CMA’s investigation into online gaming companies’ auto-renewal contracts seeks to build on recent consumer protection efforts.
The UK Competition and Markets Authority (CMA) announced on 05 April 2019 that it is launching an investigation into online gaming companies’ use of auto-renewal, cancellation, and refund policies in relation to online services. The investigation is being conducted using the CMA’s consumer protection powers.
The CMA stated that these auto-renewal contracts, whereby money is automatically taken from a customer’s account as the contract rolls over, are becoming more and more commonplace in the UK gaming industry. The UK gaming sector has also grown; industry analysts Ukie reported that consumer spending on games and gaming hardware in the UK had increased 10% in 2018 to £5.7bn.
Accordingly, the CMA is seeking to understand whether the auto-renewal process treats consumers fairly, having identified a number of damaging practices including costly exit fees, time-consuming and difficult processes to cancel contracts, requiring customers to auto-renew, and not giving sufficient warning that their contract will be rolled over.
This investigation forms part of the CMA’s response to the Citizens Advice super-complaint on the 'loyalty penalty', where disengaged and loyal consumers were found to be paying more for essential services than active or new consumers. The CMA has so far set out a package of measures in relation to the five markets identified in the super-complaint, including launching an investigation into the anti-virus software market and establishing a working group to oversee the implementation of its recommendations.
The CMA plans to provide an update on its progress in implementing its recommendations in response to the super-complaint in the summer of 2019.
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