Could Federal Trade Commission Tackle the EULA?

Do you pay attention to the fine print when you install a game or other software on your PC?

Me neither.

But in many cases, End User License Agreements (EULAs) stack the deck against consumers.

In his Law of the Game on Joystiq column, attorney Mark Methenitis speculates that the Federal Trade Commission may decide to weigh in on the EULA debate in order to protect the interests of game buyers.

In Methenitis’s view, the FTC has three possible courses of action:

  • requiring that EULAs be written in plain language, not indecipherable legalese
  • mandating that EULAs be dropped entirely in favor a consumer information checklist devised by the FTC
  • a hybrid of these two

Mark sees potential revenue opportunities for the FTC in EULA regulation as well (hit the jump for the update).


UPDATE: Mark amplifies his comments concerning potential revenue generation for the FTC:

I’m speculating based on how other agencies operate. First, there will almost certainly be some sort of review fee if [EULAs] are actively reviewed, but this is minimal.  The real means government regulations generate income is through fines and penalties…


It’s more likely they’ll impose some serious fines for non-compliance with these new rules, and I would expect enforcement will be a high priority. The government can pull in $10 million plus on a medium sized case, based on fines/penalties for trade/FCPA violations.  Siemens just paid $800 million in fines for a series of FCPA violations, one of the biggest cases on record.  It’s all part of a trend to ramp up enforcement across the board.  With an appropriate fine mechanism, you can expect the government will find a way to make money especially given the current budgetary constraints.  But, again, this is all speculation, and there may be a better barometer for this after the town hall meeting on DRM in March.

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  1. johnhugley says:

    Without question user agreements/fine print are a sham. Like everyone is saying, who actually can understand this and or even bother to read a book on it before clicking the agree button? I would ditto the comment about prefering these to be in plain english please. Then again, if they did that perhaps we might actually know our rights or lack thereof and start complaining about our right being infringed upon by these silly agreements.

    Buy Eee PC

  2. the1jeffy says:

    Try proving a game ‘broke’ your computer in any court, regardless.  The threat of internet postings about "X-game fried my HDD!" (See Microsoft’s RRoD issue) is a far larger threat and power than anythng the FTC or the courts could do.  Once again, you have more power than you choose to do anything with.

    ~~All Knowledge is Worth Having~~

  3. icarus_17 says:

    to be honest the GNU General Public License version 3 ( makes more sense than the EULA in a lot of places, but is complicated in others (primarily to cover its bases, more to defend against companies that want to integrate the software into their own and patent it all thus nullifying the open source part, i think, though i am not a contract lawyer)

  4. Wolvenmoon says:

    Ha ha, abuse it and lose it, jerks.. (To the game industry)

    How hard is it to say : "One copy, one household. Don’t copy this software and give it to your friends. Don’t copy it online. Don’t redistribute any part of it. If it crashes, we may or may not help you. If it blows your computer up, tough luck. If you sue us, we pick the court."

    Etc etc.

    I’ve always thought they should have to present a written contract before any money changes hands. And if they can’t afford to pay the stores the fees they’d be charged, then they shouldn’t have them.

    I’ve also always acted under the pretense that "I reserve the right to do whatever the hell I want to any CD in my hands, including but not limited to reselling it, making personal copies of it, snapping it in half, flinging it at something, or ripping content for personal use."

    Maybe the government that screwed us over with the DMCA and bush’s little copyright law that did the modchip raids can fix the problems they created…maybe.

  5. nighstalker160 says:

    Please explain exactly HOW a EULA provision reading:

    "You agree to submit to binding arbitration over any dispute concerning tihs product. The arbitration will be subject to the laws of [game company’s home state] and the arbiter will be selected by the [company]." 

    Serves to protect their material?

    That’s basically saying

    "If this game breaks your computer you: (1) Cannot sue us, (2) Agree to be bound by the laws of OUR state which, since we provide so many jobs to the state, is likely to be friendly to us, (3) Agree that we get to pick the person who’s going to decide what’s fair."

  6. nighstalker160 says:

    Many EULA’s contain a provision saying you agree to be bound by the laws of a particular jurisdiction or that you give up the right to sue the company for damages relating to the EULA.

    In those cases you are often agreeing to submit to binding arbitration of ANY dispute by a arbiter picked by the company.

    In other words, the EULA’s basically stack the deck against you. And you’re stacking the deck in potentially illegal and unconstitutional fashions.

  7. Vash-HT says:

    One of my problems with EULA’s is that with PC games you’re stuck with the game anyway since stores won’t let you return a PC game. Like anyone is going to decline a EULA and end up with a 50$ coaster instead of just agreeing so they can actually play the game they bought. In reality a thing like a EULA would only be helpful if a customer could read it before they bought the game.

  8. catboy_j says:

    So that still doesn’t answer the question about what of ELUA you can’t read until you plug the game in or open the packaging? Further more what’s wrong with a standardized rule that makes sure neither the customer or the company get’s screwed over?

    I bet you would be bitching if it were back in the time when the RIAA was tryin to tell us we had to rebuy music digitally when we wanted to listen to it on mp3 players. Or if movie companies snuck things into the DVD start menu that gave some long, legalese list of things you could and couldn’t do with said DVD and that by watching the movie further you officially agreed.

  9. questionmark1987 says:

    The companies have a vested interest in protecting their material. As far as I’ve seen the "altering your computer" refers to altering copies of code in the RAM, not hardware. Altering the code in the RAM for a game such as WoW (since this is the most well known and circulated instance of that wording I assume you’re referring to it) can drastically affect waht you and other players experience including breaking the game system entirely.

    As for being afraid of both DRM and EULAs, remove both and companies have 0 protection. DRM is a hard and fast way while EULAs are more "follow the rules". Making a copy of a game is much simpler and harder to track then a movie or music since slight edits can make identical code appear differently. Companies deserve to protect their creations. If you don’t like the way game developers protect themselves, don’t play the game. But don’t whine about it like you have some god granted right to play thier material. If you don’t like the rules, stay off the playing field.

  10. Spartan says:

    It would be so nice to see the government take some action on behalf of citizens and customers regarding EULA and DRM shit.  


    "The most difficult pain a man can suffer is to have knowledge of much and power over little" – Herodotus

  11. Baruch_S says:

    Exactly. If the EULAs aren’t brought under control, there’s nothing stopping companies from using them in ridiculous, consumer-unfriendly way. Since you don’t know what you’re going to be stuck agreeing to until after you’ve ruined any chance of returning the game, you can either jump through whatever hoops the companies wants or be out $60.

    I don’t advocate piracy or the hacking of online games, but if you’re not pirating or hacking, companies should back the hell off and be happy you bought their games. They need to quit trying to protect their own wallets through faulty DRM and indecipherable, excessive EULAs at the consumer’s expense. They’re only going to see piracy become more prominent if they start pushing people harder.

  12. Adamas Draconis says:

    The issue is that some EULAs have so much (Forgive the language) BULLSHIT that you don’t know WHAT could be breaking it. And has been mentioned, some EULAs states that modifying your computer (Which if worded loosly enough could mean adding a new RAM card or upgrading the motherboard) violates it. Now I don’t know about YOU but I would like it if I’m not gonna get screwed or not be able to play something I PURCHASED because some asshole decided to make it so I can’t stick my tounge out at the box without getting sued!

     Hunting the shadows of the troubled dreams.

  13. questionmark1987 says:

    I’m still waiting for a solid example of a consumer being screwed by a EULA, last I checked a consumer never had anything more then an inability to play a game from breaking EULA. Unless of course you’re defending piracy or hacking of online games, which if you are how do those actions protect ANY consumer?

  14. Baruch_S says:

    And what additional costs would those be? There’s going to be at most a minimal charge to review them. The companies only have to have the EULA reviewed once. That splits the small review fee over at least a hundred thousand copies. Unless the "minimal fee" is in the $500,000+ range, there’s no reason to raise the price.

    The only way companies are going to take a serious hit that might get passed on to the consumer is if they DON’T play by the new rules and release EULAs in legalese anyway. As long as they play nice and don’t try to confuse/screw the consumer, they’re not going to take a significant hit.

  15. Baruch_S says:

    If you want to rent the games you purchase and not realize it, go right ahead. Personally, I’m fine with the officials I elected to represent me defending my interests and rights. That is, after all, one of the reasons I voted for them.

    I’d also like to know how you get any of the things you said out of the fact that the government wants to make EULAs be written in standard English instead of legal jargon. Defending the rights of citizens is one of the government’s jobs. Game companies know that they can get by with almost anything if they force people to agree to long, indecipherable contracts that they have no choice but to accept since they can’t return the product anyway and wouldn’t be able to organize a movement with enough force to make the companies change their EULAs. Right now, EULAs are entirely in the industry’s favor to the detriment of the consumer (DRM, anyone?).  I personally like seeing the government defend consumer rights for once.

  16. questionmark1987 says:

    Additionally if any of you think that additional costs to developers and publishers is ok, just remember they are going to be passing those costs onto us. Developers are already running in the red for the entire developement cycle. They are going to recoup the cost somewhere. Most likely in the price of thier games.

  17. questionmark1987 says:

    Yay more degredation of  companies being able to protect their interest in the interest of consumers not having to think or take reponsability for our actions. Hurrah for a government that treats it’s citizens like involent downsyndrome children who can’t think or reason for themselves.

  18. Calling All Humans says:

    Without question user agreements/fine print are a sham. Like everyone is saying, who actually can understand this and or even bother to read a book on it before clicking the agree button? I would ditto the comment about prefering these to be in plain english please. Then again, if they did that perhaps we might actually know our rights or lack thereof and start complaining about our right being infringed upon by these silly agreements.

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  19. Amosh says:

    By the same measure, it could be reasonably inferred that by clicking accept that you understood the language being used. Of course we all know that the terms, even to an experienced attorney, can be ambiguous at times, and to expect the layman to fully understand such terms is laughable.

    As for how I feel about the FTC delving into the realm of EULA’s, I’m for it. It has been demonstrated that when an industry is left unbridled, the consumers lose. I am all for companies setting up their own tailored rules regarding the use of their product. However, good faith negotiations must be present, not attach a boilerplate after the point of sale and claim it as a contract that was entered into.

    What I would like to see happen is that electronic media me treated the same way as tangible products. The FTC needs to limit EULA’s to function within those established by First Sale and Fair Use Doctrine and to put in a reasonable list of rights that consumers have. At the same time, the FTC should not mandate performance from the software developers, that just hurts business, but rather react to unfair business practices.

    I am not sure how realistic this would be though, referring to my eutopic world, since there are probaly many legal hurdles with how this would interact with state and federal laws as well as other legal precedents.

  20. chadachada321 says:

    Also, according to a class I took in high school, contracts are supposed to be in simple language…So I’d say if anyone took it to court they’d probably side with the consumer

    -If an apple a day keeps the doctor away….what happens when a doctor eats an apple?-

  21. the1jeffy says:

    The sealed packaging is a good point, but I’m sure that if you look online or ask the company, they will provide a EULA for you to review before the sale.  The power is ultimately already in your hands, you are just to lazy to do anything, and want a federal commision to babysit your purchase.

    ~~All Knowledge is Worth Having~~

  22. the1jeffy says:

    Yes, I do bring Blizzard up as a good company for EULA.  If you’ve read WoW’s EULA (and by your post, I’m guessing you didn’t), you would know that modding the memory sectors for the expressed purpose of automating a character’s actions is breaking the EULA.  And they reserve the right to cancel your WoW Account for doing so.  You agree to this, or don’t play. Simple.

    However, where Blizzard has gone wrong in court, is trying to sue a man for a product that does break the EULA.  On the grounds that Blizzard loses paying customers because of him, I could see their point.  But, they are using the DMCA and saying that modding the memory sectors is agaisnt their IP, and THAT is shit.  This has NOTHING to do with the EULA. 

    More ot my point is the current state of WoW and the close relationship that the devs have with their dedicated player-base.  It’s unprecedented and by and large a good thing. 

    Having a federal commision (who know next to nothing about gamers, games, and their needs) automate a EULA restricts developer and is a long term loss for gamers.

    ~~All Knowledge is Worth Having~~

  23. the1jeffy says:

    Idiot or insincere?  Perhaps just willing to take the time to understand something that other peple don’t.

    And the FTC costs nothing now?  What a tool.  The FTC exists to levy fines, and a game company would need to spend resources to make sure they are in the clear, or bribe the FTC.  So what I said stands true, it’s just an unecessary added expense to business.

    ~~All Knowledge is Worth Having~~

  24. Faceless Clock says:

    This particular rule would cost companies nothing as long as they complied. But ultimately, what it does or does not cost the company is irrelevant, becuse I couldn’t care less if companies have to confirm to consumer protection laws. They are there to protect consumers, not please companies.

    Reading the EULA? You’re either an idiot or you’re being insincere. An EULA is pages and pages of small text and legal jargon that most people can’t understand. It is not fair to expect the consumer to have to read such a document just to ensure that there isn’t a sentence somewhere in the EULA that says "Our Company Retains Exclusive Rights To The Use Of Your First Born Child."

    The Honest Game –

  25. Awol says:

    We need to get the game companies close to us (like Blizzard has been doing in WoW recently), instead of putting an FTC shield in the way.


    Seriously you bring up Blizzard as a good company for EULA. This is the same developer who stated in court that modifing anything in your computer’s memory is breaking copyright law and breaks their EULA. Blizzard isn’t looking out for us but the money it can make.

    FTC makes rules to protect consumers, this thing against EULA isn’t only for games its all software and items. I think its about time the FTC got involved in this have you read some of these things some of them are scary. Having the FTC create some broiler-plate EULA is a good thing and might even be cheaper on the developers cause they would have to get less lawyers into the mix.



  26. catboy_j says:

    Hey I already avoid web sites that have TOS that paraphrase to "We can do whatever we want" but keep in mind some of these ELUA are inside sealed packaging nya. You pay before you even know what you’re gonna have to think about agreeing to. Some Used Games don’t even come with instruction manuals which is where it sometimes is when not on computer games.

  27. the1jeffy says:

    So we want to put another expense/hurdle to game development?  How’s that good for gamers in the long run?  If the game companies have to pay the FTC, or risk fines, that just stymies develpoment. 

    EULAs aren’t that hard to read.  Grow a brain.  Now, the provisions in them are anti-consumer, for sure, but we have the means to change that ourselves — don’t buy games that have more draconian EULA provisions.  In fact, why doesn’t the ECA get someone to "translate EULAs for their members if the language is so rough?  Or is actually helping gamers outside the ECA mandate of issuing trite press releases and organizing Xbox chapter tourneys?

    No we’d rather big government "save" our hobby.  We need to get the game companies close to us (like Blizzard has been doing in WoW recently), instead of putting an FTC shield in the way.

    ~~All Knowledge is Worth Having~~

  28. Amosh says:

     I could be wrong, but I am pretty sure new games manufactured must advertise on the outside of the box that they have an EULA that must be agreed to prior to full use of the product. Although it is a step in the right direction, it is rather ineffective. It is common knowledge that software will come with an EULA and just a notification of one existing really serves no purpose.

    On the positive side though, courts are starting to look at electronic media more realistically. In Krause v Titleserv the court said that, if I remember correctly, that by purchasing software you do own it regardless of if the EULA states that it is merely a rental/license. I’m not sure if it got reversed on appeal though.

  29. catboy_j says:

    I agree as I said earlier. Even whats more, no game store will give you back full price for any game that’s opened and does’t have a defect that can’t be attributed to personal opinion.

  30. NovaBlack says:

    What i dont get it this..


    The only mention of the EULA is when you install the game…

    Yet in the case of a pc game (which cannot be returned after being opened, so you cant really not accept it), how can an EULA be enforced upon me after i already made the purchase. In UK contract law, terms and conditions have to be made obvious to the user before  a contract is formed (formed when you agree to purchase the game from the retailer and they accept your cash), else they do not form part of that contract, and are unenforceable. i.e. you cannot add terms to a contract after the meeting of minds and the contract has been agreed and carried out.

    In the case of PC games then (which cannot be returned once opened) surely the EULA should be made obvious to me, and i should have a choice to accept it before i make the contract with the retailer and purchase the game. I mean, once ive opened it, im screwed, they could write whatever they wanted in there, and id have no choice but to agreem else ive lost out on £££ fromthe original purchase.

    If i dont agree to the EULA, ive got a £30 coaster…. But thats the point i only agreed to purchase the game from the retailer, on the understanding that they would get my money, and i would get to play the game (an inferred condition, totally enforceable in UK law)… surely if i then cannot do this.. the obligations of the original contract have not been fulfilled…

    It just stinks!

  31. Shadow D. Darkman says:

    Thank’ee kindly! 


    "Game on, brothers and sisters." -Leet Gamer Jargon

  32. catboy_j says:

    I believe GP also covered that anyways too. So you can probably read about it on this site if you click the right tags…

  33. catboy_j says:

    IMO Tom Clancy games are the worst offendors. You practically enter an agreement by thinking about one of those games there’s so much legal writing literally all over the game cases, discs, and instruction manuals.

    Whereas oddly books put out baed on his games only have the standard "Do not replicate any portion of this book" Warning.

  34. Baruch_S says:

    It would be great if someone would crack down on EULAs since you have to be a lawyer to understand what you’re agreeing to most of the time. Now, if the FTC would only crack down on DRM, we might actually have an industry that works for the consumer instead of trying to screw him over.

  35. Shadow D. Darkman says:

    Crap, the site’s blocked, and I really wanted to see that! 


    "Game on, brothers and sisters." -Leet Gamer Jargon

  36. TBoneTony says:

    Sometimes I hate it when the contract makes things complicated and you have to say yes to it.

    If you say no, then you don’t play the game, so I just scroll though to the bottom and just press yes.

    Also the ESRB ratings are easy to understand for me, it is just my countries OFLC ratings that do bother me as they always say things like Low level violence, infrequent Violence, medium or moderate violence, and high level violence, high impact violence, high frequent violence, High Bloody Violence and so on.

    Like they expect people like parents who are so unfamiliar with not only Videogame ratings but also Movie ratings to know the difference between those different types of violence.

    I feel that the ESRB and their content Discriptors give a better and clearer view on things.

    But the thing is, I am from Australia and I am stuck with the OFLC,

    besides from the OFLC’s complete lack of an R18+ rating for videogames (that is something that is out of their own hands because it is decided by the State and Federal Attorney Generals that require a 100% yes vote on to change) but to also see that the detailed information given to parents is not really clear to avoid different interpritations, I guess that would be the second biff I have with my countries OFLC that I would like to have changed to make it a bit more better for parents to understand.

    but that is getting a bit off topic though.

  37. DeepThorn says:

    I like the ones you can delete the text to and agree to nothing, haha.  There are other times where I don’t believe I see a user agreement, when I believe it may have been there…  but if you do something that breaks that agreement that should be there when you never agree to it in the first place, is it illegal?

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  38. Andrew Eisen says:

    I’m getting pretty good at deciphering legalese but I’d vastly prefer plain English.


    Andrew Eisen

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