Stricter restrictions on online ads after German court ruling

The Federal Court of Justice of Germany (Bundesgerichtshof; “BGH”) has rendered a judgment banning an online advertisement for the computer game Runes of Magic because it saw the language of the ad as an illegal direct exhortation targeted at children to buy items in the game. The ruling was essentially based on the language of the advertisement as using informal and allegedly child-like speech, but has been widely criticized for its very broad approach. However, companies need to be aware of the ruling, because as it stands this decision significantly affects the way that companies can engage in direct online marketing.

Why is the ruling important?

Under German Competition law, which is based on an EU directive, it is an illegal commercial practice to include in an advertisement a “direct exhortation” to children to buy advertised products or services or persuade their parents or other adults to do so. 

The first important legal question therefore is whether an ad directly addresses children. 

The second important question is whether an ad contains a “direct” exhortation to make a specific purchase. The German court’s recent decisions in the matter of what must be considered when targeting minors have been highly contradictory. In this case, the Federal Court of Justice applied a very strict ruling which has been widely criticized both from substantive and procedural perspectives. 

In the wake of the judgment, we are already seeing a significant increase in activity from authorities and consumer watchdog groups regarding in-game advertising language, both in the classic online sector and also increasingly in mobile games. 

Anyone advertising and selling goods or services online within the EU should therefore closely monitor the further legal developments in this area. As a consequence of the BGH decision, even greater care should be exercised in making advertising language legally compliant. Direct purchase invitations to children should be avoided at all costs.

What is it all about?

A German games provider published the following ad on an online message board associated with the game, under the heading “Die Pimp-Woche” (Literally, “the pimping week” – the English term “to pimp” is sometimes used in contemporary German in its slang meaning as “to embellish” or “to enhance“): 

“Thousands of dangers are waiting for you and your character in the wide world of Taborea. Without proper preparation, the next corner you turn in that dungeon could be your last. This week again you have the opportunity to vamp up your character. Seize the advantageous opportunity and add a little something extra to your armour & weapons. From Monday […] through Friday […], you have the opportunity to upgrade your character.“

The portion “upgrade your character” was linked to a website showing the various items that formed part of the promotion, and which registered users could purchase for virtual currency within the game. The link did not directly lead to a specific item but rather to a separate website with a list and descriptions of the relevant items.

Legal background

The BGH found the advertisement to be illegal commercial practice under § 3 para. 3 of the German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb; “UWG”) in connection with no. 28 of the appendix to the UWG (the so-called Black List). Under no. 28 of the Black List, which is based on an EU directive on unfair commercial practices (Directive 2005/29/EC of May 11, 2005), it is an illegal commercial practice to include in an advertisement a direct exhortation to children to buy advertised products or services or persuade their parents or other adults to do so. 

The BGH’s position that the ad targeted children was essentially based on the following analysis.

An ad addressed to children? 

The first crucial legal question was whether the ad in question actually directly addressed children. It appears clear that, with a game like Runes of Magic which is played mostly by adults, children cannot be the only target group of an advertisement for in-game items.

• The game operator had provided audience data showing that 85% of players were adults.
• The average player age was 32 years. 

The court however brushed these figures aside as irrelevant. It distinguished between (permitted) ads that target all audiences including children, and (prohibited) ads that target different specific audiences including children – but assumed the latter to be the case here, even though the majority of the target audience were in fact adults. 

According to the court, the ad directly addressed children because it “consistently” used informal and allegedly child-like speech. In making this finding, the court relied on the form of address which used the German informal “you” (the German language has different words and grammatical constructions for “formal” and “informal“address, the latter being commonly used for family, close friends and children), the use of words like “pimp” and “vamp up“, and the use of “Anglicisms“, predominantly relying on the use of the English terms “pimp” and “dungeon” in the ad, all of which it considers typical of children’s speech.
The line between an ad targeting all audiences and one targeting different specific audiences is extremely difficult to draw.

Direct exhortation to purchase?

A second important question was whether the ad contained a “direct” exhortation to make a specific purchase. This can only be assumed where an ad contains sufficiently specific information on one or more specific products, but not where the ad covers a merchant’s entire range of goods. Under the EU directive (art. 2 i)), an “exhortation to buy” is “a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase“. 

In the Runes of Magic case, the characteristics of the advertised items were not specifically identified in the ad itself. The ad only contained a link to a separate website with a list and descriptions of the relevant items. However, the court considered that the hyperlink to the second website was sufficient, as consumers were used to the mechanism of clicking links to retrieve additional information. It therefore saw the ad and the website it linked to as one. 

However, this analysis is hardly compelling. The website in question would not have been helpful to anyone not already registered for the game, and it did not allow direct purchases. In another recent case, the BGH allowed an advertisement that very clearly directly and exclusively targeted children. The advertiser, German consumer electronics giant MediaMarkt, had told children to “bring your report card [to MediaMarkt] and receive a 2 Euro discount on any product for each ‘A’.” 

The court took no issue with this wording, based on the consideration that the ad itself did not show any specific product but only attracted children to a retail store.

What does the decision mean for online advertising? 

As the legal situation in this area is not clear and remains subject to change, advertisers and anyone selling goods or services online within the EU should closely monitor further legal developments. Direct purchase invitations to children should be avoided and great care exercised in making advertising language legally compliant. 

The selection of available payment methods, even though ultimately not decisive in this case, may also play a role in the legal analysis. The court mentions this issue in passing which also suggests that the decision is very specific to this case, and caution should be exercised not to over-generalize the statements it contains.

Checklist/Action items:

1. Informal language as such is not prohibited – the informal address can still be used in advertising.
2. However, online advertisements should be legally vetted and, where there is doubt, worded more carefully (indirectly).
3. Where it makes sense, consider using advertisements not for specific products, but for whole stores in general. Such advertisements should potentially not contain links to the store (which may then limit effectiveness).