And researchers warn parents about the data the gaming companies are taking, too

If your child like about 80% of kids in America spent way too much time this past summer playing video games, you may have a bigger problem on your hands than trying to wean them away from their screens. Bigger as in more dangerous.

In a new missive to parents, the Consumer Financial Protection Bureau (CFPB) says that many games use sneaky tactics to encourage spending, such as in-game currencies that can be confusing and loot boxes that are essentially gambling. Some games even have features that are similar to real-life gambling, which can be especially risky for young players.

In many games, players need to store a form of payment on their gaming account in order to be able to easily convert dollars into in-game currency. Companies that make video games can conceal the true costs of transactions by using those in-game currencies.

As an example, they use confusing and inconsistent exchange rates (pay $2.95 for 320 coins or pay $9.05 for 1020 coins), which makes converting from one currency to another difficult. There is usually a prompt to buy game currency outside of game play, separating those purchasing decisions from actual spending decisions made during the game.

It doesnt stop there, either

Gamersor their parents and guardiansfrequently report being harmed by scams or theft on gaming platforms, the agency wrote. Players report having little recourse with gaming companies when they suffer losses, and game publishers claim to have no obligation to compensate the players for financial losses, including when service to a game is suspended or a consumers account is closed.

The CFPB suggests that to keep your kid safe, consider using gift cards with a set amount to limit their spending. Many games also offer parental controls that can be used to restrict purchases or require a password before buying anything. When choosing games for your child, look for ones that don't have in-game purchases or that have a one-time fee.

The CFPB says that if you encounter a problem with a financial product or service in video gaming at consumerfinance.gov/complaintor by calling(855) 411-CFPB (2372). The agency is honest about those complaints, though, saying that while most complaints receive a response from the company, many complaints about video games do not.

But dont let that stop you. Weve been working with companies to improve that. Whether a company responds to you or not, your complaint makes an impact by helping us, other agencies, and law enforcement find bad business practices and spot problems and patterns, the CFPB said.

It doesnt stop there

Another frightening revelation is that games collect information about your child. Lots of personal information location, social media activity, even biometric data data that can be turned around and used to target your kid with personalized ads and offers, which, in turn, can increase the risk of them being scammed even further.

In its own study of the situation, the Mozilla Foundation found that the leaders in the gaming industry Sony, Nintendo, and Microsoft all bear some blame when it comes to collecting personal data. Heinous enough that Mozilla handed out "Privacy Not Included warning labels to each of those companies.

Nintendo

First, Nintendo does collect a fair amount of personal information, the researchers claim. Things like name, email address, postal address, phone number, date of birth, country of residence, language, gender, device and advertising identifiers and other unique personal or online identifiers, location (with your consent), health information (with your consent), and lots of information about how and when and what games you play.

Xbox

As far as Microsoft's Xbox privacy practices raising concerns, the Mozilla team said that its a plus that the company doesn't sell personal information, but it still collects extensive data on users and their gaming habits. Additionally, it acquires data from external sources to target advertising. The FTC fined Microsoft $20 million in 2023 for violating children's privacy laws by illegally collecting and retaining their personal information without parental consent.

Violating children's privacy laws is pretty bad. especially for a video game console lots of children use daily, the researchers said.

Sony PS5

And Sonys PS 5? The researcher examining that product had this to say: Not gonna lie, this privacy researcher loves her PS5. I also recognize it collects and shares lots of information on me. Things like name, email, phone number, location, and lots and lots of device information and info on how much I game, when I game, how good I am at gaming (pretty terrible, actually).

But heres where Sony may be going a little too far: Also with the PS5, Sony now records all voice chats in order to combat abuse during online gaming. Users experiencing abuse can submit recordings--no more than 40 seconds--of abusive voice interactions to Sony for review, the researcher found.

There will be no way to opt out of this. And Sony reserves the right to monitor and record everything else you do too on the Playstation Network and potentially remove any of that content.