The Consumer Financial Protection Board: A New Player In The Game

Back in 2016 and 2017, the government regulation I wrote about was quite limited. The subject primarily confined itself to the gambling industry and the regulators were organizations like the UK Gambling Commission and the Washington State Gambling Commission. The arguments for and against practices like selling lootboxes were designed to fit into the scope of the regulators powers.

But times change. Whereas at the start of the first Trump administration issues involving gaming wasn't a federal issue, by the start of Trump's second administration the concerns are possibly greater in North America than in Europe. Sometime during the four years of the Biden administration, the concept of regulating video games acquired a more mainstream reasoning beyond protecting kids from gambling.

In today's post I'd like to briefly examine the conclusion to the Consumer Financial Protection Board's April 2024 report titled "Banking in video games and virtual worlds". The conclusion begins:

For several years, the most popular video games have included immersive virtual worlds that offer the storage and exchange of valuable assets. Gaming companies have created digital marketplaces that facilitate the buying, selling, and trading of these assets with limited consumer protections, which has led to potentially harmful practices for players including financial losses due to theft and scams.

I'll have to write another post about how the concept of "money's worth" has expanded in the United States, reflecting a more modern understanding of online video games. The report even provided what may become my favorite graphic on how money is extracted from online video games and thus provides more than sentimental value to assets acquired in games.

In my reading of the report, the phrase "limited consumer protections" refers to the signing of terms of service or EULAs which limit the rights of players to enforcement actions of game publishers for rules violations.

The idea of non-traditional is rather intriguing.

Consumer protection laws apply to banking and payment systems that facilitate the storage and exchange of valuable assets. The CFPB is monitoring non-traditional markets where consumer financial products and services may be offered, including where such products and services are provided by or in connection with proprietary gaming platforms

I'm a bit of a skeptic, but when we look at proprietary gaming platforms, a whole lot of money is involved. Those platforms range from sellers like Steam to consoles like Xbox and Playstation to games like Runescape and World of Warcraft. Although they way things are going, the CFPB may have to take Runescape off its list in the future. And I'll need to write another post to explain that line of reasoning.

Finally, we get to the portion of the report into which the recent case of U.S. v Cognosphere applies.

Additionally, the vast accumulation of data collected from consumers by gaming companies raises questions as to whether privacy rules are being adhered to and whether consumers, especially young ones and their parents, are fully aware of how their data is being collected and used across the industry. The CFPB will continue to work with other agencies to monitor companies that assemble and sell sensitive consumer data, such as a consumer's payment history, especially when this data is harvested and monetized without the user’s awareness.

The report came out in April 2024 and the FTC complaint in the case was settled in January 2025. Now, politics could get in the way of further action. Republicans are not overly fond of the CFPB and Donald Trump began his second presidential administration on Monday. Will the CFPB continue on the course we've seen over the last year, or will a Trump appointed director change the direction away from looking further into online video games?