[KH Explains] Tussle over Nexon’s loot box controversy intensifies

Nexon faces Korea’s largest game-related class action suit over deceiving MapleStory players

Nexon headquarters in Pangyo, Gyeonggi Province (Yonhap)

The feud over South Korean game developer Nexon's Maplestory, a popular side-scrolling massively multiplayer online role-playing game, or MMORPG, is escalating, with gamers filing a class action suit and Nexon taking the antitrust regulator’s fine assessment to court.

As the in-court battle is expected to take a long time to reach any sort of conclusion, gamers are hoping that the case can help spread awareness for protecting their rights, while Nexon looks to vindicate itself.

Regardless of the outcome, the legal dispute over MapleStory's loot box controversy will go down as one of the most impactful cases in the history of the country’s gaming industry, as it features two "largest-ever" titles: the largest fine imposed by the Fair Trade Commission over violating the Act on Consumer Protection in Electronic Commerce and the largest class action suit in the gaming sector.

Largest fine

The Fair Trade Commission on Jan. 3 announced its decision to impose fines totalling 11.6 billion won ($8.9 million) on Nexon for deceptively changing the drop rates -- or the odds of receiving certain items -- in purchasable in-game loot boxes in MapleStory and providing false information about them.

The decision marked the FTC's largest fine ever imposed for violating Korea’s Act on Consumer Protection in Electronic Commerce.

According to the antitrust regulator, Nexon introduced its loot box, which it calls Cube, which can reset the options of items that players equip with equal chances of each option, to Maplestory in May 2010.

But starting in September that year, the game developer lowered the probability for some of the most preferred options. Nexon later changed the probability structure so that certain options that users favor a lot would not be drawn at all after August 2011. The FTC pointed out that Nexon carried out the changes without notifying MapleStory users and said there were no changes given for the Cubes' probability.

The costs of a red Cube and a black Cube were 1,200 won and 2,200 won, respectively. According to the FTC, Nexon garnered 550 billion won from selling Cubes to users from September 2010 to March 2021.

Largest class action suit

Following the FTC’s penalty announcement, hundreds of livid MapleStory players took the matter upon themselves by filing a class action suit against Nexon.

Lee Cheol-woo, a lawyer representing the plaintiffs, told The Korea Herald on Tuesday that a total of 717 people have taken part in the case.

“We are starting with the minimum range of compensation, which will be about 460 million won, and we are going to expand the compensation range later on,” he said.

The case marked the largest amount of compensation claims and most plaintiffs in the history of the country’s gaming industry.

Lee noted that the ongoing class action dispute mediation attempt by the Korea Consumer Agency could benefit the plaintiffs if they reach a settlement with Nexon.

According to the KCA, 5,826 people have submitted applications to take part in the class action dispute mediation since applications opened on Feb. 22. The KCA is in the process of calculating the amount of damages and sorting out the applicants.

“Even if (the KCA) does not settle with Nexon, it could provide support for the participants’ class action lawsuit, so this all means that more consumers will be able to receive aid,” said Lee.

Nexon seeks court judgment

Local media outlet Chosun Biz reported Monday that Nexon had filed an administrative litigation against the FTC’s decision.

According to the report, Nexon hired legal representatives from Kim & Chang, one of the most prominent law firms in the country, and filed the case with the Seoul High Court to cancel the FTC’s decision last month.

The report quoted Nexon as claiming that the game developer disclosed the drop rate information of the loot boxes in March 2021, which was before the FTC started the probe, and made revisions to prevent recurrences. Nexon added that the FTC’s decision was about what happened before 2016, when there were no legal obligations to publish the probability of loot boxes.

“Although we respect the FTC’s decision, we decided to seek judgment from the court as there are areas that need to be explained,” said Nexon, as the game developer refrained from confirming details of the lawsuit.

After the FTC’s announcement in January, Nexon said there was no precedent in regard to disclosing the probability of in-game randomness of items. Nexon added that during that period, game companies across the world did not release in-game probabilities.

By Kan Hyeong-woo(hwkan@heraldcorp.com)