Last Friday, the Competition and Markets Authority (CMA) in the UK announced it is investigating the gaming subscriptions of Nintendo Switch, Sony PlayStation and Microsoft Xbox to determine if their business practices and terms and conditions are legal and fair. It has written to each of the companies asking for information about their online gaming contracts. The CMA, which is the UKs primary competition and consumer authority, is also asking consumers to reach out to share their personal experiences.
The consumer watchdog is particularly interested in the following information:
– Are the subscription contract terms and conditions fair to consumers?
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– Do the companies have wide discretion to change the quality of the subscription deals, such as reducing the number of games included or raising the price of the monthly subscriptions?
– How do cancellations and refunds work? Is it easy for consumers to cancel their subscription and receive refunds?
– Is the auto-renewal process clear and fair?
– Are consumers given clear, conspicuous information about how the auto-renewal process works?
– Are subscribers regularly reminded they are on an auto-renewable plan?
– Is the default subscription option auto-renewal?
In an April 5 press statement, the CMA said it has not determined that any consumer protection laws have been broken, but if any of the companies business practices are misleading or their terms are unfair and break any consumer protection laws, the CMA reserves the right to take enforcement action.
CMA Chief Executive Andrea Coscelli commented on the case Friday:
Roll-over contracts are becoming more and more commonplace and its essential that they work well for customers. Our investigation will look into whether the biggest online gaming companies are being fair with their customers when they automatically renew their contracts, and whether people can easily cancel or get a refund, Coscelli said. Should we find that the firms arent treating people fairly under consumer protection law, we are fully prepared to take action.
Nintendo Switch offers four packages for its gaming subscriptions: individuals for 1 month at $3.99 a month, 3 months at $7.99 a month, and 12 months at $19.99 a month, or a family membership for up to eight Nintendo account holders at 12 months for $34.99. Each offers a free 7-day free trial. Its purchase and subscription terms note that product pricing may vary by country. The company also spells out in ALL CAPS that, if automatic renewal is set, subscriptions will automatically renew at the end of the current subscription term for a period matching the current subscription term. Auto-renewals can be turned off up to 48 hours before the next auto-renewal is to be charged.
Sonys PlayStation Plus subscription, available for PS3, PS4 and PS Vita, offers three pricing options, following a 14-day free trial: 12 months at $59.99, 3 months at $24.99, or 1 month at $9.99 per month. Under PlayStation Pluss terms of service, subscription fees will automatically be deducted from a players wallet at the beginning of each subscription period without further notice to players. Subscriptions renew until they are canceled. The terms also specify that terms may change due to changes in the subscription membership, but those terms are not spelled out.
Xbox Game Pass is $1 for the first month and $9.99 per month after that, with no long-term commitment. Xbox Live Gold is $9.99 for one month, but other frequencies exist with additional cost savings. Xbox subscriptions, including Live Gold and Game Pass, are a little trickier to find and cancel. According to Xboxs subscription FAQs, users must go online to their Microsoft account to stop automatic renewals or to cancel their subscriptions. This is true for other Microsoft subscriptions as well, including Office 365.
In the U.S., state regulators have been following auto-renewal terms closely, and some jurisdictions have even enacted laws to ensure consumers are protected from unclear terms and conditions. For example, Washington, D.C. enacted a law called the Structured Settlements and Automatic Renewal Protections Act of 2018 that requires businesses that sell goods or services on a recurring basis to clearly and conspicuously disclose their automatic renewal provisions and cancellation procedures to consumers at the time of purchase and notify consumers prior to future renewals. Companies like Beachbody, eHarmony and Adore Me are just a few of the companies fined, prompting the need for such regulations.
The bottom line here is something you hear us say a lot – transparency is critical. Subscription companies billing customers on a recurring basis have an obligation to be transparent and to treat their customers fairly. That means ensuring that terms and conditions – including auto-renewal policies – are clear and conspicuous and that cancellations are easy, no matter where you are doing business. This is not only ethical, but it helps to attract and retain customers.