EU Proposes New Rules for Loot Boxes and Influencer Advertising

The European Commission has proposed new consumer protection rules covering paid loot boxes, other random reward systems and influencer marketing. The draft, called the Digital Fairness Act, aims to restrict some game mechanics for minors and to require disclosure of commercial content.

Under Article 15 of the draft, traders offering paid random rewards will have to inform consumers about the types of items or products available and the odds of obtaining them. Consumers would also be given accessible tools to turn these systems off. The Commission cites loot boxes, prize wheels and collectible card packs as examples, and states that such systems can encourage unwanted spending and have gambling-like speculative features. The proposal, however, does not classify every loot box as gambling.

Paid random rewards may not be offered to minors, or where the trader is reasonably certain that the user is a minor. In that case, pay-to-progress and pay-to-win mechanics are also prohibited. Virtual currencies that require payment will be switched off by default for minors and could only be enabled with the consent of a parent or guardian.

Article 11 of the draft requires influencers to clearly indicate the commercial purpose of their content using advertising or commercial partnership labels. Influencers would be banned from directly urging minors to buy products, from concealing commercial intent, and from presenting unsuitable products as appropriate for children. The Commission lists betting, lotteries and other gambling products among the examples that are harmful or unsuitable for minors in particular. However, the proposal does not impose a blanket ban on influencers promoting gambling. Existing EU and national advertising restrictions would also apply to influencer marketing.

The proposal was presented on 11 November. The text is intended to replace the 2005 Unfair Commercial Practices Directive. National gambling licensing rules will remain a separate matter. For the draft to become law, it must be approved by the European Parliament and the Council, and its provisions may change during negotiations.