Antitrust Lawyer Blog Commentary on Current Developments

Makers of Grand Theft Auto: San Andreas Settle FTC Charges

The companies behind the popular Grand Theft Auto: San Andreas video game have agreed to settle Federal Trade Commission charges that they failed to disclose important information about the game's content to consumers. According to the FTC, the companies, in advertising the Entertainment Software Rating Board (“ESRB”) rating for the game, did not tell consumers that the game discs contained potentially viewable nude female characters and a potentially playable sex mini-game.
Although San Andreas players could not access or view this sexual content during normal game play, sophisticated players posted a program on the Internet, dubbed “Hot Coffee,” that revealed this content on the PC version of the game. PlayStation 2 and Xbox players eventually were able to access the Hot Coffee content by modifying or adding an accessory to their game consoles, installing special software, and inputting “cheat codes” developed by third parties. These developments led to a more restrictive rating by the ESRB.

“Parents have the right to rely on the accuracy of the entertainment rating system,” said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. “We allege that Take-Two and Rockstar's actions undermined the industry's own rating system and deceived consumers. This is a matter of serious concern to the Commission, and if they violate this order, they can be heavily fined.”

The ESRB originally rated the game's three versions, for PlayStation 2, PC, and Xbox, as “M” for Mature, with the accompanying content descriptors of Blood and Gore, Intense Violence, Strong Language, Strong Sexual Content, and Use of Drugs. According to the ESRB, video games rated “M” contain content that may be appropriate for those aged 17 and older. The rating information, including the rating symbol and content descriptors, appeared in print, television, and retailer ads for the game, and on game packaging for all three versions, including the claims “MATURE 17+” and “CONTENT RATED BY ESRB.”

The ESRB re-rated San Andreas as AO (“Adults Only”). Games rated AO, according to the ESRB, have content that should only be played by persons 18 and older. As a result of the re-rating, many national retailers pulled the game from their shelves.

Under the terms of an agreement with the ESRB, the companies released a patch that, if downloaded and installed on the game, disables the “Hot Coffee” program; the patch is available for download at http://www.nomorehotcoffee.com. The companies also agreed to re-label or recall all existing inventory. According to the game's publisher, Take-Two Interactive Software, Inc., the company incurred $24.5 million in costs associated with returns of San Andreas stemming from the re-rating. The companies subsequently published a second, M-rated edition of San Andreas without the nude images and mini-game content.

The companies that developed and marketed San Andreas, Take-Two and Rockstar Games, Inc., are both headquartered in New York City. The FTC's complaint charges that the companies violated the FTC Act by representing that San Andreas had been rated “Mature” and assigned certain content descriptors by the ESRB, but failing to disclose to consumers that the game discs contained unused, but potentially viewable, nude female images and disabled, but potentially playable, software code for a sexually explicit mini-game that the ESRB had not rated.

The proposed consent agreement with the FTC requires Take-Two and Rockstar Games to clearly and prominently disclose on product packaging and in any promotion or advertisement for electronic games, content relevant to the rating, unless that content had been disclosed sufficiently in prior submissions to the rating authority. In addition, the companies cannot misrepresent the rating or content descriptors for an electronic game. Finally, the companies must establish, implement, and maintain a comprehensive system reasonably designed to ensure that all content in an electronic game is considered and reviewed in preparing submissions to a rating authority. Once the order becomes final, the companies will be subject to civil penalties of up to $11,000 per violation if they violate the order. The companies will be subject to compliance reporting requirements to ensure that they meet the terms of the order.

The Commission vote to accept the proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 10, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

Camelia C. Mazard
202-589-1837
cmazard@dbmlawgroup.com