Study Reveals Disturbing Non-Compliance in Loot Box Advertising Rules in UK and South Korea

A recent study published in the *Journal of Behavioral Addictions* has revealed alarming statistics regarding the compliance with mandatory advertising disclosure requirements for loot boxes in video games within the United Kingdom and South Korea. According to the research conducted by Leon Y. Xiao and his team at City University of Hong Kong, over 90% of advertisements for games containing loot boxes failed to adhere to established regulations aimed at protecting consumers, raising significant concerns about the enforcement of consumer protection laws in these regions.

Loot boxes, a popular feature in many video games, allow players to purchase in-game rewards with real money, often resembling gambling due to their randomized nature. As such, jurisdictions worldwide have introduced regulations demanding clear disclosures of loot box presence in advertisements. The current study assessed 2,358 advertisements from more than 100 mobile, console, and PC games known to contain loot boxes and found that only 8.4% of ads in the UK and 7.6% in South Korea complied with disclosure requirements. Of these, a staggering 71.4% of UK disclosures and 44.9% of South Korean disclosures were not visually prominent enough to meet regulatory standards, effectively reducing compliance rates to a mere 2.4% in the UK and 4.2% in South Korea.

Dr. Sarah Johnson, Professor of Consumer Protection Law at the University of London, stated, "These findings underscore a critical failure in both industry self-regulation and governmental oversight. The lack of compliance not only violates advertising standards but also undermines consumer trust in an industry that increasingly resembles traditional gambling." The investigation highlights the roles of various regulatory bodies including the UK’s Competition and Markets Authority (CMA) and South Korea’s Game Rating and Administration Committee (GRAC), which have been criticized for inadequate enforcement of existing rules.

Historical context shows that the push for greater advertising transparency around loot boxes gained momentum in September 2021, following guidance issued by the UK’s Committee of Advertising Practice (CAP). The Advertising Standards Authority (ASA) has since enforced this guidance multiple times, including a notable ruling against Electronic Arts (EA) in 2023 for failing to disclose loot box presence adequately. Meanwhile, the European Commission clarified that clear disclosures are required under EU consumer law, which remains effective in the UK post-Brexit.

The current study suggests that many companies are aware of these regulations yet continue to skirt around compliance, raising ethical questions regarding corporate responsibility. In South Korea, while GRAC has enforced probability disclosure requirements, it has not addressed the necessary presence disclosures, leaving a critical gap in consumer protection. As of March 2024, South Korean regulations mandate that loot box disclosures appear in Korean, specifically using the phrase '확률형 아이템 포함' (translated: "Includes probabilistic items"). Any alternative wording does not satisfy legal requirements.

Experts like Dr. Mark Thompson, a leading researcher in gaming addiction at Oxford University, emphasize the urgency of regulatory action, stating, "Without strict enforcement, these advertising practices can exploit vulnerable players, particularly children, who may not fully understand the implications of spending real money on randomized in-game rewards."

The study's authors advocate for a unified approach from regulatory bodies in both the UK and South Korea to enhance compliance and protect consumers effectively. They urge gaming companies, especially multinational publishers, to critically review their advertising practices and align them with legal standards. This comprehensive research serves as a call to action for stronger regulatory frameworks and corporate accountability in an industry that continues to evolve rapidly amid concerns of consumer protection and ethical advertising practices.