In-Game Purchases and Gacha Campaigns: Prepaid Payment Instruments and Probability Disclosures

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

In the game business, a variety of monetization measures are used, such as issuing in-app currency, gacha (randomized loot draws) and item sales. While these measures are directly linked to revenue, multiple laws come into play, including the Payment Services Act, the Premiums and Representations Act and the Act on Specified Commercial Transactions. In legal work on in-game purchases, apart from how entertaining a plan is, the measures are reviewed along two axes: "the flow of money received from users" and "the prizes and representations shown to users."

In-Game Currency and Prepaid Payment Instruments

A system in which users purchase paid coins or points in advance and later spend them on in-game items or gacha takes the form of receiving consideration first and providing value later. In-game currency with this structure may fall under prepaid payment instruments under the Payment Services Act.

For a prepaid payment instrument for the issuer's own business that does not fall under an exemption, when the unused balance as of a reference date (March 31 and September 30 each year) exceeds JPY 10 million for the first time, a notification is in principle required within two months of that reference date. Where the balance as of a reference date exceeds this amount, there is also an obligation to secure at least half of the entire balance. There are also alternatives to a deposit with the official depository, such as a prescribed security agreement or a trust. A third-party-type instrument that can be used at third-party stores and the like in principle requires prior registration, separately from the balance threshold. In a hit game, the unused balance of paid currency can build up faster than expected, so from the planning stage, set up a system that allows you to track the balance and consider in advance whether notification is required.

There are exemptions, such as for instruments usable only within six months of issuance, but this does not remove consumer protection rules. Free points are also managed separately from paid points. In addition, in cases such as discontinuation of business where a statutory refund obligation arises, the obligation cannot be avoided simply by terms stating "no refunds will be made." If the terms of use, the disclosure under the Act on Specified Commercial Transactions and the wording on the in-app purchase screen are inconsistent, the company's explanation will not hold up in disputes with users. It is therefore necessary to align their content together with the design of the measures.

Gacha Probability Disclosures and the Premiums and Representations Act

The next thing to check in gacha campaigns is the relationship between what is shown to users and the actual specifications. If representations such as drop rates, rarity and provision ratios diverge from the data actually built into the game, problems may arise under the Premiums and Representations Act. Check the stated probabilities and provision conditions against the actual draw settings. A skew in the results of a small number of draws does not by itself establish a mismatch with the representation.

In addition, a mechanism such as "complete gacha," which provides a separate economic benefit for collecting items of different types, is prohibited under the Premiums and Representations Act if it falls under "card matching" (kado awase), that is, providing premiums to users who collect two or more specific different items through sales that use paid chance. Whether a mechanism falls under this cannot be judged from the name of the campaign, so at the planning stage, check the gacha specifications, the probability disclosures and whether premiums are involved together. Changing the specifications after release also brings a separate problem: explaining the change to users who have already paid.

The Position of Event Rewards and Ranking Rewards

Games sometimes offer rewards for top performers in events or ranking rewards. The issue here is whether the rewards are limited to in-game items or are highly convertible into cash, such as money or electronic money. The legal picture changes depending on what the reward is.

When applying this to a specific measure, identify whether there is a participation fee, how strong the elements of chance and skill are, and the relationship between the source of the rewards and their convertibility. In particular, where cash equivalents or digital assets that can be traded on secondary markets are offered as rewards, careful consideration is required from the perspectives of gambling, payment services, the Premiums and Representations Act and tax.

Handling In-Game Purchases by Minors

In-game purchases often raise problems of large purchases by minors. What the operating company should design is the entry point before purchases, such as age verification, purchase limits and screens for obtaining parental consent. If you leave everything to the platform's mechanisms, there will be no response you can explain as your own when trouble arises, so the company's own terms of use, help pages and customer support also need to be put in order. A minor's contract in principle requires the consent of the legal representative, but there are exceptions, such as acts using property the minor has been permitted to dispose of. A checkbox for age verification alone does not automatically establish the existence of consent or fraudulent means under Article 21 of the Civil Code, so whether a purchase can be rescinded is judged by checking the specific circumstances of the purchase.

Services Related to In-Game Purchase and Gacha Legal Work

We provide support through the following service, from judging whether notification is required under the Payment Services Act to probability disclosures under the Premiums and Representations Act and handling purchases by minors.

For oripa, the random sale of physical trading cards, the relationship with the crime of gambling, the Premiums and Representations Act, the Secondhand Articles Dealer Act and the Payment Services Act is explained in detail in Is Oripa Illegal? Legal Regulation of Online Oripa.

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Frequently asked questions

Does in-game currency fall under prepaid payment instruments under the Payment Services Act?

It may. This is because a scheme in which users purchase paid coins or points in advance and later use them for in-game items or gacha has a structure of receiving consideration first and providing value later. For a prepaid payment instrument for the issuer's own business that does not fall under an exemption, when the unused balance as of a reference date exceeds JPY 10 million for the first time, a notification is in principle required within two months of that reference date, and an obligation also arises to secure at least one half of the total balance.

Is "complete gacha," which involves collecting specific items, prohibited by law?

It is prohibited if it falls under card matching under the Premiums and Representations Act. This is because a scheme that, in sales using paid chance, provides premiums to users who collect two or more specific different items or the like is prohibited under the Premiums and Representations Act. Whether a scheme falls under this cannot be judged from the name of the campaign, and it is necessary to check the gacha specifications, probability disclosures and whether there is a premium together at the planning stage.

Can a checkbox for age verification prevent rescission of in-game purchases made by minors?

It does not automatically prevent rescission. This is because a checkbox for age verification alone does not automatically establish the existence of consent or fraudulent means under Article 21 of the Civil Code. A minor's contract in principle requires the consent of the legal representative, but there are exceptions, such as acts using property the minor has been permitted to dispose of. Therefore, I think whether a purchase can be rescinded is determined by examining the specific circumstances of the purchase.