Game on - unfair trading practices and online gaming

Key Points

The Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (Cth) (the Act) passed both Houses of Parliament on 2 July 2026 and received royal assent on 6 July 2026. From 1 July 2027, when the Act comes into effect, the Australian Consumer Law (ACL) will be amended to:

• introduce a general prohibition on engaging in unfair trading practices towards consumers
• strengthen protection against drip pricing practices
• address subscription practices that are harmful to consumers and small businesses.

For a detailed analysis of the Act at the draft bill stage, see our earlier articles, here and here.

While the Act is economy-wide in its application, the online gaming industry is particularly exposed, as many of its common monetisation practices could attract heightened scrutiny under the new regime. The global video game market is expected to grow to over US$326 billion in 2026, with a significant share of that revenue driven by in-game transactions (such as cosmetic or season-pass purchases) rather than upfront sales. This article explores what the Act means for gaming companies supplying services to users in Australia.

The Act and the concept of ‘dark patterns’

The central feature of the Act is a new general prohibition on unfair trading practices. A person will be taken to have engaged in unfair trading practices where they engage in conduct that does, or is likely to:

• manipulate the consumer
• unreasonably distort the environment in which the consumer makes, or is likely to make, a decision
• causes, or is likely to cause, detriment (whether financial or otherwise) to the consumer.

In the context of the Act, ‘manipulation’ refers to wrongful interference with a consumer that induces a change in their behaviour, decision-making or actions contrary to their interests. This may involve leveraging cognitive or behavioural biases but does not require dishonesty. Separately, the ‘unreasonable distortion’ limb seeks to capture conduct that induces consumers to proceed with a transaction they would otherwise have been likely to decline, or that impedes them from acting on economic decisions they would otherwise have taken (such as seeking a refund).

As reported in our article on the changes introduced following consultation on the Government’s exposure draft, the Act omits the word ‘unreasonably’ from the manipulation limb. The effect is that any manipulation falling outside legitimate, reasonable, or generally accepted marketing or sales practices could now be caught within scope.

The Act is particularly directed at ‘dark patterns’, which are design choices in digital interfaces intended to influence users towards making decisions that may not be in their best interests, often without their full awareness and to the benefit of the goods or service provider. These patterns exploit cognitive biases and psychological triggers to maximise user engagement, drive user spending and capture attention (see link). The Explanatory Memorandum identifies several practices that may contravene the general prohibition, including:

• obstructive menu design
• pre-selected options or defaults
• hidden subscription cancellation options
• artificial urgency created through countdown timers or low-stock notifications
• ‘confirm shaming’, where a consumer is unfairly made to feel guilt or regret about a particular choice.

Practices such as these may satisfy the ‘detriment’ element of the prohibition, which itself is defined broadly. It extends beyond financial loss to include wasted time and other negative impacts on a consumer. Conduct that is merely likely to cause detriment is enough, and actual detriment is not required. Beyond defining detriment broadly, the Act also sets out examples of conduct that may amount to unfair trading practices, offering further guidance on the prohibition’s intended reach. These include:

• impeding a consumer’s ability to exercise legal rights or seek legal remedies
• failing to disclose material information to a consumer
• disclosing material information to a consumer in a complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming way
• creating an environment (including by using design elements in digital interfaces) which places unreasonable pressure on, or obstructs the consumer from, making or fulfilling their decision.

The penalties for contravening the new obligations under the Act are substantial. For corporations, the maximum penalty per contravention is the greater of $50 million, three times the benefit obtained from the contravention, or 30% of adjusted turnover.

How online gaming companies monetise

To understand the potential impact of the Act on the gaming industry, it is useful to consider some of the methods that online gaming companies use to generate revenue.

The free-to-play or ‘freemium’ model dominates mobile and online gaming, accounting for nearly two-thirds of total video game revenue in 2025. Although players do not incur a cost to play the game itself, gaming companies generate revenue through in-game purchases, such as:

• cosmetic enhancements, including character skins or visual upgrades
• consumable items, such as extra lives or performance boosts
• in-game currency bundles.

While only a small proportion of players convert to paying users, revenue compounds significantly as the player base scales, driven by that small proportion of players who do spend repeatedly over time.

Free-to-play games commonly rely on virtual or ‘premium’ currencies as a core monetisation strategy. Such games require players to purchase a virtual currency (such as gems, coins or tokens) with real money before they can acquire in-game items. The exchange rates between real money and virtual currencies can mask the true cost of purchases, making it difficult for players to monitor their overall spending.

Beyond in-app purchases, gaming companies deploy a range of other monetisation strategies to generate revenue. Subscription models deliver a steady stream of revenue for gaming companies by offering players continual access and perks for a recurring fee. Similarly, battle passes present gaming companies with a seasonal monetisation model, rewarding gamers who complete challenges during a ‘season’ to unlock in-game items, with new content introduced each season. Loot boxes have attracted controversy due to their resemblance to gambling mechanics – players pay for a randomised reward, with valuable items weighted to appear less often than common items.

Where gaming monetisation meets the new laws

Many gaming monetisation techniques comprise entirely legitimate marketing and advertising practices. However, several tactics common in the online gaming industry closely resemble the dark patterns and unfair trading practices that the Act expressly seeks to address. Gaming companies should carefully assess whether any of their current practices risk falling foul of the new regime.

Evaluate the use of artificial urgency and scarcity signals. Some online games deploy countdown timers on exclusive or flash sales or display notifications highlighting when other players are viewing or purchasing the same item. The Explanatory Memorandum identifies countdown timers, low-stock notifications and other supply constraint indicators as dark patterns capable of contravening the prohibition if used to provoke impulsive consumer decisions, exert social pressure during the transaction, or create an artificial sense of urgency around exclusive, time-limited content. The same principle extends to ‘confirm shaming’ tactics, where games use guilt-laden language on decline buttons to discourage players from refusing purchases.

The use of virtual currencies may also be probed. The new drip pricing provisions require transaction-based charges to be displayed legibly, prominently and unambiguously, in close proximity to the base price. These requirements may also apply to video games that use arbitrary in-game currencies or complicated currency conversions, designed to obscure the true dollar cost of a gamer’s spending. Under the Act, presenting material information in a ‘complex, ineffective, unclear or unintelligible’ manner may constitute an unfair trading practice.

Loot boxes and similar randomised reward mechanisms pose a further risk. Research has raised concerns that these mechanisms may exploit psychological triggers akin to those used in gambling, such as variable reward schedules and the allure of unpredictability, to captivate young and adolescent gamers. Gaming practices that conceal odds (or present them in a way that is difficult for the average user to understand) in an attempt to encourage consumers to make unintended purchases may be manipulative under the Act.

‘Grinding’ as a dark pattern and consumer vulnerability. The United States Federal Trade Commission's Bureau of Consumer Protection has also identified ‘grinding’ as a digital dark pattern, a practice that involves making free versions of games so tedious that players resort to unlocking time-saving features through in-app purchases, a tactic that could attract regulatory scrutiny. Companies should also bear in mind that a practice which may not be considered deceptive when directed at adults could nevertheless amount to manipulation when encountered by a child. Although the Act’s prohibition does not distinguish between adult and child consumers, a consumer’s vulnerability and capacity to comprehend the practices at issue are likely to be relevant contextual factors when assessing whether conduct manipulates or unreasonably distorts the decision-making environment.

Daily log-in systems and cumulative spending mechanics also warrant careful inspection. Video games that impose daily log-in requirements (such as streaks) exploit loss aversion to compel engagement. Such a design may constitute manipulation under the Act. Additionally, cumulative micro-transaction spending in some video games can reach extraordinary amounts, with reports suggesting that fully upgrading a single character in one title can cost upwards of $100,000. Where incremental purchase structures obscure the true aggregate cost for the user, this may amount to presenting material information in a manner that is neither clear, effective nor intelligible.

Key takeaways for gaming companies

Online gaming companies should prioritise the following considerations before the new laws commence, whether they are developing new monetisation strategies or reviewing current practices:

• Consider jurisdictional reach. The general prohibition applies to conduct in trade or commerce that involves the supply of goods or services to Australian consumers, including through online channels such as video games. The prohibition extends to post-sale conduct, which would include in-game purchase environments, and is designed to be sufficiently flexible to adapt to evolving digital practices. Given that the prohibition applies to conduct in connection with online supply to consumers, and the ACL already applies to foreign companies operating in the Australian market, overseas gaming companies should not assume they fall outside its reach.
• Ensure that pricing is genuinely transparent. Where virtual or premium currencies serve as intermediaries between real money and in-game purchases, companies should ensure that conversion mechanics allow players to readily understand their real-world spending. The emphasis here is on ensuring information is presented in a user-friendly and understandable manner.
• Conduct a walk-through of the game player experience to identify any dark patterns or design elements that may be manipulative under the new prohibition. This includes reviewing navigation structures that induce players towards spending and reviewing the language used on accept/decline buttons.
• Assess battle-pass subscription and auto-renewing membership models against the Act’s subscription practice requirements. Key information must be disclosed clearly, and a framework should be implemented to ensure players are notified of material subscription terms and provided with a straightforward cancellation process requiring minimal steps.
• Pay particular attention to the impact on younger players. Monetisation strategies that appear routine when directed at adults can amount to manipulation when experienced by a child, who may lack the cognitive maturity to appreciate what is being asked of them or the financial consequences of responding.
• Begin preparing now. Gaming companies have until 1 July 2027 to prepare for compliance. They should start now, by reviewing interface design, assessing monetisation techniques for ‘dark patterns’ and engaging legal advisers before the new laws take effect.