Roblox Faces Class-Action Lawsuit for Removing Digital Content
Roblox is facing a class-action lawsuit for removing digital content without giving refunds. What does it all mean for investors?
June 1 2021, Published 10:01 a.m. ET
Roblox, the popular virtual reality platform enjoyed by millions worldwide, is in some legal trouble just a few months after its direct listing on the NYSE. It trades on the NYSE under the ticker symbol "RBLX." Recently, Roblox stock has risen to more than double its IPO price of $45 per share.
The game, or virtual world platform, features a wide variety of immersive 3D experiences. Roblox says that it has 8 million developers (who create unique worlds) and 20 million experiences that world users can explore.
A Michigan girl and her father have filed a class-action lawsuit against Roblox for removing digital items purchased within its platform without warning or reimbursement.
Roblox lawsuit, explained
Roblox’s platform, created by CEO and co-founder David Baszucki, allows anyone to be a creator and make their own digital worlds for themselves and others to explore. In addition to the “Experiences,” users can purchase additional items in-app that enhance their enjoyment of these characters and virtual worlds.
Roblox says that it performs a “multi-step review process” before items like clothing or accessories for characters are placed for sale on its platform. However, “Jane Doe,” the girl bringing the class-action lawsuit, claims that she bought multiple objects in the Roblox Avatar Shop that the company deleted without a refund.
In the class-action suit filed on May 25, Jane Doe says that her deleted products didn't contain any inappropriate or trademarked content. The filing alleges that Roblox provides “sham content moderation.”
The lawsuit states that Roblox is earning unfair monetary profit by selling products first and vetting them later. It will remove digital content that users have already purchased and claim that they violate the game’s moderation policies and standards. However, the company doesn't reimburse users for purchases that are removed from the platform.
Roblox makes a 30 percent commission on all third-party sales, which means that it earns a good amount of revenue from accessories sold in the Avatar Shop. If it doesn’t offer reimbursements for flagged and removed items, it's making that 30 percent profit while the customer loses money.
According to Roblox’s website, “some third-party payment processors require refunds to go through their support services and Roblox is unable to refund charges for those providers.”
Is Roblox safe for kids?
Bloomberg noted that at least 70 percent of Roblox users are under the age of 18, with over half of the total being under age 13. Naturally, with such a young audience, people are concerned about whether Roblox is safe for kids.
Roblox has put several safety precautions in place to ease the concerns of parents and other adults about child safety online. It has customizable parental controls, which allow adults to disable chatting and designate a limited list of age-appropriate games for the children. It also has established the Trust & Safety Advisory Board.
The Roblox chat filters and reporting system also help keep kids from seeing or participating in inappropriate messaging or content.
There are limitations to what the company can do as far as online safety. Parents need to educate their children on best practices for internet safety like never giving out personal information to people they meet online.