Is it time to level up risk management in gaming? The Consumer Financial Protection Bureau (CFPB) thinks so. The regulator published a report identifying a range of financial and privacy risks to consumers in video gaming marketplaces. It highlights how virtual economies need greater oversight to prevent fraud, scams, and financial losses.
What are the issues the CFPB raises and what should GRC professionals be talking about? MBK Search looks at the data.
The Rise of In-Game Economies
Video games have come a long way from the days of putting quarters into an arcade machine. Today’s games feature complex virtual worlds with their own economies, where players can earn, buy, and trade in-game currencies and items. These assets can have real-world value, with some rare items selling for thousands of dollars on secondary markets. As the value of these virtual assets grows, so too does the potential for financial harm to consumers.
Lack of Consumer Protection
One of the main concerns raised by the CFPB is the lack of consumer protections in these virtual economies. Unlike traditional banking and payment systems, gaming platforms often take a “buyer beware” approach, placing the burden on players to avoid scams and fraud. When accounts are hacked, or items are stolen, players may have limited recourse to recover their losses. The CFPB also notes that gaming companies can terminate player accounts and seize virtual assets without warning or compensation.
Monetizing Player Data
Another concern is the vast amount of data gaming companies collect about their players. This can include financial information, like purchasing history and spending habits, and personal details, like location and social media activity. The CFPB warns that this data can be used to manipulate prices, target advertising, and even discriminate against certain players. There is also a risk that this sensitive information could be compromised in a data breach.
Emerging Financial Products
As the value of virtual assets continues to grow, some companies are beginning to offer financial products and services specifically targeted at gamers. These can include loans secured by in-game items, payment processing for virtual transactions, and even mortgages for digital real estate. The CFPB monitors these developments closely to ensure that consumers are protected and that these products comply with existing financial regulations.
Key Takeaways for GRC Professionals:
- Virtual economies in video games are becoming increasingly sophisticated, with real-world financial implications for players.
- The lack of consumer protections in these virtual economies is a significant concern, as players may be vulnerable to fraud, scams, and financial losses.
- Gaming companies collect vast amounts of player data, which could be used for price manipulation, targeted advertising, or even discrimination. This data is also at risk of being compromised in a breach.
- New financial products and services are emerging in gaming, such as loans secured by in-game items and payment processing for virtual transactions. These products may require additional regulatory oversight to ensure consumer protection.
Discussion Points:
- How can gaming companies improve consumer protections in virtual economies without compromising the integrity of the game experience?
- What steps can be taken to ensure that player data is collected, used, and stored responsibly and securely?
- As financial products and services evolve in the gaming space, what regulatory challenges and opportunities do GRC professionals anticipate?
- How can GRC professionals work with gaming companies to develop best practices for consumer protection, data privacy, and regulatory compliance in virtual economies?
At MBK Search, we help firms find world-class talent to build champion teams across regulated markets. Let’s start building — visit our website to find out how. www.mbksearch.com
