Tuesday, April 9, 2024
"Americans of all ages are converting billions of dollars into currencies used on virtual reality and gaming platforms," CFPB Direct Rohit Chopra said in releasing the report. In a prepared statement, he added that the agency sees potential harms that "can be especially acute" for young children and other vulnerable populations. "As more banking and payments activity takes place in video games and virtual worlds, the CFPB is looking at ways to protect consumers from fraud and scams," he said.
Americans spent nearly $57 billion on gaming in 2023, according to the report. The total includes hardware, software and in-game transactions like converting dollars into virtual currencies or other gaming assets. These assets can be bought, sold or traded on virtual markets, in effect replicating everyday activities online, including payments and banking.
"The role of banks and consumer finance products within gaming is evolving, but there appears to be a trend towards introducing services that are similar to traditional consumer financial products that rely on the value of gaming assets and the digital transactions that are happening on gaming platforms," the report stated. "Leveraging the value of gaming assets and the amount of commerce occurring on gaming platforms, some companies have begun exploring gaming-specific services that resemble traditional financial products."
For example, the report noted that JPMorgan Chase is said to be working on an "embedded payment ecosystem" for gaming, which has been described as "a wallet that can serve as a central hub for anything related to a player: gaming credentials, in-game currency balances and transactions, and spending history." The bank also has invested in Tilia, which specializes in payment processing for gaming, virtual worlds and content creators.
In 2023, the online platform MetaLand heralded plans to let players of some games take out loans against in-game crypto assets.
Here's the problem: the increased value of in-game assets has spurred fraudsters to action. Scams, phishing, account takeovers and outright thefts are becoming commonplace in these virtual worlds. The CFPB said the bureau itself and the Federal Trade Commission have seen an uptick in complaints from gamers about hacking attempts, account thefts and loss of access to assets.
But gaming companies seem to be providing little in the way of user support. "Consumers report having little recourse with gaming companies when they suffer losses, and game publishers claim to have no obligation to compensate the players for financial losses," the CFPB said.
The consumer watchdog agency also expressed concern about the large amounts of personal information on players the gaming companies are collecting, as well as behavioral information, such as financial practices and purchasing histories.
"The Consumer Financial Protection Bureau is working to understand how these worlds can become a haven for scam, fraud, financial losses and unanticipated purchases that can deplete a family's real-world financial assets," Chopra said. 
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