The CMA, UK’s primary competition and consumer authority, has launched a consumer law investigation into Nintendo Switch, PlayStation and Xbox to find out whether their auto-renewal terms are unfair.
The CMA is concerned about whether some of these companies’ business practices are legal, such as their use of auto-renewals for online gaming contracts, their cancellation and refund policies, and their terms and conditions.
As well as buying consoles and games, people can pay for online services, such as playing against other gamers, communicating with other players, and extra games.
These services can involve a membership which is often entered into on an auto-renewal basis. This means that money will be automatically taken from a person’s account as the membership rolls over.
The CMA has written to Nintendo Switch, PlayStation and Xbox requesting information about their online gaming contracts to help better understand their practices. It is also calling on customers who use these services to get in touch with the CMA and share their experiences in order to assist the investigation, which will examine issues including:
- are the contract terms unfair? - do the companies’ terms give them wide discretion to change the quality of the deal, for example, by reducing the number of games included or increasing the price?
- how easy it is to cancel or obtain a refund? - are there any factors that make it difficult for people to cancel their contract or get their money back?
- how fair is the auto-renewal process? - are customers clearly told that their membership will be rolled over, are they regularly reminded that they are on a roll-over contract before further payments are taken, and is auto-renewal set as the default option?
The CMA has not reached a view as to whether or not companies have broken consumer protection law. However, if the CMA thinks the companies’ practices are misleading or their terms are unfair, such that they are breaking consumer protection law, it could take enforcement action.
In a statement, Microsoft said: "We have received a notification from the Competition and Markets Authority and will be co-operating fully with their investigation."
Nintendo and Sony have not yet responded to a request for comment.