Published Articles

June 16th, 2006

Makers of “Grand Theft Auto” Settle FTC Charges

The makers of the "Grand Theft Auto: San Andreas" video game, Take-Two Interactive Software, Inc. and Rockstar Games, Inc. (together, "Take Two"), recently settled Federal Trade Commission charges that they deceptively marketed the game by failing to disclose to consumers that it contained hidden content. FTC File No. 052 3158 (June 8, 2006).

The FTC prosecuted Take Two for labeling the game with the Entertainment Software Rating Board’s "Mature" rating without disclosing that there was hidden sexual content in the game that could have changed the game’s rating – even though this content was only viewable if the game were modified by users.

Background

The Entertainment Software Rating Board ("ESRB") is the self-regulatory organization that rates most video games sold in the United States. The ESRB has a two-part rating system, the rating symbols and the accompanying content descriptors.

The ESRB ratings consist of: EC (early childhood), E (everyone), E10+ (everyone 10 and older), T (teen), M (mature 17+), and AO (adults only 18+). Most major retailers in the United States will not sell a video game that does not have a rating, and some will not accept a game rated "AO."

Take-Two is the maker of the popular "Grand Theft Auto" video games. In September 2004, Take-Two applied to the ESRB for a rating for "Grand Theft Auto: San Andreas." Take-Two did not inform the ESRB that there was an unfinished sex mini-game that had been edited out of the game, but was embedded in the game’s computer code.

The ESRB’s published requirements did not state that this type of material was required to be disclosed to the ESRB, however. The ESRB rated the game "M," with the following content descriptors:"Blood and Gore, Intense Violence, Strong Language, Strong Sexual Content, and Use of Drugs."

Take-Two marketed the game with the "M" rating and did not disclose that the game contained unused, but potentially viewable, content.

Soon after the release of the game, however, players were able to access the unfinished sex mini-game, referred to as "Hot Coffee," through the use of software available on the Internet and other methods. As a result of this, the ESRB changed the game’s rating to "AO," with the additional content description, "Nudity." (These background facts were taken from the allegations in the FTC’s complaint in this matter.)

FTC Action

The FTC alleged that Take Two’s advertising of the "Grand Theft Auto: San Andreas" video game with an "M" rating, without disclosing that there was potentially viewable unrated content on the game that could change the rating to "AO," was a deceptive practice in violation of Section 5(a) of the FTC Act. Section 5(a) prohibits: "unfair or deceptive acts or practices in or affecting commerce." See 15 U.S.C. § 45(a)(1).

Take Two entered in a consent order with the FTC,without admitting wrongdoing, that settled the charges. The FTC announced the settlement on June 8, 2006. The settlement agreement will be subject to public comment through July 10, 2006, after which the Commission will determine whether to make the settlement final. See 71 Fed. Reg. 34620 (June 15, 2006).

As part of the settlement, Take-Two agreed, in connection with video games, to: (a) disclose, clearly and prominently, on product packaging and in any promotion or advertisement for an electronic game, content that is relevant to the rating, unless that content has been disclosed sufficiently in prior submissions to the rating authority; (b) not misrepresent, expressly or by implication, the rating or content descriptors for an electronic game; and (c) establish and implement, and thereafter maintain, a comprehensive system reasonably designed to ensure that all content in an electronic game is considered and reviewed by Take-Two in preparing submissions to the rating authority. Once the order becomes final, Take-Two will be subject to civil penalties of up to $11,000 per violation if it violates the order.

In a statement, Lydia Parnes, Director of the FTC’s bureau of Consumer Protection, said "parents have the right to rely on the accuracy of the entertainment rating system. We allege that Take-Two and Rockstar’s actions undermined the industry’s own rating system and deceived consumers. This is a matter of serious concern to the Commission, and if they violate this order, they can be heavily fined."

FTC Testimony

On June 14, 2006, the FTC presented written testimony to the House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection on "Marketing Violent Entertainment to Children: Self-Regulation and Industry Practices in the Video Game Industry."

The FTC testified that, "undisclosed explicit content in video games is obviously a matter of serious concern. Parents must be able to rely on the accuracy of the industryrating system. Practices, whether by game manufactures or a third party, that undermine the integrity of this system need to be addressed."

The FTC acknowledged that, "because the expressive content in video games has been considered protected speech under the First Amendment, there is a very narrow range of permissible government involvement with their advertising and marketing" (footnote omitted).

The FTC asserted in its testimony, however, that its enforcement action against Take Two makes clear that "companies owe an obligation to the public, independent of their obligations to the ESRB, not to misrepresent the content that might become accessible on a video game."

- Jeffrey A. Greenbaum

This article was first published in the MLRC MediaLawLetter June 2006.