Gavin Howe
Mobile games have become notorious for their misleading advertisements, with some even featuring footage from completely different games. This has led to many questioning whether these advertisements constitute false advertising and if so, why the relevant laws don't seem to apply to mobile games. While false advertising laws do exist and extend to entities outside of the country in which they are enforced, the online nature of mobile gaming advertisements makes them difficult to regulate. The free-to-play model of many mobile games also complicates matters, as consumers do not suffer financial damages, making it less likely for authorities to take action.
| Characteristics | Values |
|---|---|
| Extent of false advertising laws | False advertising laws exist, but they are rarely enforced |
| Reasons for lack of enforcement | Low priority for regulators, difficulty in taking action against companies outside the US, high number of offenders, lack of financial damages |
| Platforms' role | Platforms such as Facebook and Google are more concerned with profits than with screening ads |
| Consumer behaviour | Consumers may be able to remedy the deception before spending money, but misleading ads may still work by expanding a game's player base |
| Legal recourse | Plaintiffs may seek statutory damages and injunctive relief; competitors who do not engage in false advertising may also seek injunctions |
What You'll Learn
What constitutes false advertising?
The rise of "fake ads" in mobile gaming refers to the use of unrelated gameplay footage in mobile game advertisements. These ads feature bold CGI animations or innovative game mechanics that bear no resemblance to the actual game. This practice is particularly prevalent in the mobile gaming industry, which has experienced rapid growth and a surge in advertising.
So, what constitutes false advertising? In Australia, Section 18 of the Australian Consumer Law (ACL) states that "a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." This means that an advertisement cannot present a product in a way that is substantially different from its actual nature, as doing so would be considered misleading to consumers.
The determination of whether an advertisement is misleading is based on an objective assessment of the conduct as a whole, considering the circumstances of the particular case. Courts will take into account the characteristics of the targeted class of consumers to evaluate if the advertisement is likely to deceive or mislead a significant number of reasonable members of that class.
It is worth noting that the ACL applies not only to entities located in Australia but also to those conducting business in the country. This was affirmed in the Valve Corporation v ACCC case, where a US-based company with no physical presence in Australia was found liable under the ACL due to its substantial customer base and revenue generated in the country.
The issue of false advertising in mobile gaming is not limited to Australia, as similar concerns have been raised in other jurisdictions. The effectiveness of misleading advertisements does not make the practice legal or ethical, and it is only a matter of time before these cases are tested in courts as community awareness of "fake ads" grows.
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Why are mobile games not considered false advertising?
The rise of mobile gaming has been accompanied by a surge in deceptive advertising practices, with mobile game advertisements often bearing no resemblance to the actual game. This has led to questions about why mobile games are not considered false advertising and whether this practice is legal.
The main reason mobile games seem exempt from false advertising laws is the lack of regulation in online advertising. Unlike traditional media, such as television or print, online advertising is largely unregulated, with many advertisers located outside the jurisdiction of laws like the Australian Consumer Law (ACL). This makes it challenging to hold them accountable.
Additionally, mobile games often use "free-to-play" models, where players can download and play the game without spending money. As a result, by the time players realise the game is not as advertised, they have not suffered any financial loss, making it less likely for regulatory bodies to prioritise these cases.
Furthermore, the sheer volume and variety of mobile games, coupled with the fact that many are produced by companies outside the US, make it difficult to identify, investigate, and punish these deceptive practices.
However, this does not make the practice of "fake ads" any more legal or ethical. The ACL, for example, prohibits misleading or deceptive conduct in trade or commerce, regardless of intent or actual damage suffered. As community awareness of "fake ads" grows, it is expected that these practices will be tested in courts, and legal action will be taken to prevent and punish such deceptive advertising.
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Who enforces false advertising laws?
False advertising laws are enforced by both federal and state governments. The primary federal agency responsible for enforcing these laws is the Federal Trade Commission (FTC). The FTC enforces truth-in-advertising laws, ensuring that advertisements across all platforms are truthful, not misleading, and backed by scientific evidence when appropriate. The FTC pays close attention to claims about food, drugs, dietary supplements, alcohol, and tobacco, as well as conduct related to high-tech products and the internet. When the FTC uncovers fraud, it takes legal action to stop scams, prevent future fraud, freeze assets, and obtain compensation for victims.
In addition to the FTC, state governments also play a role in enforcing false advertising laws, typically through their attorney general's office, consumer protection agencies, and local district attorneys. State laws vary, but they generally prohibit the dissemination of untrue or misleading information about products or services. For example, California's Business and Professions Code § 17500 allows for both civil and criminal enforcement against false advertising.
Furthermore, consumers and competitors can bring private lawsuits against companies that engage in false advertising. These lawsuits can be particularly potent when brought as class actions, as the combined damages can be substantial, prompting target companies to take them seriously.
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What are the consequences of false advertising?
False advertising can have serious consequences for both the consumer and the business.
Effects on the Consumer
Consumers who are misled by false advertising may make uninformed decisions and purchase products or services that do not meet their needs or solve their problems. They may also be unaware of negative side effects or hidden costs and serious health risks associated with the advertised product or service.
Effects on the Business
False advertising can be detrimental to the business engaging in such practices. Consumers who feel deceived are likely to retaliate, spread negative stories about the company, and take their business elsewhere. The business may also face lawsuits and incur hefty litigation costs.
Legal Consequences
In the United States, the Federal Trade Commission (FTC) enforces truth-in-advertising laws and monitors advertising across various media platforms, including the internet, radio, television, newspapers, and magazines. The FTC pays close attention to claims that can impact consumers' health or finances. If the FTC finds a case of fraud, it can take legal action, seeking orders to stop scams, freeze assets, and obtain compensation for victims.
Businesses found guilty of false advertising may face penalties, including fines or even imprisonment, as outlined in the U.S. Code. The FTC can also issue cease and desist orders, forcing companies to discontinue their false advertisements and make corrections or additions to provide accurate information to consumers.
Competition and Industry Impact
False advertising can have a negative effect on healthy competition between companies. Instead of investing in innovation and improving their products and services, companies may feel pressured to spend their resources on creating misleading advertisements. This can result in industry-wide damage, hindering overall progress and innovation.
Employee Impact
Employees often bear the brunt of customer backlash from false advertising. They are left to deal with unhappy customers and may be blamed for malfunctioning products or unfulfilled promises. This can lead to low employee morale, high turnover rates, and further challenges for the business.
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What can be done to stop false advertising in mobile games?
False advertising in mobile games is a frustrating issue for many players. The rise of "fake ads" in the mobile gaming industry has seen bold CGI animations or innovative game mechanics used to promote a game, only to provide an experience that differs significantly from what was advertised. This practice is particularly prevalent in the mobile gaming market due to its unprecedented growth, new monetisation models, and advertising technologies. While false advertising laws, such as the Federal Trade Commission's (FTC) rules in the United States, do apply to mobile games, the enforcement of these laws is often lacking.
To stop false advertising in mobile games, several measures can be implemented:
- Increased Regulation of Online Advertising: Unlike traditional media, online advertising is largely unregulated, allowing advertisers to operate outside the boundaries of specific countries. By enforcing stricter regulations on online platforms, including mobile gaming stores like Apple's App Store and Google Play, false advertising can be minimised.
- Platform Accountability: Advertising platforms, such as Facebook and YouTube, play a crucial role in disseminating these misleading ads. Holding these platforms accountable for the content they promote and providing transparent information about the advertisers can help curb false advertising.
- Consumer Awareness and Reporting: As the volume of mobile games and "fake ads" continues to grow, consumers must be vigilant. Reporting misleading ads to relevant authorities and spreading awareness through online communities can help bring attention to the issue and prompt action from regulators.
- Legal Action: While legal action is often challenging, particularly for foreign companies, it is not impossible. Consumers and competitors can seek legal remedies by filing lawsuits or injunctions against developers who engage in false advertising. This can set a precedent and deter other developers from employing similar tactics.
- Algorithmic Adjustments: Currently, algorithms play a significant role in promoting ads that generate the most engagement, regardless of their accuracy. Adjusting these algorithms to prioritise truthful and ethical advertising over pure engagement can significantly impact the effectiveness of false advertising.
- Industry Self-Regulation: The mobile gaming industry can implement self-regulatory measures to maintain the integrity of its advertising practices. This includes establishing clear guidelines, ethical standards, and consequences for developers who engage in false advertising.
By combining these strategies and addressing the gaps in enforcement, consumers, regulators, and the mobile gaming industry can collectively work towards minimising false advertising in mobile games.
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Frequently asked questions
Yes, false advertising laws do apply to mobile games. However, in practice, mobile game developers rarely face legal consequences for false advertising due to various factors, including the free-to-play nature of many mobile games, the difficulty of taking action against foreign companies, and the low priority given to these cases by regulatory bodies.
False advertising in mobile games typically involves using misleading or deceptive gameplay footage or mechanics in advertisements that do not accurately represent the actual gameplay experience. This may include using completely unrelated gameplay footage, exaggerated or false claims about the game's features, or presenting a product in a completely different light from what it actually is.
While regulatory bodies such as the FTC in the US or the ACCC in Australia have rules against false advertising, enforcement often relies on consumer complaints and lawsuits. Consumers who have suffered loss due to false advertising can take legal action, but it can be challenging, especially when dealing with foreign companies. Additionally, competitors in the gaming industry who do not engage in false advertising can also seek legal injunctions to prevent unfair competition.
