US senator calls on ESRB to take action on loot boxes, suggests FTC could get involved (Updated)

Update: "We received Senator Hassan’s letter and appreciate her confidence in and support of the ESRB rating system," an ESRB spokesperson said in response to our inquiry. "For more than two decades we have earned the trust of parents around the country by helping them make informed decisions about the games their children play."

"As the industry evolves, so does our rating system, and we will continue to make enhancements to ensure parents continue to be well-informed.  We will also continue to provide information about additional tools, including parental control guides, that help parents set spending and time limits and block potentially inappropriate games based on the ESRB-assigned age rating."

Original story:

A letter sent to ESRB president Patricia Vance by United States senator Maggie Hassan calls on the rating agency to take steps to analyze and curb the proliferation of loot boxes in videogames. In a separate Q&A session with FTC commissioner nominees, the senator also suggested that if the ESRB fails to take action, the government could become directly involved. 

In the letter, and in her preamble to the FTC nominees, Hassan praised the ESRB for its effectiveness and value as an age rating board. But she also noted that loot boxes are a relatively new phenomenon, and that the ESRB "must work to keep pace with new gaming trends." 

"Recently the World Health Organization classified 'gaming disorder' as a unique condition in its recent draft revision of the 11th International Classification of Diseases," Hassan wrote. "While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny. At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games."  

She called on the ESRB to review its rating practices, with a specific eye toward the ethics and transparency of loot boxes, to collect and publish data on the use and prevalence of loot boxes, and to come up with a system of  loot box-related "best practices" for developers to give parents more control over what their children are playing, and how.   

Her questions to the FTC nominees echoed those sentiments, but concluded on what could be taken as a slightly ominous note. "Do you agree that children are being addicted to gaming and activities like loot boxes that might make them more susceptible to addiction is a problem that merits our attention?" she asked. "And depending on how the ESRB responds to my inquiry, would the FTC be willing to look at loot boxes as an issue independently?" 

If legislation does move forward, it could have a dramatically greater effect on videogames than the ESRB. Ars Technica reports that Hawaii, for instance, is now considering a bill that would ban the sale of games with purchasable loot boxes to anyone under 21, essentially the equivalent of an AO rating. Such restrictions would impact games like Overwatch, Call of Duty, and Battlefront 2, to name a few obvious examples. And that bill would impose legal repercussions rather than an industry fine.

New laws could lead to uncharted territory for microtransactions in games. We talked about that in greater depth last year in our look at how loot boxes are bad, but why we're wary of legislation. 

Hassan's letter can be seen in full below. I've reached out to the ESRB for comment, and will update if I receive a reply.

Dear Ms. Vance:

I write to today regarding an important gaming issue that was recently brought to my attention by a constituent.

The  Entertainment Software Ratings Board (ESRB) has an important mission in  both providing parents with the necessary information to make decisions  about the suitability of games, and their content,  for children, as well as ensuring that the industry is following  responsible marketing practices. 

The ESRB  rating system is of great value to parents across the country,  empowering parents to make informed decisions on behalf of their  children. As technology advances, ESRB must work  to keep pace with new gaming trends, including the in-game  micro-transactions and predatory gaming tactics, particularly as they  are deployed on minors. 

The  prevalence of in-game micro-transactions, often referred to as ‘loot  boxes,’ raises several concerns surrounding the use of psychological  principles and enticing mechanics that closely mirror  those often found in casinos and games of chance. The potential for  harm is real. Recently the World Health Organization classified “gaming  disorder” as a unique condition in its recent draft revision of the 11th  International Classification of  Diseases. While there is robust debate over whether loot boxes should  be considered gambling, the fact that they are both expensive habits and  use similar psychological principles suggest loot boxes should be  treated with extra scrutiny. At minimum, the rating  system should denote when loot boxes are utilized in physical copies of  electronic games.

To that  end, I respectfully urge the ESRB to review the completeness of the  board’s ratings process and policies as they relate to loot boxes, and  to take into account the potential harm these  types of micro-transactions may have on children. I also urge the board  to examine whether the design and marketing approach to loot boxes in  games geared toward children is being conducted in an ethical and  transparent way that adequately protects the developing  minds of young children from predatory practices. 

Further,  I urge the ESRB to consider working with the relevant stakeholders –  including parents – to collect and publish data on how developers are  using loot boxes, how widespread their use is,  and how much money players spend on them.

Finally,  I ask that you develop best practices for developers, such as ethical  design, tools for parents to disable these mechanisms, or making them  less essential to core gameplay.