Two Class-Action Lawsuits Seek to Disaffirm Childrens' Microtransactions in Fortnite (also: the “10 hotdogs, 8 buns trick”)

THE BIG PICTURE

Two different class-action lawsuits have been filed seeking to disaffirm Fortnite microtransactions made by children; one against Epic Games and the other against Sony Interactive Entertainment. These lawsuits try to portray the monetization practices of Epic — and, by implication, most of the video game industry — in a harsh, predatory light. They appear to have little chance of success, but it will be informative to see how the courts handle these claims and accusations.

C.W. V. EPIC GAMES 2020 WL 1650496 (N.D.CAL.)

In the first class-action lawsuit, the plaintiff C.W., a minor, filed a First Amended Complaint (FAC) against Epic Games (after an initial and successful motion to dismiss from Epic Games was filed), in a declaratory relief action for a minor’s right to disaffirm Fortnite purchases. The FAC alleges claims for “declaratory, equitable and monetary relief under the Declaratory Judgment Act, California's contract laws, Consumers Legal Remedies Act Cal. Civ. Code § 1750, et seq, Breach of Good Faith and Fair Dealing, Negligent Misrepresentation, Business and Professions Code Sections 17200 et seq., and/or for Unjust Enrichment.”

The FAC uses highly vituperative language, accusing Epic of targeting children and making games that are “highly addictive” and designed to “compel children playing them to make purchases.” It alleges:

Fortnite is known for its addictive tendencies and have been compared to crack-cocaine and heroin. See Jef Feely and Christopher Palmeri, Fortnite Addiction is Forcing Kids Into Video-Game Rehab, bloomberg.com (November 27, 2018, 9:21 AM), https://www.bloomberg.com/news/articles/2018-11-27/fortnite-addiction-promptsparents-to-turn-to-video-game-rehab.

Players are encouraged to spend money on microtransactions within the game. See Society for the Study of Addiction, Predatory Monetization Schemes in Video Games (e.g. Loot Boxes) and Internet Gaming Disorder (2018) available at https://onlinelibrary.wiley.com/doi/epdf/10.1111/add.14286 (last visited May 16, 2019).

The FAC goes on to allege that Epic is playing the “10 hotdogs, 8 buns trick.” The FAC explains that the amount of V-Bucks (Fortnite’s in-game currency) in a currency pack “almost never corresponds evenly to the price of items” meaning that “Epic perpetuates a cycle of constantly needing V-Bucks….”

The ol’ 10 hotdogs, 8 buns trick, eh?

On top of that, the FAC alleges that “Epic is willfully blind in designing mechanisms that do not provide any means for minor children to download and confirm approval from a Guardian.” The FAC also alleges that Epic made negligent misrepresentations about its refund policy. As for the class, the FAC seeks to certify a class period when Epic introduced Fortnite games with microtransactions in 2017, on behalf of: “All minors in the United States, within the applicable statute of limitations, who made an in-App purchase that was non-refundable or made an in-App purchase with their own gift card.”

Epic, of course, has filed another 12(b)(6) motion to dismiss the FAC. This time around, Epic contends:

…their new allegations show that Plaintiffs (i) have sued the wrong defendant with respect to C.W.'s alleged “gift card” transactions; and (ii) have added claims regarding purchases that C.W. made as an authorized agent on his parent's credit account, which he cannot legally disaffirm. Plaintiffs’ attempt to resurrect their fraud-based claims fails because the FAC did not cure the defects that caused the Court previously to dismiss those claims. For these and other reasons, Plaintiffs' FAC alleges no valid claims, and the Court should dismiss it with prejudice.

Epic also makes a pretty solid common sense argument distinguishing disaffirming contracts from consumable purchases:

One simply does not see cases involving minors attempting to recover money they spent on ordinary consumable purchases. A minor cannot, for example, enjoy a day at an amusement park and then “disaffirm” her payment of the entry fee, ask for his money back from the theater after having watched a movie, get her money back for gasoline already used in a car, or demand a refund for an opened pack of baseball cards after not finding the card he wanted. No such cases exist, from California or anywhere else.

The hearing on Epic’s 12(b)(6) motion is currently set for May 12, 2020. It’s hard to see Epic losing this one.

CRAWFORD V. SONY INTERACTIVE ENTERTAINMENT, LLC, 2020 WL 1190708 (N.D.CAL.)

The second class-action lawsuit involving Fortnite is against Sony Interactive Entertainment (SIE) and seeks: “declaratory, equitable and monetary relief under the Declaratory Judgment Act, California's contract laws, Consumers Legal Remedies Act, Business and Professions Code Sections 17200 et seq., and/or for Unjust Enrichment.

Similar to the C.W. case, the Complaint here alleges that “SIE does not employ effective measures to prevent minors from creating these accounts. Minors frequently use their parents' credit or debit cards as a means of securing payments for in game purchases.” It also harps on the “free to play” concept as being deceptive by alleging: “Epic markets the Fortnite video game as free to play without warning adult consumers and parents of the in-game purchase features, directly inducing minors to make in-game purchases without authorization from their parents or legal guardians.”

This Complaint uses similar vituperative concepts and language, using words like “bait” and “prey” and describing the overall system as a “bait-and-switch business scheme.” The Complaint seeks to certify a class comprised of: “All persons in the United States who paid for a purchase of Game Currency made by their minor children without their knowledge or permission….”

As with the case against Epic, it’s hard to see this case against SIE going anywhere.

THE TAKEAWAY

While neither of these lawsuits are likely to succeed, I’ll be watching to see how courts receive the colorful arguments alleging that game companies are basically predators seeking to take advantage of children. Again, I would be surprised if either case makes it much further.