive messaging of loot box microtransactions as a form of advertising in the FIFA video-game series, this paper seeks to establish the need for amendments to the Quebec CPA through 1) emphasizing how the video game industry has disregarded Québécois child advertising-regulations; 2) introducing how other nations have addressed advertising approaches used in video games; 3) breaking down how self-regulatory approaches from other governing entities can be adopted into legislation.
Keywords: Advertising regulation; Children’s advertisements; Quebec; Video Games; Digital Regulation
Digital Disregard: A Case for Amending Quebec’s Children Advertising Legislation
Often touted for its progressive legislation, the province of Quebec, Canada prohibited all advertising to children under 13 in 1978, making it the first wide-reaching advertising ban of its kind. Outlined in the provincial government's Consumer Protection Act (CPA) under Sections 248 and 249, three criteria are provided to determine whether advertisements qualify as targeting children. These include the intended purpose, the manner of presenting the advertisement, and when and where it is shown (Office de la protection du consommateur, 2012).
While these standards lend themselves to the regulation of traditional advertising in media such as print and broadcast, it is more difficult to apply such standards to digital technologies, such as video games that incorporate microtransactions, the additional for-purchase material within the game itself. Video game advertising falls within two categories; the external promotion of the game through commercials and print advertisements, and the increasingly utilized internal promotion of microtransactions. In some situations, such microtransactions act as the video games' primary source of revenue, surpassing profits made through product placement and game sales (McCaffrey, 2019).
Quebec is unique in its progressive adoption of a legal framework to regulate advertising; as other Canadian provinces and most western nations rely solely on self-regulated advertising standards. For example, the United Kingdom’s Advertising Standards Authority (ASA) - while highly praised as a leader in regulating digital video game advertisements - functions as a regulatory body that holds organizations to account through various measures related to non-compliance, rather than having the legally binding teeth afforded through the CPA’s legislative power. With a specific focus on the United Kingdom and the European Union due to their role at the forefront of video game advertising policy research – we explore the rules and practices of other nations that have adopted self-regulatory measures while examining the limitations of the existing Québécois legislation on children's advertising based on its inability to address digital media requirements. Through a case study analysis of the online football simulation video game FIFA 22, we propose that Quebec should adopt the rules outlined by other nations (often as self-regulation) into the legislative authority of the CPA in order to ensure commercial compliance.
The FIFA series, a product of Electronic Arts (EA), is infamous for promoting microtransactions within its paid platform in exchange for largely cosmetic features. In the Canadian legal landscape, EA has drawn criticism for its manipulative and exploitative use of loot boxes, a form of randomized microtransactions comparable to gambling, in the past (Ivan, 2020). Such appeals are particularly concerning when used on children, a demographic included in the games' rating of “E” for everyone (which encompasses children ages 6 and up). FIFA, widely available in the Quebec market, exposes children to the potential harms of both advertising and gambling, and thus goes against criteria laid out by the CPA. Because of this, we propose that increasingly popular internal advertising within FIFA and similar games has been left unchecked under the current Québécois legislation.
As such, this paper argues for amendments to the Quebec CPA through 1) emphasizing the scale to which the video game industry has disregarded Québécois child advertising regulations through a case study analysis; 2) introducing a variety of ways that other nations have addressed the unique and covert advertising approaches used in video games, such as the United Kingdom’s Advertising Standards Authority (ASA), which divides how in-game versus externally advertised items are regulated; and 3) breaking down how similar, often self-regulatory approaches from other governing entities can be applied through amendments to Quebec’s existing advertising regulation.
Advertising Regulation and the Unique Case of Quebec, Canada
“Allowing self-regulation is like letting the monkeys guard the bananas”
- Nicole Parton, 1979 (Vancouver Journalist) (Francis, 1979)
Established to protect citizens from growing American and western consumerism during the rise of neoliberal deregulation and consequential market power in the 1960s and 1970s, the Provincial government in Quebec, Canada introduced the first CPA in 1971. Through significant amendments in the years after its inception, sections 248 and 249 were introduced in 1978 and banned the act of advertising to children (Legis Quebec, 2022). The sections are as follows:
- Subject to what is provided in the regulations, no person may make use of commercial advertising directed at persons under thirteen years of age.
- To determine whether or not an advertisement is directed at persons under thirteen years of age, account must be taken of the context of its presentation, and in particular of
- the nature and intended purpose of the goods advertised;
- the manner of presenting such advertisement;
- the time and place it is shown.
Such a law speaks to the progressive nature of the Quebec government at a time when advertising legislation was (and, to this day, largely continues to be) self-regulated in western democratic states. Self-regulation can be defined broadly as “the control of business conduct and performance by business itself rather than by government or by market forces” (Pickering & Cousins, 1980, as cited in Boddewyn, 1985). Unlike the explicit regulatory involvement of the Quebec provincial government, the rest of Canada has adopted a self-regulatory approach to the management of advertising standards (see Bate, 2009). This includes relying on industry co-operation and self-management under the (industry-created) Canadian Code of Advertising Standards through administration from Ad Standards, the self-regulated industry body. Advertising to children is one of the two forms of ads (in addition to alcohol advertisements) that are described as “regulated” by the nation’s regulatory agency - the Canadian Radio-television and Telecommunications Commission (2020). Overseen by the Children’s Clearance Committee of Ad Standards, ads must be deemed in compliance with the Broadcasting Code for Advertising to Children (Children’s Code) (Advertising Standards Canada, n.d.).
The entirety of the “regulatory” involvement of the CRTC thus includes the initial endorsement of the Children’s Code, and the requirement that all ads targeting children must receive ad clearance from Ad Standards Canada before being made public (a requirement that is, curiously, not mandated but only “recommended” for other, non-children targeted ads) (Canadian Radio-television Telecommunications Commission, 2020). The approval or disapproval of advertisements targeting children, then, are nonetheless regulated by industry bodies rather than government actors. Such an approach to controlling commercial driven advertising persuasion through self-regulation, particularly as it pertains to the protection of children from persuasive and exploitative advertising, has been scrutinized in the past for not effectively controlling corporations attempts at reaching children (Goltz & Neufeld, 2013; Kent & Pauzé, 2018). In not relying on the industry itself to uphold government approved conditions of advertising, Quebec’s legislation outlined in the CPA is thus better able to shield children from commercial influences (Pepall & Reiff, 2017).
The CPA has undergone numerous amendments since its inception in 1971. For example, in 2019, Bill 197 - titled: An Act to amend the CPA to fight planned obsolescence and assert the right to repair goods - proposed an amendment to the CPA pertaining to the warranty of purchased goods and advocating for the “right to repair” (National Assembly of Quebec, n.d.). This paper proposes that sections 248 and 249 of the CPA should be similarly updated in order to best protect Quebecois citizens. Pascale Valois, in her Master’s thesis, similarly recommended the strengthening of these sections in the CPA - specifically through “extension du concept de publicité à tous les modes de communication Commerciale” [“the expansion of the concept of advertising to all modes of commercial communication”] (Valois, Painchaud & Mongeau, 2008; as cited in Bourgoignie & Lafond, 2007). In the most recently updated application guide from 2012, created by the Quebec government for industries in order to effectively navigate sections 248 and 249 of the CPA, targeted by the legislation are broadly described as “All formats and media are targeted when they are used to distribute or broadcast commercial advertising” (Office de la protection du consommateur, 2012). Though left open to “constantly evolving, new formats” of technology as it changes over time, examples provided are limited to largely traditional mediums and conceptions of advertising, such as radio, television, the web, and promotional items. Such formats, we propose here, does not encompass the increasingly complex digital landscape for what is to be considered an “advertisement”.
While numerous studies have examined, praised, and scrutnized Quebec’s unique blanket ban on children's advertising since its implantation, a significant proportion of these focus on the impact of eliminating the marketing of junk food to kids (Dhar & Baylis, 2011; Galbraith-Emami & Lobstein, 2013; Pauzé, Remedios & Kent, 2021). This study, in order to expand the scope of the CPA legislation to incorporate the increasingly digital-based experiences of children in the third decade of the twenty-first century, examines the role of advertising to children and positions this practice within existing literature. Furthermore, this paper explores how technological advances - specifically those in the video game industry - have led to the ability of profiting off of consumers (including children) in digital spaces that stray from traditional conceptions of formats and media as described in the most recently updated Quebec Application Guide (Office de la protection du consommateur, 2012). This is examined through a case study analysis of one of the world’s most sold video game franchises - EA Sports’ FIFA - and the ways in which this game (and the many others who employ similar tactics) has incorporated problematic advertising and promotional techniques that directly contradict Quebec's CPA (Batchelor, 2020).
Advertising to Children
As new formats continue to emerge in the advertising field, the conceptual definition has been altered various times. The increasingly evolving digital environment has complicated how scholars, practitioners, regulators, and consumers define “advertising.” In the pre-digital era, Richards and Curran (2002) proposed a description that stated advertising was “a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future.” Even though some specifics of this definition may be considered accurate today in the digital age, scholars like Kerr and Richards (2020) agree that updating the concept in the increasingly complex market is necessary. They proposed that “advertising is paid, owned, and earned mediated communication, activated by an identifiable brand and intent on persuading the consumer to make some cognitive, affective or behavioural change, now or in the future” (Kerr & Richards, 2020, p. 16). By generating this definition, the scholars’ goal was to expand the boundaries of what media types are involved under advertising practices, to be able to fit into self-regulatory organizations’ definition of advertising, and to keep the definition consistent globally (Kerr & Richards, 2020). One example of a self-regulatory organization that follows a similar definition is Advertising Standards Authority (ASA) in the UK. The ASA definition is as follows:
Advertising and advertisement(s)” are any message, the content of which is controlled directly or indirectly by the advertiser, expressed in any language and communicated in any medium with the intent to influence the choice, opinion or behaviour of those to whom it is addressed. (Advertising Standards Authority, n.d.)
Meanwhile, Quebec’s CPA has a comparatively brief definition of what an advertisement consists of - referring to an ad as “a message designed to promote goods, services or an organization in Quebec” (Legis Quebec, 2022). While possibly seen as limiting due to the unspecific nature of the definition, this broad description in the provincial law allows for a greater breadth of interpretation of advertisements as technologies and promotional techniques change over time. Such a policy approach is beneficial in markets that are constantly evolving, as being over-precise can limit the applicability of law to the exact wording of the provisions (Baldwin, Cave, & Lodge, 2011). For this reason, and due to the context of this analysis being based on Quebecois regulation, we adopt the CPA’s definition of advertising in this paper.
Advertising to children has been a complex issue in practice and regulation. Children lack the cognitive skills to understand the persuasive intent of advertisements and the ability to differentiate advertisements from editorial content. Hence, they are considered more vulnerable to manipulative or persuasive texts (Sandra L. Calvert, 2008; Laczniak & Carlson, 2009). Taking all of these harmful effects into consideration, scholars have warned parents and practitioners to be mindful of advertising effects, and have proposed policy solutions for the betterment of young audiences. For instance, Radesky et al. (2020) recommend prohibiting in-app host selling and purchases, including loot boxes (described below), and requiring clarification between advertising and content as two highly significant means of decreasing the risk of harm to children. Significantly, the digital age has altered traditional perceptions of what forms and mediums advertising takes, complicated by ever increasing opportunities to make money off of audiences. One such example is the video game industry, which, in the past two decades, has reinvented its main revenue sources through diversifying outside of pure product sales, and instead has moved towards the encouragement of in-game microtransactions, a process that has been described as the “perpetual commodification of the video game” (Lizardi, 2012, p. 3).
Video Games
Like many industries adapting to the digital environment of recent years, video games have shifted their revenue model away from simply relying on game sales. Starting in the 2000s, the industry saw a shift from profiting solely on sales to including more content for players to buy, introducing the concept of microtransactions. Defined as premium content in which players can download in addition to normal gameplay, microtransactions allow for the expansion of a game's world. Users can purchase this additional content using either real-world money, or with in-game currency (gained either by purchasing the currency with real money or earned through gameplay) (McCaffrey, 2019). One form of microtransactions – Loot boxes – are particularly problematic due to their incorporation of gambling.
Zendle et al. (2020) define loot boxes as “items in video games that may be bought for real-world money, but which provide players with a randomized reward of uncertain value” (p. 3). These items offer opportunities to obtain game-changing features, or change how players dress their characters. In either scenario, there is no guarantee a player will win the item they’re looking for in a loot box. Loot boxes have been described as predatory in nature (Harvey, 2021; King & Delfabbro, 2018; Uddin, 2021), and have often been compared to gambling and accused of encouraging compulsive spending, particularly amongst children (Mann, 2020).
Importantly, loot boxes are extremely profitable. In 2018, it was estimated players collectively spent $30 billion on loot boxes, demonstrating the economic incentives of organizations to shift towards microtransactions – a move that has come to disrupt the culture of gaming (Mann, 2020). Electronic Arts (EA), an American video game developer and publisher, is often associated with microtransactions, as several of their games include the gaming mechanic, including massive hits such as Apex Legends, The Sims, and Titanfall. Over 60% of EA’s revenue comes from services, which includes microtransactions and more specifically, loot boxes (Warren, 2017). While most of EA’s games contain some form of microtransaction, the FIFA series is one of the largest, most well-known games to do so (Electronic Arts, 2022a).
FIFA
FIFA is a football video game series based off of the Fédération Internationale de Football Association, a governing body associated with running world-wide competitions for football released annually to keep the player roster up to date, replacing retired players and adding new ones in order to reflect yearly personnel changes in real football teams. Users can create different teams based on their preferences, going up against the game itself or other real users. The game is available on multiple platforms, allowing users to play on consoles or computers (Electronic Arts, 2022b), and is easily accessible throughout Canada, including Quebec.
Since the 2009 edition release, FIFA has incorporated loot boxes, referred to in the game as “packs.” These packs can contain new players, cosmetics, and temporary team boosts (Thomas, 2009). With three levels of packs (bronze, silver, and gold), it drastically changes the percentage of what players and items can be collected (Electronic Arts, 2022c). Despite its popularity, the series has come under serious scrutiny throughout the years. In 2020, EA came under fire after the company placed a loot box advertisement in a children’s toy magazine. The advertisement promoted FIFA’s in-game currency as a way to purchase packs and in turn, “build [their] dream squads” (Robinson, 2020). The advertisement was very quickly removed, and EA promised to conduct “an immediate review of all future media placements” to ensure it is being responsible to its younger audience (Robinson, 2020). However, since the controversy, FIFA has taken other actions to persuade its players to purchase FIFA packs.
In 2021, a report from the Canadian Broadcasting Corporation (CBC) that cited internal company documents from EA found that the company was driving consumers towards purchasing FIFA packs to collect football players that are popular out of the game, but have notoriously low chances to earn through FIFA packs alone. Yet again, the company issued a response, stating it does not force people to spend money on their games but only provides them with the choice to do so. In general, EA has found itself with multiple class-action lawsuits, ranging from the company adjusting the difficulty to encourage consumers to buy more packs (which has since been settled in EA’s favor) (Robinsin, 2021), to EA breaching Canada’s gambling laws for selling loot boxes in its games (Ivan, 2020). Both lawsuits included FIFA at the forefront. As of 2023, FIFA has continued to vouch for its FIFA packs and will continue to include them in their upcoming installment (Robertson, 2022; Yin-Poole, 2022) despite the controversies addressed prior.
A concerning theme throughout EA’s cyclical pattern of abuse and hand-slapping is the company’s insistence that it is not pushing or promoting its products. This is made possible because, aside from the advertisement from the toy magazine addressed earlier, there has been no “direct” or traditionally conceived advertisements. The lack of such explicit promotional material does not point to a lack of persuasive efforts by EA in pushing FIFA packs to its consumers. Instead, the company chooses to promote loot boxes subtly in the game through “psychological nudges,” or in other words, making consumers feel as though they are missing out or are lesser for not having in-game items, only found in loot boxes (Yin-Poole, 2021).
Aside from advertising, loot boxes encourage a complicated issue: gambling among children. As addressed earlier, the variety in FIFA packs is consistently changing the chances of earning in-game items, thus, making it complicated to follow the probabilities throughout the multiple packs (Electronic Arts, 2021). Examining the implications of such, Zendle and Cairns (2018) found significant relationships between video game loot boxes and problem gambling, highlighting that gambling among gamers was clearly associated with loot boxes.
FIFA’s rating of E for everyone in Canada makes it difficult to know when children are playing the game, and thus difficult to measure and track the impact of exposure to loot boxes. Instead of tracking these implications, we focus on how loot boxes appeal to all consumers invested in gameplay, and amplify them to demonstrate the increased impact of ad exposures amongst children. In doing so, we aim to critique the lack of existing regulations that speak to digital-age advertising pertaining to loot box sales and microtransactions more specifically, and discuss possible policy solutions that Quebec might enforce to address such discrepancies through improving existing regulation.
Quebec Legislation in the Digital Age: A Case Study of FIFA’s loot boxes
Grounded in the literature discussed above, we examine the ways in which the loot box video game industry has disregarded the Quebecois legislation on children's advertising through examining Electronic Arts video game FIFA as our case study of analysis. Furthermore, through the examination of existing and introduced national regulation in other countries, we propose changes to the existing Quebec CPA through the adoption of digital focused regulation meant to further limit the exploitation of children under 13.
Through examining Quebecois legislation pertaining to advertising to children under sections 248 and 249 of the CPA (Legis Quebec, 2022), in addition to the most recent Application Guide (Office de la protection du consommateur, 2012), FIFA’s use of microtransactions in a video game rated E for everyone in the Quebec marketplace is, we propose, in violation of the CPA.
Breaking Down the Ban
Under section 248, the CPA states “no person may make use of commercial advertising directed at persons under thirteen years of age” (Office de la protection du consommateur, 2012). Clarifying who exactly is affected by the ban on advertising to children, the Application Guide states:
The ban applies to all merchants: Those who request the promotion of goods or services as well as those involved in the advertising process. The ban also applies to persons who design, distribute, publish or broadcast the advertisement [emphasis added] and persons who request the advertisement’s design, distribution, publication or broadcast. The Act defines these individuals as “advertisers.” (Office de la protection du consommateur, 2012, p. 2)
This description of advertisers, specifically the second section speaking to the creators of advertisements, speaks to the self-promotion inherent in the sale of microtransactions built into the increasingly commodified and self-contained video game advertisement realm. Furthermore, in describing commercial advertising, the guide states that the goal of such is to promote:
- goods or services offered for sale or rental;
- an organization having one or more activities consisting of the sale or rental of goods or services. (Office de la protection du consommateur, 2012)
Returning to the example of FIFA, the blatant example of EA trying to sell loot boxes in children’s toy catalogs demonstrates the broader intentions of the companies messaging surrounding the microtransactions (Batchelor, 2020). Furthermore, the narratives surrounding loot boxes that emphasize a better gaming and/or social experience can be understood as the promotion of a good to be purchased.
The formats and media targeted by the legislation, as described above, are lacking in their inclusion of digital age advertising and promotional strategies - outlining mediums including radio, television, the web, mobile phones, printed material, signage and promotional materials (Office de la protection du consommateur, 2012, p. 3). With this being said, the guide also explains that:
All formats and media are targeted when they are used to distribute or broadcast commercial advertising…Since the Act’s interpretation is constantly evolving, new formats and media that emerge as a result of changes in advertising practices and technologies are also affected. (Office de la protection du consommateur, 2012, p. 3)
Thus, while the technological and medium-based specifics of FIFA are not directly outlined in the current legislation, the broad scope (specifically in referencing “all formats and media are targeted”) demonstrates the flexibility of the application of the act to changing formats.
Determining Scope
Furthermore, outlining how to determine whether commercial advertising is directed at children as specified in section 249 of the CPA states that the context of the presentation must be taken into consideration. This includes:
- the nature and intended purpose of the goods advertised;
- the manner of presenting such advertisement;
- the time and place it is shown (Office de la protection du consommateur, 2012, p.4)
FIFA’s in-game promotion of loot boxes as providing added benefit to the game, the manner in which said products prioritize well-known and popular prizes through a lottery-style reward system, and the placement of such in a video game rated E for everyone clearly demonstrates the qualification of the game within CPA jurisdiction as targeting children.
The Act also poses the following three questions with corresponding criteria to breakdown qualifications of jurisdiction:
- For whom are the advertised goods or services intended? Do they appeal to children?
Aimed at understanding the qualification of a promotional item under the legislation outlined in section 249 of the CPA, the application provides a scale ranging from being “essentially intended for children”, to “greatly appealing to children without being exclusively intended for them”, to “not particularly appealing to children”. FIFA’s low age rating can be understood as, in part, appealing to children - though can not be deemed exclusively intended for them due to the widespread demographic of audiences of the game. Regardless, children do access the video game, and are encouraged to do so with the low rating deeming the product accessible to all.
- Is the advertisement designed to attract the attention of children?
The Application Guide lists a variety of characteristics that would establish a product as being “designed to attract the attention of children” (Office de la protection du consommateur, 2012, p. 6). Those applicable to FIFA include:
- a level of language commonly used by children;
- subjects linked to fantasy, magic, mystery, suspense, adventure or virtual worlds;
- spectacular media techniques: sound, color, special effects, cartoons or 3D animation
Arguably, many video games meet these very qualifications. The nature of appealing to wide audiences often means appealing to simplistic language easily understood by the majority of the population. Furthermore, the manipulative nature of loot boxes (comparable to gambling in many ways, as described above and below), denotes a targeting of vulnerable audiences privy to buying into such techniques. This is to say that just as a child at a carnival is less likely to understand the economic model of carnival games relying on continued and consistent loss, so too will they be less likely to understand the exploitative nature of loot boxes in FIFA.
The annual revamp of FIFA to incorporate new and traded players year after year speaks to the fantasy, virtual world the game provides to users of all ages - but has been found to be particularly meaningful to children who have been found to be less skilled in differentiating constructed worlds and truths from reality (Calvert, 2008; Laczniak & Carlson, 2012). Reflective of this, the stimulating sound, colors and special effects of the game promote the prolonged attention of users. While not exclusive to children, such effects speak to the ability to draw in young people through the allure of digitized excitement.
- Are children targeted by the advertisement or exposed to it? Are they present at the time and place it appears or is broadcast?
The criteria described in assessing the qualification of this third question includes reflecting on the proportion of children that make up the audience or that might be reached by an advertisement, whether children are present both at the time of broadcasting and at the location of broadcasting. The FIFA audience, though difficult to gauge specific demographics due to the complications of products purchased and shared with family members, can be understood as appealing to children due to its rating as E for everyone. While the exact number of children participating in the game has not been made clear, EA has demonstrated it’s interest in young audiences through direct appeals, advertising loot boxes in toy catalogs (Batchelor, 2020). Furthermore, the relationship between game play and temporal and physical space pose difficult questions in a media format with no such user restrictions, and that utilizes the internet as a marketplace for promotional transactions.
| Criterion A | Criteria B and C |
|---|---|
Goods or services essentially intended for children and that therefore appeal to them. Ex.: certain video games, toys or candy primarily consumed by children. |
The ad must not:
|
Goods or services that are particularly appealing to children without being intended exclusively for them. Ex.: certain desserts, fast foods, amusement parks, video game consoles. |
The ad is allowed if:
|
Goods or services that are not particularly appealing to children. Ex.: cleaning products, alcoholic beverages, certain types of clothing. |
The ad is allowed. However, if the company sells children’s products, attention must be paid to the ad’s design. The design should not be appealing to children if they essentially comprise the audience when and where the ad is broadcast or distributed. |
Figure 1 - Three Criteria for determining if an advertisement is prohibited under the Consumer Protection Act (CPA)
The three criteria described above make up the basic principles to consider when assessing the qualifications of advertisements as appealing to children. The application guide states:
The relationship between the three criteria is what determines whether an advertisement is directed at children…An advertisement can be prohibited depending on the appeal that the goods or services advertised have for children. To reach a conclusion, the ad’s design must be considered in order to determine if it might appeal to children and if the time and place the advertisement is shown make it possible to reach children. (Office de la protection du consommateur, 2012, p. 8)
This is to say that the intended audience, the appeal toward children, and the place and time the ad is shown are equally important criteria in determining the status of an ad as targeting children (see Figure 1 for more information on the three criteria). Such a balancing of criteria takes into consideration (in near equal weight) the temporal and spatial components of advertisements. This problematizes the legislative overview of digital, online based promotional material, such as that seen in FIFA. We demonstrate here that, aside from such temporal and spatial specifications written for a time dominated by broadcast media being applied in the digital world, FIFA’s push of loot boxes and microtransactions to its users - including (sometimes directly) children - meets the qualifications of advertising prohibited by the CPA under sections 248 and 249.
Alternative Policy Approaches
While other countries such as the United States (Hawley, 2019) have sought to regulate microtransactions, and more specifically loot boxes, the European Union and United Kingdom have become the forefront of creating regulatory language to curb the impacts of this game mechanic. Thus, we have chosen to largely focus on these two regions to analyze their existing regulations and understand their approaches, alongside select policies introduced by other nations.
The Policy Department for Economic, Scientific and Quality of Life Policies provided a study focusing on the problematic effects of loot boxes and examining the regulatory framework at both the EU and national levels (Cerulli-Harms, Munsch, Thorun, Michaelsen, & Hausemer, 2020). This demonstrated that the EU has not tackled loot boxes separately, but has instead made changes to general rules on consumer protection that apply to loot boxes (Cerulli-Harms et al., 2020). Due to loot boxes’ gambling-like features, there have been debates about how they can be regulated under online gambling, and the European Commission adopted recommendations to prevent minors from participating in them. Even though loot boxes are similar to gambling, they are not legally considered gambling in most EU member states which problematizes the protection against loot boxes, except for Belgium (Cerulli-Harms et al., 2020). When it comes to the advertisements of loot boxes, there are stricter prohibitions against the practice, such as seen in Germany where neither the purchase of loot boxes can be advertised, nor can games offer the option to players to open loot boxes in exchange for watching advertisements first (Cerulli-Harms et al., 2020). Moreover, Germany’s Bundestag (federal parliament) also passed a reformed Youth Protection Act that limits adding loot boxes to games that are restricted to the age group 18 and older, though this is pending approval by the Bundesrat (legislative body) (Fingas, 2021).
Another practice to make loot boxes less deceptive and more transparent is a concept called disclosure regulation, which requires game developers to disclose the probability of earning different items and rewards from the loot boxes the players open. For example, The People’s Republic of China introduced legislation in 2016 where players are required to be informed of these probabilities (Fingas, 2021; Straub, 2020). Meanwhile, the Korea Association of Game Industry took up a similar approach by starting a self-regulatory measure rather than legislation (Cerulli-Harms et al., 2020). Due to the inherent contradictions of power involved in the self-regulation of advertising standards, as discussed above, we propose probability disclosures should be adopted into the CPA as a requirement rather than a voluntary measure. Overall, banning loot boxes under gambling regulation such as seen in Belgium, or recognizing the problems affiliated with loot boxes beyond gambling such as in the EU, are both viable options to consider when expanding the scope of the CPA to the digital realm.
While EU regulation contains a number of measures to assist in protecting children, the United Kingdom has been a leader in regulating advertising in-game purchases through the Advertising Standards Authority (ASA). The ASA is an independent, self-regulating advertising body, meant to keep advertisements in the UK within a strict set of guidelines. The ASA developed a report in 2021 for video game advertisements, more specifically in-game advertisements. The organization sought to prevent pressure from being placed on players towards purchasing products or misleading them to misunderstand the price or purpose of a product. In this report, a number of terms were broken down in a way that was understandable for companies when considering the promotion of relevant products (CAPBCAP, 2021). For instance, for video games the description of odd pricing - a manipulative tactic where two currencies in a game and the real world currency used to buy such do not align - was described (CAPBCAP, 2021). In addition, it establishes that “in-game storefronts are considered to be advertising where the items are purchased with virtual currency that can only meaningfully be obtained with real money (CAPBCAP, 2021). FIFA overlooks both of these guidelines, having adopted odd pricing throughout and hosting in-game storefronts that do promote the purchase of in-game currency with real-world money.
Recommendations
With these various policy approaches in mind, we propose that it would benefit Quebec to adopt an array of strategies employed elsewhere in order to create stronger regulations for children’s advertising, particularly regarding new forms of digital media such as video game promotion. Accordingly, we propose the following four recommendations - established from the literature and case study above - for the Quebecois government to consider incorporating into the existing CPA under sections 248 and 249:
- Clarifying the definition of advertising and adjusting it for the digital media landscape
Looking at the EU members’ and the UK’s reports and legislation, we propose that Quebec’s definition of advertising, while perhaps strategically broad (as described above), lacks important clarity in the digital age. Such clarity should include direct and indirect aims and digital communication places and means so as to provide better restrictions against advertisers in the digital age. While this is not to say the definition should be so specific so as to lose broad applicability, adopting language that aims to restrict advertising loot boxes and similar exploitative processes is a necessary step. Similar to Germany’s approach to loot box advertisements, expanding the definition of advertisements in the CPA and restricting advertisements for both the purchase of loot boxes and those that showcase the process of unlocking loot boxes would further protect minors. Alternatively, the UK has proposed that video game developers should make the type of purchase clear for the player and clearly label such as advertising. This entails that if the in-game currency used to buy the loot boxes is obtained through real-world transactions, rather than in-game elements, any information (store-front and inducements) that is provided about the purchase is considered advertising and should be regulated accordingly. Such expansions to both the considerations of what qualifies as an advertisement, as well as what is deemed acceptable (or not acceptable) for young consumers will, in turn, protect young audiences in Quebec.
- The advertising of loot boxes should be considered a form of gambling and harmful to minors
The conception of loot boxes as an acceptable form of microtransaction within video games should be reconsidered. The UK Advertising Standards Authority report focused on the gambling side of loot boxes, establishing that loot boxes and in-game chance purchases can be considered a form of gambling. While there remains hesitancy in the UK as to whether this argument is strong enough to invoke direct regulatory efforts, countries in the EU such as Belgium have firmly taken this step. This national ban on loot boxes comes with the threat of criminal prosecution for non-compliant companies implementing gambling without a license to do so. Even while the entirety of the EU does not have union-level regulation to enforce such restrictions as seen in Belgium, the Union’s report goes as far as to say that voluntary measures are insufficient to protect players from loot boxes’ potentially harmful effects. Germany’s amended Youth Protection Act that aims to limit loot boxes to games that are restricted to the age of 18 and older is another example of possible action when dealing specifically with young consumers. This federal law went into effect in January 2023, and is enforced by the Entertainment Software Self-Regulation (USK) - an independent self-regulatory committee - to check on a case-by-case basis if certain functions have a higher negative risk to children (Unterhaltungssoftware Selbstkontrolle, 2022). Quebec should consider a similar limitation by adopting the language used in Germany’s amendment to the Youth Protection Act into the CPA in order to prohibit gambling amongst children - something intrinsically involved in the promotion and sales of loot boxes.
- The regulation of video game language similarly to advertisement language pertaining to pricing and probabilities of purchases.
The UK recommends the transparent inclusion of odds for rarer, more coveted items within loot boxes. In addition, it recommends changing the in-game language to prevent direct encouragement of purchasing products, as well as a direct gambling disclaimer (CAPBCAP, 2021). In addition, the UK requires that marketers and promoters do not mislead consumers by discouraging any vague language. Within the EU, it is suggested that video games disclose the probabilities of specific items from loot boxes in an accessible format for the intended audience. In China, disclosure of information regarding loot boxes is a requirement, rather than a recommendation. We propose that Quebec should consider these actions and enforce their own guidelines to prevent video game developers, such as Electronic Arts, from taking advantage of loopholes in traditional advertising legislation for children under 13.
- Adopting digital-age language into the CPA and Application Guide
In focusing on the temporal and physical reception of advertisements, the CPA demonstrates its positioning in the broadcast era and simultaneous neglect of digital space. In an attempt to expand this definition, the CPA suggests that "a website section falls under the media category", comparable to physical space. In encompassing the entirety of the web as a single media category, the CPA demonstrates its ill-equipped approach in handling complex situations that regularly occur in online spaces. Furthermore, in outlining whether content that is not exclusively targeting children but may be particularly appealing to them is permitted or not, advertisements are deemed permissible primarily based on whether "it is not broadcast or distributed in a place where or at a time when children in particular are normally reached". Such restriction based on the location and temporality of advertisements - as applicable in the broadcasting of content - does not take into consideration digital media that does not operate under such restrictions. It is thus our recommendation that - in addition to the important guidelines established for traditional media, the way that media is provided and consumed in the digital age must be adopted by the CPA. This could include the flagging of common websites specifically targeting children (such as YouTube Kids) and enforcing legislation there. Furthermore, the conception of media as one single entity does not allow for the specific regulation of complicated online spaces such as video games that utilize the internet for the exchange of micro-transactional goods.
Conclusion
"The whole thing is a dog's breakfast"
-J Richard Genin, 1983
(Sales Manager of Tele-Metrople Inc. in protest to CPA restrictions, in Lippman, 1983)
Quebec is a province that leads the charge in addressing the safety and protection of children in media environments - as demonstrated in its early adoption of extremely progressive advertising legislation. However, despite the province’s actions in the past, we aimed to demonstrate throughout this paper that in order to maintain its status as a leader of children’s rights, the provincial Consumer Protection Act must adjust it’s legal framework to meet the demands of the 21st century digital media environment. Throughout this paper, we have outlined holes in existing advertising regulations made for a pre-internet age in order to demonstrate the need for stronger, digitally focused language and restrictions in order to prevent digital media industries from taking advantage of citizens, specifically the most vulnerable of such.
Microtransactions such as loot boxes are incredibly profitable, but rely on predatory tactics that currently go unrestrained - even in jurisdictions that fought to protect children in the broadcast age. When examining Quebec’s CPA - what has been considered one of the most progressive advertising policies in the world - the few checks and balances pertaining to digital media forms do little to curb media industries from advertising gambling to consumers, particularly children, in popular video games. The adoption of regulation, such as that that has been applied in other nations – even if just at the self-regulatory level - is necessary to rein in the promotion of loot box microtransactions, as described throughout this paper. By adopting self-regulatory policies of other nations into the legislative authority of the CPA, Quebec can prevent further exploitation of young audiences, and maintain its status as a progressive leader of children’s safety.
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