“In typical damage lawsuits, the party that has suffered must prove the damage, but it is unusual for the game company to have to prove that there was no intent.”
“Game companies have been trying to comply with regulations on probability-based items since last year, and there are concerns that if this revised bill is enacted, damage compensation lawsuits will follow.”
The domestic gaming industry is increasingly troubled as probability-based items account for 70% of revenue. This is because the 'Partial Amendment to the Act on the Promotion of the Game Industry (Game Industry Promotion Act)' that states a company must compensate up to three times for damages when displaying probability-based item information falsely passed the National Assembly's plenary session on the 31st of last month. If this revised bill is enacted, it will require the game company to prove that there was no intent in the event of an error in displaying probability information, increasing the likelihood of being embroiled in lawsuits seeking compensation.
◇ If intent is proven, triple compensation… game companies must prove their innocence
Currently, game companies must indicate the types and supply probability information of probability-based items for each game and related advertisements. However, there are no legal provisions to receive compensation for damages suffered by users due to the absence of probability displays or false displays, and even when seeking compensation, the burden of proof lies with the consumer, making it difficult to rectify rights.
The revised Game Industry Promotion Act, which passed the National Assembly's plenary session on the 31st of last month, strengthens existing regulations. The amendment includes provisions that ▲game companies will be liable for damages if they fail to disclose or falsely disclose the supply probability information of probability-based items and ▲will be liable for punitive damages up to three times for user damage caused by the company’s intent, while also transferring the burden of proof concerning the company's absence of intent or negligence to the game company. These provisions will take effect six months after the law is promulgated.
Users are welcoming the passage of the revised bill. Lee Cheol-woo, chairman of the Korea Game Users Association (lawyer), noted in a conversation with CHOSUNBIZ that “practically, it was not easy for users to prove the necessary materials for a trial in the information asymmetry situation between game companies and users” and added, “Since the shift of the burden of proof is the core point, it seems likely to greatly help in protecting users’ rights.” He further predicted, “This revised bill will also contribute to building user trust, which is fundamental to the gaming industry.”
Kim Seung-soo, a lawmaker from the People Power Party who proposed the amendment, said, “It should not happen again that gaming users suffer from the misleading actions of some game companies and opaque information disclosure,” adding, “I am relieved that the game industry law that many game users hoped for has finally passed the National Assembly's plenary session.”
◇ Probability-based items account for 70% of gaming company revenue… will 'opaque operations' be eradicated?
Probability-based items are paid contents that allow users to acquire items based on certain probabilities in the game. Users purchase probability-based items not knowing what item will appear, and upon using them, they have a chance to win real items based on certain probabilities. Though it stirs user interest like a 'lottery,' it has lost credibility due to excessive gambling controversy and the 'opaque operations' of gaming companies.
Game companies find themselves in a difficult position due to the passage of this revised bill. Probability-based items are considered a core business model for gaming companies. According to the 2023 Gaming White Paper, it is estimated that 76% of PC game revenue and 75% of mobile game revenue comes from probability-based items, making it difficult to scale back operations. In particular, game companies are embarrassed by the shift of the burden of proof to themselves. Since the enactment of the partial amendment to the Game Industry Act in March last year, they have been displaying probability-based item information, but if users initiate lawsuits, the company will have to prove that there was no intent.
A gaming industry official said, “Regarding the subjects currently under investigation by the Fair Trade Commission, the companies claim that it was a 'human error' that occurred during the manual writing of probabilities. Companies have no choice but to explain this position, but confusion is expected during the adjustment process.” They added, “Since users will have broader grounds to demand compensation for damages, companies will have many more issues to be concerned about.”
The revised bill also includes a provision stating that if it is difficult for the court to prove the amount of damages, the court may recognize the amount based on the arguments and evidence presented. Factors such as the scale of damage caused to users due to violations, the benefits gained by game companies, the duration and frequency of violations, and efforts to remedy damages will be comprehensively considered.
◇ Cases before enforcement are unlikely to be applied retroactively… “There may be pressure to prove”
Five companies, including KRAFTON, WEMADE, GRAVITY, WEBZEN, and COM2US, are under investigation by the Fair Trade Commission for allegedly operating probability-based items in an opaque manner. Nexon lost a final ruling in a damage lawsuit regarding the probability-based items filed by a user of 'MapleStory', and a civil lawsuit initiated by 711 MapleStory users is currently underway at the Suwon District Court Seongnam Branch.
However, this revised bill is expected to apply only to incidents occurring after its enactment, and will not be retroactively applied to ongoing investigations or lawsuits. Legal experts believe that while it may be difficult to obtain compensation under the revised bill for ongoing damage claims, it could exert pressure on game companies regarding proof of intent.
Hong Jeong-pyo, a lawyer at Turtle Law Firm, stated, “If we assume the case reaches the point of filing a damage claim lawsuit against the gaming company, it is highly likely that the court will side with the users by recognizing intent if the company does not prove otherwise.” He added, “Users may also request the court to consider this revised bill for currently ongoing lawsuits.”