Class Action Lawsuit Brought Against Roblox Over Suspected 'Content Deleting Scheme'
SAN FRANCISCO (CBS SF/BCN) -- San Mateo gaming company the Roblox Corporation got hit with a federal class action lawsuit Tuesday for allegedly cheating users through a "clever content deleting scheme."
The suit was brought by a Michigan minor identified only as "Jane Doe," who seeks to represent a class that would include "all Roblox users who purchased content on the Roblox platform that was later deleted."
Roblex says that its mission is "to bring the world together through play."
The Roblox platform is a virtual universe full of games and experiences built by third-party developers. Users traverse this "metaverse" by way of their own avatars, and as they explore they can play games and interact with other users.
In the first quarter of 2021, Roblox had 42.1 million daily active users who spent 9.7 billion hours engaged on the platform, according to a May 10 U.S. Securities and Exchange Commission filing.
According to the complaint, the pandemic has been very good to Roblox "as the digital world offered the only escape to people forced to stay at home."
70% of Roblox's users are under 18 and more than half are under the age of 13, according to the complaint.
Roblox's revenue in the first quarter of 2021 was nearly $400 million, more than double that generated during the same quarter in 2020, according to the SEC filing. Free cash flow, a measure of a business's ability to generate cash, increased four-fold in the quarter to $142.1 million.
The dispute has its roots in the way that Roblox generates its revenue.
A Roblox user can create a user account to access the multiverse without charge and may explore and play games within the platform for free.
Unlike subscription-based gaming or advertising-driven platforms, Roblox makes most of its money through "in-game purchases," as users buy enhancements for their avatars through purchases within the game.
The enhancements run the gamut from digital clothing to gear to body parts or accessories.
The medium of payment is a virtual currency called Robux and it can be purchased from Roblox for real money. For example, the complaint says $4.99 will buy a user 400 Robux, which can be spent in the Avatar Shop where developers offer their merchandise for sale.
Roblox takes a 30% cut, according to the suit.
While the complaint refers to any number of questionable activities that occur on the Roblox platform as some developers seek to exploit or take advantage of young users, the lawsuit is narrowly focused on a Roblox business practice that the plaintiff describes as fraudulent and violative of California's consumer laws.
The suit alleges that Roblox engages in loose and shoddy screening of the content that goes into the Avatar Store for purchase. That allows many questionable products to be offered for sale. As the lawsuit puts it, "trademarked, vulgar, or otherwise objectionable content is in high demand."
Roblox may later delete the content from the platform under the banner of "content moderation."
The problem, according to the plaintiff, is that this moderation does not take place not upfront but only after customers have already purchased "clothing, gear, animations, simulated gestures, emotes, or other objects" for their avatars -- and Roblox has already collected its 30% fee.
Moreover, because the objects that users purchase are intangible, nobody comes to repossess the assets; when the content is moderated, the items simply disappear.
The heart of the dispute is that when the content is moderated away, Roblox does not refund the Robux spent to purchase the in-game content.
Thus, a digital "dress coat" or "big sad eyes" or "extreme headphones" purchased on Monday might be eliminated from the platform on Tuesday and the purchaser would get no compensation.
The complaint says, "As a result, users sometimes have only a fleeting moment to enjoy their newly purchased items from the Avatar Shop. Roblox has deleted items days, months, and even years after the user has made the purchase. Worst of all, Roblox refuses to refund or credit users' accounts after it deleted these items."
The complaint goes on to allege that Roblox's content moderation is a sham and amounts to "nothing more than a cover for its attempt to generate additional revenue from its users -- which are predominantly children."
"Roblox routinely removes content that doesn't on its face appear to violate any of the platform's policies, and its structure for 'moderating' content fails to do so with consistency, accuracy, or any transparency," the suit says.
Roblox did not immediately respond to a request for comment on the allegations in the suit.
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