Games Monetizing With In-App Purchases Need to Re-Consider Their Terms if Their Gamers Include Children

Creating enforceable end user license agreements (similar to a “terms of use” document) has become increasingly challenging in recent years.  The challenge has often focused on whether the company can prove a specific user of the digital content (a website, app, etc.) consented to the EULA.  You can read more about that issue here.  But, games targeting children (which we will define as anyone under the age of majority for purposes of forming a contract) may face a new challenge.

In the law, generally, children cannot be bound by a contract that they enter into if they disaffirm the contract within a reasonable time frame.  What that means is that a child may often back out of a deal that they make, or their parents can do so on their behalf.  EULA’s are enforceable when a court finds that they represent a contract between the user and the website or app.  Accepting those legal basic principles, children may be able to disavow EULA’s that they have otherwise agreed-to.  This can create great legal risk to a company relying on the provisions of that document to protect itself.

The Dispute Surrounding Epic Games’ EULA

Epic Games dealt with a lawsuit where a child disaffirmed Epic’s EULA.  The child, through his parents, brought consumer protection claims under California law and sought to represent a class of people in California who had purchased a Llama with V-bucks, which V-Bucks were purchased with money, in Fortnite Save the World.  The Plaintiff alleged that Epic, by allowing V-Bucks to be bought in currency packs and setting prices at odd amounts, induced players to spend more money.  Plaintiff further alleged that children have difficulty conceptualizing how much money is spent on in-game purchases with V-Bucks.  Plaintiff mainly claimed two misrepresentations and omissions by Epic:  “(1) [Epic’s] usage of thought bubbles next to Llamas are deceptive because it often displays a rare, sought-after item when in facts the odds of getting that item are low; and (2) [Epic] does not display the odds of receiving the higher-tier loot.” 

With respect to Epic’s EULA, since Fortnite’s launch, all users have had to affirmatively agree to the EULA.  For example, when someone downloads Fortnite and starts to play, the EULA is displayed on-screen to the user with a check-box reading, ‘I have read and consent with the End User License Agreement.’  The box must be checked before proceeding into the game.  That EULA has included a provision that non-arbitrable claims be heard in North Carolina applying the law of North Carolina.  The EULA was updated in 2019 and displayed to all users who logged on after it was updated.  That EULA includes a bold and all-caps section about binding arbitration and class action waiver. 

There was no dispute that someone logged on to the Plaintiff’s account had accepted the 2017 and 2019 EULAs.  However, Plaintiff claimed that he and his minor brother were the only two people to see the EULA.  Epic had no evidence that any adult consented to the EULA.  Plaintiff also filed a sworn statement in his case disaffirming consent to either the 2017 or 2019 EULA’s. 

The Court concluded that the minor-Plaintiff effectively disaffirmed the 2019 EULA.  (For other procedural reasons, the Court did not make any finding about the 2017 EULA’s disaffirmation.)  It made that finding even though Plaintiff continued to play Fortnite after he filed his lawsuit (but before he disaffirmed the EULA).  For that reason, the Court denied Epic’s motion to compel arbitration.           

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