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Nintendo Switch, PlayStation and Xbox's auto-renewal terms to be investigated

Nintendo Switch, PlayStation and Xbox's auto-renewal terms to be investigated

The competition watchdog has launched an investigation into Nintendo Switch, PlayStation and Xbox to find out whether the auto-renewal terms of their online gaming services are unfair.

The Competition and Markets Authority (CMA) says it's concerned about whether some elements of these companies' online gaming contracts – such as their use of auto-renewals, their cancellation and refund policies and their terms and conditions – are legal.

As well as buying consoles and games, gamers can pay for online gaming services in order to be able to play against others and access extra games. You usually have to buy a membership, which is often offered on an auto-renewal basis, meaning that money is automatically taken from your account when the contract rolls over.

The CMA has written to Nintendo Switch, PlayStation and Xbox requesting information about their online gaming contracts to help better understand their practices. It's also calling on customers who use these services to get in touch with it and share their experiences in order to help the investigation.

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What will the investigation look into?

The key areas that the investigation will focus on are:

  • Are the contract terms unfair? For example, do the T&Cs give the companies the ability to change the quality of the deal, perhaps by cutting the number of games included or increasing the price?

  • How easy is it to cancel or obtain a refund? This will involve looking at whether there are any factors that make it difficult for people to cancel their contract or get their money back.

  • How fair is the auto-renewal process? For example, are customers clearly told their membership will be rolled over, are they regularly reminded they are on a roll over contract before further payments are taken, and is auto-renewal the default option?

What could happen to the companies?

The CMA says that at this stage it has not reached a view on whether or not the companies may have broken consumer protection law.

However, if the CMA concludes the companies have broken consumer protection law, it could take enforcement action. This would likely involve it demanding the companies make changes, with the threat of legal action if they don't.

What does the CMA say?

CMA chief executive Andrea Coscelli said: "Roll over contracts are becoming more and more commonplace and it's essential that they work well for customers.

"Our investigation will look into whether the biggest online gaming companies are being fair with their customers when they automatically renew their contracts, and whether people can easily cancel or get a refund.

"Should we find that the firms aren't treating people fairly under consumer protection law, we are fully prepared to take action."

A spokesperson for Microsoft, which runs the Xbox online gaming service, said: "We have received a notification from the Competition and Markets Authority and will be co-operating fully with their investigation."

MoneySavingExpert.com has contacted Nintendo and Sony, which runs the PlayStation online gaming service, for comment and will update this story when we hear back.