Dark Patterns in Games: Legal Battles Reshaping Gaming Industry

Online gaming companies have long leveraged user psychology to maximize revenue and engagement. However, an emerging legal trend is challenging the industry's controversial use of "dark patterns" , subtle design techniques used to influence consumer behavior, often without clear consent. This new wave of litigation highlights the critical intersection of consumer rights, privacy law, and digital manipulation.

Understanding Dark Patterns

As explained by Harry Brignull, PhD, a UX expert who coined the term:

“A Dark Pattern is a manipulative or deceptive trick in software that gets users to complete an action that they would not otherwise have done, if they had understood it or had a choice at the time.”

They are intentional design choices that exploit cognitive biases or lack of consumer awareness to nudge users into actions they might not otherwise choose, such as making unintended purchases, opting into subscriptions, or forfeiting privacy rights. Examples include:

• Misleading buttons ("Confirm" versus "Buy Now").
• Hidden recurring charges or auto-renewals.
• Intentionally difficult cancellation procedures.

The Evolution of Dark Patterns in Gaming

Game monetization has changed dramatically in the last decade. Simple one-time purchases have evolved into complex revenue streams that exploit psychological vulnerabilities. These changes are the foundations of what we now call dark patterns in the gaming industry.

From Harmless Nudges to Predatory Monetization

The experience of simple game purchases to today's sophisticated monetization tactics started in 2006. Bethesda sold downloadable horse armor in Elder Scrolls IV: Oblivion for $2.50. This simple downloadable content paved the way for aggressive monetization strategies. Games became services instead of products, and developers started using what experts call "predatory monetization." These payment systems hide or delay the true cost until players become psychologically or financially invested.

These manipulative designs target vulnerable players, especially children. Games now use customized monetization techniques that rely on behavioral data analysis, which leads to excessive spending. The gaming industry no longer focuses on creating enjoyable experiences but implements strategies to hook players and turn them into paying customers.

How Game Developers Implement Dark Patterns

Developers of all sizes use different dark pattern categories to maximize revenue by exploiting psychological triggers:

• Temporal Patterns: Games use techniques like "grinding," where free versions are purposely difficult to encourage purchases of time-saving options. The FTC specifically identified grinding as a dark pattern in 2022. They defined it as "making a free version of a game so cumbersome and labor intensive that the player is induced to unlock new features with in-app purchases".
• Monetary Patterns: These include loot boxes (randomized rewards bought with real money), premium currencies that hide actual costs, and artificial lack through limited-time offers. Currency confusion works well, players convert real money into arbitrary in-game currencies which makes spending feel less meaningful.
• Social Patterns: Games create artificial urgency through time-limited events and use fear of missing out (FOMO) to drive impulsive purchases.

Games also use auto-renewing subscriptions that are hard to cancel, a pattern called "Roach Motel". Some free-to-play games let players progress to a certain point before they introduce mandatory purchases. This makes the "free-to-play" label misleading.

The $245 Million Epic Games Settlement: A Turning Point

In December 2022, the FTC's landmark $245 million settlement with Epic Games, creator of Fortnite, became what legal experts call a game-changer for dark pattern litigation. The FTC's complaint targeted Epic's "counterintuitive, inconsistent, and confusing button configuration" that let players make unwanted purchases with a single button press.

The FTC pointed out that Epic made it easy for children to make purchases without parental consent and locked accounts of customers who disputed unauthorized charges. The settlement required Epic to pay $245 million in refunds and banned the company from charging consumers through dark patterns or without their clear consent.

This case shows how regulators now approach manipulative design practices in games differently. Legal experts say this increase in dark pattern lawsuits isn't a "sky is falling" situation for the industry. However, game makers should be "exceedingly careful" about their UI decisions. 

Legal Cases Defining Dark Pattern Litigation

Legal battles over dark patterns in games have created a fresh frontier in consumer protection law. A few cases have questioned how gaming companies design their interfaces and make money.

Gwinn v. Budge Studios, Inc.: Exploiting Children's Trust for Profit

The Gwinn lawsuit, filed in the Northern District of California in September 2024, confronts the issue of manipulative monetization techniques within mobile gaming apps designed for young children. The plaintiffs allege Budge Studios utilizes "stealth advertising" and addictive game design methods to pressure children into making in-app purchases, often without parental awareness. Notably, the complaint emphasizes Budge's strategic use of familiar media characters, creating parasocial relationships that children trust deeply, exacerbating their vulnerability to commercial exploitation.

Specifically, the lawsuit claims that Budge deploys dark patterns such as:

• Parasocial Relationship Pressure: Leveraging children's trust in beloved characters like "Paw Patrol" and "Barbie" to encourage repeated in-app purchases.
• Navigation Constraints: Presenting advertisements disguised as game elements and restricting access to content unless purchases are made.
• Artificial Time Pressure: Utilizing countdown clocks and limited-time offers to create urgency, compelling children to make impulse decisions.

While the case is ongoing and a final judgment is yet to be reached, its detailed allegations have already resonated throughout the industry. The clarity with which it frames psychological manipulation, and the targeting of especially vulnerable children, provides a potentially powerful model for future plaintiffs. 

N.A. v. Nintendo of America, Inc.: Addressing Loot Boxes and Gambling Analogies

In a parallel but distinct action, N.A. v. Nintendo, filed in March 2023, challenges Nintendo’s sale of loot boxes, described as randomized virtual items purchasable within games. Plaintiffs argue that Nintendo deceptively promotes these loot boxes as harmless entertainment while knowingly profiting from an inherently addictive mechanism.

The core legal theory is that selling loot boxes to minors with undisclosed odds is an unfair and deceptive practice. It is deceptive because material information (the odds of obtaining valuable items, the true cost likely needed to get a specific reward) was not disclosed, and because the game allegedly misrepresented itself as a fun racing game while concealing a pay-to-win scheme. 

It is unfair because it intentionally targets children in a manner that shocks conscience likening the practice to predatory gambling targeting minors. Notably, the suit also raises contract-law arguments: it asserts that any in-game purchase contract with a minor is voidable and that the minor disaffirms the End User License Agreement, including its arbitration clause​

Outcome: 

In December 2023, the court (Magistrate Judge Donna Ryu) granted the motion to compel arbitration, staying the case​. The judge’s order found that the question of the contract’s validity (including the minor’s disaffirmation) was delegated to the arbitrator because the arbitration clause covered disputes over enforceability of the agreement​. 

Pushback on Illegal Gambling Theory in Gaming Litigation

Loot boxes - digital items with random virtual rewards - have faced many legal challenges based on gambling laws. Courts usually rejected these claims. Two cases saw California courts throw out claims that platform holders enabled illegal gambling.

​In Taylor v. Apple Inc., the court addressed whether loot boxes constitute illegal gambling devices under California law. The court concluded that loot boxes do not meet the definition of illegal slot machines because the virtual items obtained lack real-world transferable value. Specifically, the court stated:​

"Finally, the allegations of the complaint further fail to show that the games violate the Penal Code because the loot boxes do not offer players a chance to win 'a thing of value.' Plaintiffs insist that the loot boxes contain items that are of significant subjective value to those who play the games and purchase them. While that undoubtedly is true, the lack of any real-world transferable value to the items takes them outside the meaning of the statute." 

In Coffee v. Google LLC, the court similarly found that loot boxes do not constitute illegal slot machines under California law due to the absence of real-world value in the virtual items obtained. The court noted:​

"Google contends that all of these claims fail because Loot Boxes do not offer a chance to win a thing of value and thus are not illegal slot machines under California law. Loot Boxes offer a chance to win a virtual 'in-game item or feature designed or perceived to enhance gameplay or provide competitive advantage.' Google correctly points out that no court has found such in-game items to satisfy the thing of value requirement under California law."

In-App Purchase Litigation Targeting Children

Cases about children's in-app purchases have picked up steam. Apple paid a $32.5 million settlement to the FTC in 2014. They failed to tell parents that typing their password opened a 15-minute window for unlimited purchases without extra approval.

Amazon also faced FTC legal action for charging parents "millions of dollars in unauthorized in-app charges incurred by children". The FTC pointed out that Amazon's setup let kids spend unlimited amounts in children's games without parent approval. Amazon kept 30% of all in-app charges.

These cases set key rules that make gaming companies:

• Get clear, informed consent before charging for in-app purchases
• Use proper password protection
• Offer simple refund options
• Create interfaces that stop accidental or unauthorized purchases

The legal scene shows growing worry about dark patterns that take advantage of children and their parents' trust. Their interface design choices now face closer inspection under consumer protection laws.

Legal Theories Driving Dark Pattern Claims

"Many dark patterns appear to violate federal and state laws restricting the use of unfair and deceptive practices in trade." — Jamie Luguri and Lior Jacob Strahilevitz, Researchers at the University of Chicago Law School

Regulatory agencies and plaintiffs' attorneys now challenge dark patterns in games more aggressively. This has created a specialized litigation area that focuses on manipulative design.

Consumer Protection Violations

Federal and state consumer protection laws, including the FTC Act and various state equivalents like California's Unfair Competition Law (UCL), are frequently cited against dark pattern practices. Claims often argue that manipulative designs constitute deceptive or unfair acts because they mislead or exploit consumers. 

Additionally, recent advisories from agencies like the Consumer Financial Protection Bureau (CFPB) caution consumers about financial risks within games that involve complex payment systems or virtual currencies, though the CFPB’s role remains largely advisory rather than enforcement-based.

False Advertising and Misrepresentation

Claims of false advertising commonly appear in dark pattern litigation. Plaintiffs allege companies misrepresent game features, costs, or the nature of purchases, especially when targeted at minors. Additionally, claims of intentional and negligent misrepresentation arise when gaming companies knowingly or carelessly omit or distort critical information, such as the likelihood of obtaining valuable items from loot boxes or subscription renewal terms, leading to financial harm.

Unjust Enrichment

Plaintiffs frequently assert unjust enrichment, alleging gaming companies unfairly profited from deceptive interfaces or coercive design techniques. Under this theory, plaintiffs seek restitution of profits companies earned specifically due to misleading or manipulative user interfaces.

Unfair and Deceptive Trade Practices

The FTC’s authority under Section 5 of the FTCA remains the strongest legal basis driving dark pattern litigation. The agency specifically regulates practices using two key standards:

• Unfair Practices: Actions causing substantial consumer harm that consumers cannot reasonably avoid, with no offsetting benefits.
• Deceptive Practices: Misleading representations or omissions likely to deceive a reasonable consumer on material issues.

Informed Consent Failures

At the heart of dark pattern litigation is informed consent. Laws like the California Consumer Privacy Act (CCPA) address dark patterns by defining them as interfaces designed to substantially undermine user autonomy or manipulate consent. Under these regulations, consent obtained through manipulative designs can be deemed legally invalid.

Gaming companies now face enhanced scrutiny over their disclosure practices and consent mechanisms. Research consistently indicates that typical disclosures or user interfaces can confuse or mislead users, causing them to accept terms or make purchases without genuine understanding or consent. Courts will increasingly assess whether companies’ design choices intentionally create the illusion of informed consent, rather than providing consumers meaningful choice.

International Developments

Globally, regulatory scrutiny of dark patterns, especially loot boxes, has intensified, providing context and potential influence on U.S. litigation trends:

• Belgium (2018): Declared paid loot boxes illegal gambling. This prompted some gaming companies to withdraw or modify products in the Belgian market, though enforcement has been inconsistent.
• United Kingdom (2022): Following extensive debate, the UK government chose not to formally regulate loot boxes under gambling laws, instead strongly encouraging the gaming industry to adopt voluntary protective measures, including clearer disclosure of odds and enhanced parental controls.
• European Commission (2023): Released updated consumer law guidelines encouraging fairer video game designs, potentially influencing future regulatory approaches.
• Australia: Currently exploring the introduction of mandatory age ratings or clear consumer warnings for games that incorporate loot boxes.

Defense Strategies in Dark Pattern Cases

Gaming companies now face more scrutiny over dark patterns. Their legal teams have created sophisticated defense strategies that challenge both the basic contours and real-world applications of these claims.

Challenging Causation Between Design and Harm

Legal teams often question the connection between interface design and consumer harm. They argue that personal responsibility and parental oversight matter more than game design elements. This defense strategy highlights the scientific uncertainty in proving direct links between game mechanics and negative outcomes. The American Psychological Association's research revealed that competitive aspects of games might drive aggressive behavior, whatever the violent content.

The numbers back up these causation challenges. A joint study by the U.S. Secret Service and Department of Education looked at 37 incidents of targeted school violence. Only 12% of attackers showed interest in violent video games, compared to 24% who preferred violent books and 27% who liked violent movies. 

Britannica makes an interesting observation: video game sales jumped 204% between 1994 and 2014 while violent crimes dropped 37% during the same time.

First Amendment and Creative Expression Arguments

Game companies strongly defend their First Amendment rights. They see their products as protected artistic expression. Companies like Activision Blizzard claim they have a constitutional right to create entertaining games. This defense got a major boost in 2011. The U.S. Supreme Court ruled 7-2 in Brown v. Entertainment Merchants Association that California couldn't ban violent video game sales to minors as it violated free speech rights. Justice Antonin Scalia wrote in the majority opinion that states don't have "free-floating power to restrict the ideas to which children may be exposed".

Industry Standard Practices Defense

There's another reason companies use to defend themselves - they present challenged design elements as standard industry practices rather than deceptive patterns. Companies usually file motions to dismiss cases they believe lack legal merit. 

The video game industry maintains that entertainment, not manipulation, drives their product design. This defense becomes stronger when many platforms and studios use similar interface elements. These shared practices make questionable design choices seem more normal.

Looking Ahead

Legal battles against gaming companies over dark patterns represent a radical alteration in consumer protection enforcement. These cases now focus on interface designs that manipulate players into unwanted purchases.

The Epic Games case, now several years old, set clear precedents about acceptable monetization practices. The FTC's subsequent actions show stricter regulatory oversight of gaming interfaces. Courts now evaluate whether design choices create genuine user consent or just create its illusion.

Key lessons:

• Gaming companies must get explicit consent before charging users
• Interface designs that lead to accidental purchases face strict penalties
• Children's privacy protection remains the top priority in enforcement actions
• Loot box mechanics face ongoing legal challenges despite mixed court rulings

The litigation landscape around dark patterns is rapidly evolving. Here’s what attorneys and gaming companies should expect:

• Expansion of Litigation: More class actions will likely emerge, especially targeting apps that prominently feature microtransactions aimed at minors.
• Increased Regulatory Intervention: Expect potential federal or state-level legislation explicitly prohibiting specific manipulative design practices.
• Greater Enforcement on Arbitration: Plaintiffs will likely continue seeking innovative strategies to circumvent arbitration clauses, especially involving minors.

The rise in dark pattern litigation represents a broader shift toward transparency and consumer empowerment in digital experiences. Gaming companies must adapt or face substantial legal and financial consequences.