Game Developer Uses False Ads to 'Trick' Players Into In-App Purchases, Says Suit

Video game developer FunPlus advertises former prices to induce players to act quickly to take advantage of limited-time sale prices, alleged a fraud class action Tuesday (docket 3:23-cv-02667) in U.S. District Court for Northern California in San Francisco.

Plaintiffs Yovanni Yanez, a California resident, and Emelyn Matos, a New York resident, began playing FunPlus’ Frost & Flame: King of Avalon mobile app game in 2018, said the complaint. The freemium app is free to download and play, but players can augment play through in-app purchases for currency, weapons, garments and time, the complaint said. Plaintiffs bought various packs purporting to save them money but wouldn’t have bought them if they had known about the deceptive advertising, it said.

FunPlus “deceives consumers” by offering limited-time “bonuses” that purport to “massively discount” the price of its in-game goods, sold in packs from 99 cents to $99, said the complaint. The company uses “strikethrough pricing and percentages to trick consumers into believing they are benefitting from limited-time promotions that substantially increase the value of their in-game purchases, especially in relation to purchases made by competing players,” alleged the complaint. The advertised savings are “false” because the original prices referenced in the ads “are fabricated,” it said.

Players engage in “microdissections” to make in-app purchases of items necessary to maintain competitiveness with other players, the complaint said, contrasting the business model with other free apps that offer “non-essential” or cosmetic items for purchase. KOA’s in-app purchases “advance one’s account in direct proportion to the amount of money spent by a player and confer advantages not reasonably attainable by in-game labor alone,” said the complaint, calling it a “pay to win” mobile game.

A player who spends money in KOA “will be more powerful in relation to players who choose not to spend money in the game,” the complaint said. The game leverages the model by “bombarding players with advertisements and invitations to buy additional packs and resources whenever they reach a point in the game where their progress has stalled,” plaintiffs alleged. There's no in-game mechanism to review one’s purchase history or the total amount one has spent, they said. Upgrade costs are shown only for upgrades for which the player is currently eligible, meaning FunPlus hides the “explosive exponential costs of ingame upgrades until the game’s players have already invested months of time and money into the game,” they said.

The ads have run for years but the in-game items have never been offered at a non-discounted price, said the complaint. The company offers “false discounts from an original price that did not exist,” and players bought packs “on sale” that were the “same prices they would ordinarily pay.” The virtual in-game items have “no real-world value”; their pricing “is entirely determined by FunPlus,” alleged the complaint. To acquire the resources necessary to reach a certain threshold, Stronghold level 30, a player would need to spend bout $1,400 on packs, it said.

Defendants’ tactics to induce players to spend “tens, if not hundreds, of thousands of dollars” on purchases fall within the “manipulative design practices” identified by the FTC in a September report, “Bringing Dark Patterns to Light,” said the complaint. The report noted practices such as false discount claims and low stock messages are designed to create “pressure to buy immediately by saying inventory is low when it isn’t.”

The complaint alleges violation of California’s Business & Professional Code, which says: “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement.”

The complaint also alleges FunPlus violated California’s Unfair Competition False Advertising laws and Consumers Legal Remedies Act. Additional claims are fraud, unjust enrichment and violation of New York’s General Business Law. Plaintiffs seek compensatory and actual damages of over $5 million, punitive damages and civil penalties, plus attorneys’ fees, legal costs and interest.