As the multi-billion market for virtual goods continues to grow, so too does the regulatory scrutiny. One area where many companies in this space may want to review is their SEC disclosure practices.
At a recent conference of the American Institute of Certified Public Accountants, a Securities and Exchange Commission representative stated:
“The sale of a virtual good represents a service, not the sale of an actual good” and that the SEC is seeking “enhanced disclosure” about virtual goods accounting policies, including how the goods were purchased (e.g., with virtual currency, stored value or real time money purchase) and the time period over which they are recognizing revenue from the sale of a good. Brad Skinner, senior assistant chief accountant at the SEC’s Division of Corporation Finance added that virtual goods sellers should be disclosing whether the company is being charged processing fees by the platform it uses to sell the goods, and whether it faces any legal or regulatory requirements to refund consumer purchases.
As the use of virtual goods and virtual currency continues to grow, these and other legal and regulatory issues will continue to emerge. For more information on legal issues with virtual currency, see our guide to legal issues with virtual currencies.