Is social game currency subject to new credit card laws?


It may be odd to think of social games as a kind of banking and credit-granting institution, but when you think about it, they're largely in the business of turning real currency into a kind of virtual credit or gift certificate that can only be spent in their virtual worlds. And its that portion of the business that may run these games afoul of laws meant to regulate credit cards and banks, according to a recent article at InformationWeek.

Dax Hansen, a partner at Perkins Coie's Electronic Financial Services, told InformationWeek that the recent Credit Card Act of 2009 has language that treats electronic point accounts -- like those used in social games -- as a sort of gift certificate. This means the virtual currency could be subject to a host of local, state and federal requirements, including "restrictions on an issuer's ability to expire the virtual currency or impose inactivity fees, requirements to give cash back for unused virtual currency, obligations to remit unused virtual currency balances to states, potential regulation as a financial institution, requirements to structure systems to avoid illegal lotteries, and privacy and data security issues," according to Hansen.

While none of these issues seems to have popper up yet in the social gaming space, Skype is in the process of settling a class action lawsuit on similar grounds.