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No matter how small it seems to you, if your company offers a reward to consumers as encouragement to market your goods or services, then your company should not remove or expire that reward without notice and a rational basis. A recent case confirms a consumer’s right to sue on such losses.
No reward is too tiny and no game life is worthless. When your company offers customers internally-based rewards – in-game advantages, coupons for your services, social media points – unfair loss of these rewards can serve as a basis to sue your company.
A recent case in federal court in Illinois held that a consumer stated a claim and had standing to assert that claim in federal court when the loss in question consisted of certain in-game “lives” (costing no more than $.20 each) when those lives were granted to the consumer for marketing the game in question. Liston v. King.com, Ltd., 2017 ILRC 1859 (N.D. Ill., May 23, 2017). The court dismissed several counts from the plaintiff’s complaint, but upheld the plaintiff’s right to standing and to assert claims under state consumer law, claims of implied-in-fact contract, and claims of unjust enrichment.
At the core of this decision, the named class action plaintiff Zachery Liston claimed that defendant King.com, the operator of Candy Crush Saga, improperly and unilaterally removed Donated Lives – discrete game playing opportunities received from friends – from his account, and the accounts of other consumers in the class. This decision arose from King.com’s motion to dismiss the case outright for lack of standing and other grounds. The court’s decision will allow the case to continue to move forward in court.
The court noted that “The game operator focuses on Liston's alleged failure to assert an immediate economic loss, but an injury need not be economic in nature to support Article III standing.” See, e.g., United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 686 (1973) (“In interpreting ‘injury in fact’ [the U.S. Supreme Court] made it clear that standing was not confined to those who could show ‘economic harm’ ….”).” The court in this case also stated that the injury-in-fact requirement for standing purposes is not the same as the ultimate measure of recovery. Further, the court wrote that “The complaint alleges, plausibly enough, that Candy Crush lives have actual economic value; they are available for purchase at a particular price and King compensates players for marketing the game by facilitating the receipt of Donated Lives.”
As more businesses use social media, contests and gamification to encourage customer involvement, they create more rules to follow and more prizes to fight over. The Liston case reminds us to take care in regulating and managing these prizes, or potentially be exposed to the tiny bites of thousands of angry customers all at one time.
If you have any questions regarding this alert, please contact Ted Claypoole at 404.879.2410 or TClaypoole@wcsr.com or Nadia Aram at 919.755.2119 or NAram@wcsr.com.