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South Korean Government Hits Developers With Nearly $1 Million in Loot Box Fines

Three South Korean developers were fined nearly a million dollars by the country’s Fair Trade Commission for deceiving customers about the odds used in their in-game loot boxes, the Korean Herald reports.

Nexon Korea, the developers of “Counter Strike Online 2” and the country’s largest game developer, received the bulk of the penalties from the South Korean FTC (about $890,000) for the way it promoted the loot boxes in “Sudden Attack” and “Counter Strike Online 2.” The FTC said the company misled players about the chances of winning specific prizes and didn’t properly inform customers of their right to withdraw in-game item purchases in “Counter Strike Online 2.”

“Destiny Child” creator NextFloor and “Ys Online” and “Star Wars: Force Arena” developer Netmarble received the rest of the penalties for similar practices. All three companies were told to rework the way they promote and disclose the odds for loot boxes.

Loot boxes, in-game crates that are sold for real money and contain any number of randomized items used in a game, have become a topic of international conversation since their practice was called into question by Star Wars fans in the lead up to the release of “Star Wars: Battlefront II.”

Developer Electronic Arts halted microtransactions on the eve of “Battlefront II’s” launch after beta participants complained the loot boxes were overly aggressive and gave an unfair advantage to those who spent the money. The public outcry led to EA receiving the most downvoted comment in Reddit history. The publisher reportedly also lost an estimated $3.1 billion in stock value following the controversy. EA overhauled its use of microtransactions in the game last month.

Lawmakers in several states, along with one federal lawmaker, are now either seeking laws to control the use of this specific sort of in-game purchase or asking for federal regulators to investigate the issue.

Senator Maggie Hassan (D-NH) sent a letter to Entertainment Software Ratings Board head Patricia Vance in February, asking the ESRB to review the ratings process as it relates to loot boxes, examine the marketing of loot boxes to children and develop best practices for developers around the toxic form of microtransactions. The Senator also asked the board to conduct a study that further delves into the reach and impact of loot boxes in games.

In Hawaii, state lawmakers introduced four new bills that may change the way video games with loot box mechanics are bought and sold in Hawaii.

In response to Hassan’s letter, the ESRB rolled out plans to list whether a game includes in-game purchases on boxes and in online descriptions. They also launched a parental education plan on the topic.

At the time, the head of the ESRB sent a letter defending loot boxes to Hassan, In the letter, Vance says that loot boxes aren’t gambling and are more comparable to baseball cards, “where there is an element of surprise and you always get something.”

Internationally, the question of whether loot boxes are a form of gambling is still being debated as well. The fines in South Korea mark the highest ever levied against a local game company by the FTC there and could be part of a wider effort to regulate the sale of loot boxes, the Korean Herald points out.

Nexon Korea told the Korean Herald it disagrees with the FTC and plans to ask for an additional review of the issue.

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