The German State Bavaria has published a draft for a new guideline (“Draft JuSchRiL”) on the interpretation of the Interstate Treaty for the Protection of Minors (“JMStV”). The JMStV regulates, inter alia, youth protection matters for online media in Germany (including online video games, mobile games and apps). The new guideline - which clearly serves as a reaction to the ongoing loot box and monetization debate - states, among other things, that “advertisement which is also directed at minors can in particular be unlawful if an advantage is granted for viewing advertisement”. The guideline also targets invasive monetization models in general by providing additional interpretation guidance on one of the requirements of the prohibition of direct purchasing appeals towards minors. While the guideline has not yet been passed, its adoption is likely. This short article explains the relevant advertisement restrictions in Germany and puts the new guideline into perspective.
I. Legal Framework
Sec. 6 (2) No. 1 JMStV states the following:
“Advertising shall not cause any physical or moral detriment to children and adolescents, nor shall it contain direct appeals to buy or rent goods or services directed at children or adolescents exploiting their inexperience and credulity.”
Sec. 6 (4) JMStV states the following:
“Advertising which is also directed at children or adolescents or advertising in which children or adolescents are involved as actors shall not harm the interests of children or adolescents or exploit their inexperience.”
Sec. 15 (2) sentence 1 JMStV regulates that guidelines on the interpretation of the JMStV can be adopted:
“The decision-making bodies of the state media authorities which are competent pursuant to the respective state media legislation shall enact concordant statutes and guidelines covering the implementation of this Interstate Treaty.”
The German state media authorities:
The German state media authorities are the regulatory bodies for online youth protection matters in each German state. Their decisions, however, are made through the Commission for Youth Protection in the Media (“KJM”). This turns the KJM into the de facto head regulatory body for youth protection matters for online media in Germany.
The Youth protection guideline:
As early as 2005, the German state media authorities harnessed the legitimation provided in Sec. 15 (2) JMStV and passed a guideline on the interpretation of the JMStV (“Youth Protection Guideline” – “JuSchRiL”). Since then, the JuSchRiL has not been updated. The new Draft JuSchRiL constitutes the first extensive revision of the old version of the JuSchRiL. The German version of the draft is available here.
Sec. 4.3 Draft JuSchRiL states:
“[…] Inexperience and credulity [within the meaning of Sec. 6 (2) No. 1 JMStV] is always assumed with regard to children. When the exploitation of the inexperience and credulity of adolescents is evaluated, the overall assessment of the offer and the underlying business model must, among other things, be considered.”
Sec. 4.6 Draft JuSchRiL states:
“Advertisement within the meaning of Sec. 6 (4) JMStV which is also directed at children can in particular be unlawful if
(1.) an advantage is granted for viewing advertisement;
(2.) the linking of profiles with another platform is advertised.”
II. Legal explanations on the relevant advertisement restrictions and the Draft JuSchRiL
1. Sec. 6 (2) No. 1 JMStV - The prohibition of direct purchasing appeals
Sec. 6 (2) No. 1 JMStV prohibits direct purchasing appeals aimed at minors in online media. The term advertisement is understood broadly (this is also confirmed by the Draft JuSchRiL). Furthermore, in order for the provision to be applicable, the advertisement must include a direct purchasing appeal (a.) which is directed towards minors (b.) and ultimately, the advertisement must exploit the inexperience and credulity of children or adolescents (c.).
a. Direct purchasing appeal
A direct appeal is any slogan such as “You should try it as well!” or “Get the new edition!”. The same applies of course to slogans such as “Get 20 loot boxes for EUR 5!”. There is a legal debate whether an in-game purchase offer in a children’s product always and automatically constitutes a direct appeal towards minors. However, this interpretation contradicts the wording of the law which clearly requires a direct purchasing appeal and not a mere offer to purchase (price + product picture). Otherwise, any offer displayed on a children’s website would also have to be prohibited.
b. Direction towards minors
Direct purchasing appeals are not automatically prohibited. Only direct purchasing appeals directed towards minors are prohibited. Whether the appeal is directed towards minors is typically the most relevant question.
aa. Requirement of an explicit appeal towards minors?
The Draft JuSchRiL states: “An explicit appeal and a specific direction towards children and adolescents is not required.” With this wording the Draft JuSchRiL applies a broad and strict standard. Technically this means that many direct purchasing appeals in games/apps which are mainly played/used by adults but also by some minors are covered by the provision because they appeal to minors and adults.
It is doubtful whether the strict approach of the Draft JuSchRiL conforms with the available case law. It must be noted, however, that the highest German civil court, the Federal Supreme Court, has indeed also applied a rather strict standard in relation to the “parallel” provision on direct purchasing appeals included in the German Act on Unfair Competition (Unlauterer Wettbewerb-Gesetz - “UWG”). No case law on the JMStV provision is available so far. While the relevant UWG and JMStV provisions essentially regulate the same matter (prohibition of direct purchasing appeals), there are some differences between both provisions. Nevertheless, in practice the case law available on the UWG provision is also used to interpret the corresponding JMStV requirements. In 2014, the Federal Supreme Court applied the following rather strict approach in relation to an advertisement concerning the video game Runes of Magic (case no. ZR 34/12, dated September 18, 2014): “[The UWG provision], which serves the purpose of protecting children, is not only applicable if children are the only or at least the main addressee of direct purchasing appeals included in an advertisement. Otherwise, the field of application would largely run empty because advertisements often do not only target a narrow and exactly determined circle of addressees but typically aim to attract consumer groups of different age structures. The legislative purpose is therefore not already rendered inapplicable if “mixed” or even groups mainly consisting of adults are targeted.”
Nevertheless, despite this strict standard the court also clarified: “For [the UWG provision], which serves the purpose of protecting children, it is required, but also sufficient, that children are at least directly targeted.” With this clarification, the Federal Supreme Court expresses that while it is not necessary that the direct purchasing appeal only or mainly targets children, it needs to at least also specifically target minors. Not sufficient, on the other hand, is an advertisement which appeals to minors only acting as a party to the general consumer group. An example would be a direct purchasing appeal for a chocolate which is consumed by both children and adults. As long as the purchasing appeal does not at least also specifically target minors, it is not prohibited. Thus, depending on the case, it might be worth challenging the standard set out in the Draft JuSchRiL. This applies all the more as Sec. 6 (4) JMStV explicitly regulates cases where an advertisement is “also”directed at children or adolescents. Sec. 6 (4) JMStV has been deliberately drafted by the legislator as a broad fallback provision, which applies to all advertisements, those which are directed only/mainly towards minors and those which are “also” directed towards minors. Consequently, Sec. 6 (2) No. 1 JMStV cannot set out the same broad standard. Otherwise, the legislator would have included the wording “also” here as well.
bb. Determination process to assess whether or not a purchasing appeal is directed towards minors
The question whether an advertisement is at least also directed at children or adolescents must be assessed on a case-by-case basis. Guidance can be drawn from two court decisions:
(i) Federal Supreme Court on Runes of Magic:
The Runes of Magic decision settled litigation on an advertisement included in the free-to-play game Runes of Magic which was challenged by the German consumer association VBZB. The VZBV claimed that the game violated the restrictions for advertising vis-à-vis minors and, more specifically, that it contained an unlawful direct purchasing appeal towards minors to buy products or services. The advertisement used the following slogan:
"Pimp your character week. Is your character ready and set up for the upcoming adventures?
Thousands of dangers are awaiting you and your character in the world of Taborea. Without appropriate preparation any edge of the dungeon could be your last step.
This week you have another chance to pimp up your character!
Seize this good opportunity and give your armor and weapons that certain 'something'”.
The Federal Supreme Court held that this sentence, by its context and language, was a direct appeal targeted at minors and therefore violated the UWG prohibition of direct purchasing appeals vis-à-vis minors. Arguments by the court:
- The advertised product: The court implied that a fantasy RPG is mainly a product directed towards minors. Related advertisement would therefore be automatically directed towards minors as well. The court did not outline its argument to greater detail. Instead it only claimed that “[f]rom the relevant perspective of the addressed persons, the appeal at hand is based on the advertised product and right from the outset is not only directed to a limited circle of addressees of minors over 14 years of age […] but instead to underage players in general.“ This argument was heavily criticized as there is numerous research available which demonstrates that the majority of gamers consists of adults and not minors.
- The language used: A central argument for the Federal Supreme Court was the language used for the advertisement slogan. The German language contains two different words to address another person, one being informal and used in particular vis-à-vis minors and close friends (“Du”), while the other is more formal and used in particular vis-à-vis other adults (“Sie”). The advertisement used the informal language. Though the Federal Supreme Court explicitly stated that using the informal language does not automatically mean that an advertisement is directed towards minors, it held that the overall presentation of the advertisement in conjunction with the used informal language was directed vis-à-vis minors. This argument was also heavily criticized as internet communication is traditionally less formal. However, the court also held that the remaining language of the slogan was primarily directed at children as it used “terms typically used by children, including common anglicisms” (note that the only two anglicisms used in the original German advertisement were “pimp” and “dungeon”).
(ii) High District Court Berlin on World of Warcraft:
Shortly after the above-mentioned decision by the Federal Supreme Court, the High District Court Berlin (Kammergericht) ruled on a similar matter quite differently (case no. 5 U 74/15, dated 01 December 2015). The case concerned a marketing slogan for World of Warcraft:
"Buy at the pet shop
New exclusive riding animal: Armored Blood Swing – GET IT NOW
This monstrous, flesh eating bat is the perfect companion for a detour to the next battlefield in order to bring death and destruction.”
While the court agreed that the slogan constitutes a direct appeal, it did not find that the slogan was also aimed at children and adolescents. The court argued that its decision would not contradict the land mark decision of the Federal Supreme Court (which is Germany’s highest civil law court). Instead, the ruling would specify the requirements set out by the Federal Supreme Court and would simply apply them to another case. Nevertheless, the decision is considered as easing the requirements on advertisements which may be considered as being directed towards children. Arguments by the court:
- The advertised product: The mere fact that the advertisement relates to a video game which includes a colorful fantasy world with typical fantasy creatures is not sufficient to assume a direct appeal vis-à-vis minors as this characteristic applies to the majority of video games, no matter whether they are played on console or smartphone. It is not apparent that these types of games are directed only towards minors. Based on the court’s experience quite the contrary is the case. The Runes of Magic decision by the Federal Supreme Court does not say that any fantasy game explicitly targets minors. Instead, this question must be assessed on a case-by-case basis.
- Payment methods: The fact that the game operator also enables persons who do not own a credit card or bank account to participate in the game by offering pre-paid cards, which can be used for game time or game accessories also does not automatically suggest the advertisement directed at minors. Such pre-paid cards can also be used by persons who wish to avoid their bank account or credit card being charged. Additionally, no direct connection exists between these pre-paid cards and the advertisement at hand.
- The language used: The use of the informal language alone is not sufficient to assume that the advertisement is directed vis-à-vis minors. The use of the informal language in advertisements towards adults is quite common as well. This must therefore be decided on a case-by-case basis. The remaining language used in the advertisement at hand does not imply that it is directed only towards minors (note that the court provides several examples at this point). Furthermore, the product description does not consistently rely on the use of informal language and instead occasionally switches to the formal language. In addition to this, the advertisement at hand does not make use of terms typically used by minors, e.g. terms which make the advertisement sound less formal.
c. Exploitation of the inexperience and credulity of children and adolescents
The requirement of the exploitation of the inexperience and credulity of children and adolescents did not play a greater practical role so far. In general, it must be differentiated between children (i.e. persons under 14 years of age) and adolescents (14-18 years of age). In relation to children, the inexperience and credulity is assumed and will be difficult to deny. This was already the standard set out in the old (i.e. current) JuSchRiL. The assumption is also included in the Draft JuSchRiL but with an even stricter wording. Instead of only stating: “Inexperience and credulity is assumed with regard to children”, the Draft JuSchRiL now states: “Inexperience and credulity is always assumed with regard to children”.
In relation to adolescents, the old JuSchRiL did not provide any standard. Based on secondary law sources, examples for an exploitation of the inexperience and credulity are slogans such as “only today!”, “all your friends already have it!”. In all likelihood with the aim to better enable the youth protection bodies to react to certain direct purchasing appeals within their own competence (i.e. youth protection and not unfair competition where the requirement does not exist), the Draft JuSchRiL now provides further guidance on the requirement by stating: “When the exploitation of the inexperience and credulity of adolescents is evaluated, the overall assessment of the offer and the underlying business model must, among other things, be considered.”
The guideline does not provide further guidance on what exactly this means. However, the regulation must be interpreted in light of the ongoing in-app and in-game monetization debate and monetization models which are considered by some as being too invasive, in particular in relation to minors. Examples that have been discussed as invasive business models are loot boxes, certain discounts, limited time events and the possibility to spend large amounts on microtransactions in a short period of time. However, it must be remembered that any such business model does not automatically infringe the prohibition. The guideline clearly states that the business model must only be considered. Furthermore, the other two requirements (direct purchasing appeal and direction towards minors) must also be met in order to be covered by the provision.
2. Sec. 6 (4) JMStV - Advertisement deemed to harm the interests of children
Since the enactment of the JMStV, Sec. 6 (4) JMStV was almost never applied in practice. No (published) case law on the interpretation of the provision exists. However, after the loot box debate emerged in 2017, the provision was “rediscovered” as a potential tool to combat in-game/in-app monetization practices which are considered by some as being too invasive, in particular towards minors.
Sec. 6 (4) JMStV serves the purposes of a so called “fall back provision” which is intended to apply to all advertisements that harm the interests of children, which are not already included within the catalogue of Sec. 6 (2) No. 1-4 JMStV (e.g. the prohibition on direct purchasing appeals).
Sec. 6 (4) JMStV is significantly broader than the prohibition on direct purchasing appeals. Firstly, it applies to any online advertisement and not only to the specific form of direct purchasing appeals. Secondly, as explicitly outlined in its wording, the provision applies to all advertisements which are “also” directed towards minors. Thus, any advertisement which primarily targets adults but also appeals to minors falls under the provision, leaving no room for the debate outlined above in relation to the prohibition of direct purchasing appeals.
With such a broad area of application, the most relevant question is what exactly falls under the requirement of “harming the interests of children or adolescents or exploiting their inexperience” [sic]. The examples which were discussed by legal literature so far had almost no practical relevance. The Draft JuSchRiL now attempts to fill this gap by the addition of more practically relevant guidelines. The most notable amendment is Sec. 4.6 which states:
Advertisement within the meaning of Sec. 6 (4) JMStV which is also directed at children can in particular be unlawful if
(1.) an advantage is granted for viewing advertisement;
(2.) the linking of profiles with another platform is advertised.
The new guideline concerns all forms of rewarded advertisement (e.g. “watch this 30 Sec. advertisement clip to earn 1.500 in-game currency”). With this guideline, the state media authorities target one of the main monetization tools used in the mobile gaming industry. Furthermore, the guideline targets the common marketing practice of advertising via the linking/connecting with profiles of third party (social media) providers.
Two notable restrictions should be emphasized:
(i) While Sec. 6 (4) JMStV applies to both, advertisements which are also directed towards children and adolescents, the guideline regarding rewarded advertisement and profiles only concerns advertisement which are also directed towards children (see the wording above). This becomes additionally apparent from the subsequent Sec. 4.7 of the Draft JuSchRiL which includes further guidance specifically for advertisements targeting children or adolescents (i.e. not only children). Thus, the wording indicates that the state media authorities consider rewarded advertisement and profile linking as mainly being harmful in relation to children but not to adolescents. Nevertheless, the fact that the advertisement must only “also” target children still leaves room for a broad application of the guideline to all games/apps which are also played/used by minors.
(ii) By using the wording “can” (see above), the guideline provides a flexible standard. Thus, it must be assessed on a case-by-case basis whether the specific rewarded advertisement actually harms the interests of children. The guideline does not stipulate a general prohibition of rewarded advertisement vis-à-vis children. This leaves room for defensive arguments depending on the particular case.
III. Status of the draft
The draft has not been enacted yet. However, the internal coordination and enactment process is in its final stage. Suggestions for a less invasive approach by different bodies and stakeholders have been rejected by the state media authorities. Currently, it seems likely that the new Draft JuSchRiL will be enacted.
IV. Enforcement risk
Statements by different stakeholders/representatives who were involved in the enactment process are contradictory. While some stakeholders say that a strict application of the new guideline is not to be expected, others state exactly the opposite. Thus, in relation to potential enforcement action by the regulator, only the future can tell how strictly the new rules will be enforced. However, the KJM is widely considered as not being a very active enforcement body. The greatest risk therefore lies with Germany’s consumer protection associations such as the VZBV which have the benefit of extensive financial means and which have already repeatedly targeted the video gaming industry for youth protection and ecommerce matters. The new guideline provides a strong argument in court on how the JMStV advertisement restrictions must be interpreted and therefore a strong basis for potential cease and desist claims/injunctions.
Violations of the JMStV can be sanctioned with fines of up to EUR 500,000. However, fines imposed in practice are typically significantly lower. Furthermore, violations can be made subject to cease-and-desist claims (typically brought forward by injunctions) by competitors and in particular German consumer protection associations such a