Virtual worlds like Roblox, Fortnite, and Minecraft offer highly immersive experiences, and making in-game purchases through these platforms has become commonplace. It has also become costly, with Americans spending $56.6 billion on gaming hardware and content in 2022.
The rise in virtual marketplace transactions presents unique risks, according to a recent report from the Consumer Financial Protection Bureau (CFPB). The CFPB’s central critique is that “metaverse” marketplaces have been modeled after digital banking and payment systems, but don’t offer any of the protections.
As a result, virtual worlds have left their users open to account theft and fraudulent transactions, which can have significant financial impacts. The CFPB also raised concerns about ambiguous transaction fees and the amount of surveillance data the platforms collect about their users.
A Haven for Scams
In a statement accompanying the report, CFPB Director Rohit Chopra called virtual worlds “a haven for scams, fraud, financial losses, and unanticipated purchases that can deplete a family’s real-world financial assets.” Chopra emphasized that gaming platforms skew toward a younger audience that are often more vulnerable to fraudsters.
Because users are spending gaming credits in metaverse transactions, it can seem like real money isn’t changing hands. The CFPB also made it clear that gaming assets are not equivalent to gift cards. Gaming assets can be sold and traded between users and their value can fluctuate. Game publishers can even manipulate an asset’s worth.
Gaming asset values have skyrocketed as third-party websites have sprung up to facilitate trading, as proven by the 2023 sale of a Counter-Strike metaverse “skin” for $500,000. The CFPB was disturbed by the rise of the skin gambling industry on third-party sites, where users wager virtual-world skins in casino games like blackjack or roulette.
Rife With Hidden Fees
The conversion of traditional currencies to gaming credits is another sticking point. Many virtual worlds sell credits in currency bundles, and it’s not always clear just how much a user is paying.
The currency conversion rate is not readily apparent either. Buying 100,000 in Roblox credits costs $1,000, but selling that same amount will only net $350. In addition, some platforms charge hidden transaction fees upon cash-out, and some enforce minimum credit balances before they let users withdraw.
Because cashing out is handled by third-party websites, there are increased opportunities to commit account fraud or steal gaming assets. The CFPB warned that user data collected by gaming companies can be sold or traded, and its report raised alarms that surveillance data on user behavioral patterns could be leveraged by gaming publishers to induce elevated spending.
The CFPB also noted that if users dispute transactions, oftentimes their accounts will be suspended or terminated. Chopra said the CFPB will continue to assess virtual world financial practices, and that users should take a hard look at the virtual transactions they and their children are making.
