Your kids might be looting your bank account in the guise of gaming

Rahel Philipose (0:01)

If you've ever left a kid unsupervised with your phone before, you might want to think again. We all know that one kid who's always looking for a phone to play on. For me, it's my 12-year-old cousin who lives with my grandparents. Whenever I visit, he always asks me for my phone, but he's usually always disappointed because I never have any games worth playing on it. And so, he always heads straight to my grandfather's phone, which is just the default call-and-text apps and then Subway surfers, Fruit Ninja and whatever else game my cousin has installed.

Now, this is probably a familiar phenomenon for most of us. But turns out, kids co-opting their grandparents' or any other relative's phone isn't just the usual household story. It's becoming an actual problem.

As my colleague Sakshi Sadashi found out from two senior Delhi police officials, the city's cybercrime cell has been getting more and more fraud complaints. But most of them turn out not to be fraud at all.

Just a child with a relative's phone and a UPI pin that wasn't kept secret enough from them. In fact, another game playing 12-year-old that Sakshi spoke to could recite his grandmother's pin from memory. It's a problem prevalent enough that the Hyderabad police has actually issued several advisories on it. And despite last year's government ban on online real money games, Indian regulation hasn't quite caught up with this particular side of the issue. To find out why, I'm reading Sakshi's edition from one of the Ken's most popular subscriber-only newsletter called Trade Tricks. It is titled, Your kids might be looting your bank account in the guise of gaming.

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rachel Varghese, and every day of the week, my co-host, Snigdha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Tuesday, the 15th of September.

Aarush, name change, my neighbor's 12 year old, doesn't own a phone or even a credit card. He has two working parents, doting grandparents and an abiding love for mobile games. His parents' phones are mostly off-limits. His grandparents' phones home are not. That's how he plays Free Fire Max, BGMI or Battlegrounds Mobile India, Call of Duty Mobile, E-Football, Clash Royale, you name it, he has probably played it. The games range from Battle Royales and football simulations to shooters and strategy games, each with its own in-game economies designed to keep players spending.

And his favourite part across these games? Loot boxes. They are also called lucky chests and they are in-game mystery boxes that let players spend real or virtual currency for a chance at outfits, skins, weapons and other virtual rewards. He told me that loot boxes are a big deal and that he gets a little rush when he opens one, comparing it to something like a Pokemon card.

So, I asked him the obvious question, how do you pay for all this?

Aarish told me that he knows his nani or grandmother's UPI pin and even parroted it back to me.

This, it turns out, is not especially unusual. Last year, the government banned online real money games or ORMGs under the Promotion and Regulation of Online Gaming Act or PROGA affecting games that involved monetary stakes such as fantasy leagues, poker, rummy and the like.

But two senior Delhi police officials told the Ken that the city's cybercrime cell has been seeing a rise in complaints of online fraud even after the legislation was passed. But when officers investigated, many of these cases didn't actually involve a scammer.

The fraud often turned out to be a child making in-game purchases with a family member's bank account, card or UPI without naturally bothering to ask. Hyderabad Police too has issued multiple advisories on the subject, pointing to grandparents' phones as a particular weak spot. Payment credentials and UPI apps are already set up while the person holding the phone may not be watching quite as closely. A senior Delhi police official told me that teenage boys these days organise their conversations and leisure time around games and peer status is attached to expensive skins, elite past years and rare items bought inside these games. The skins in the game become both a status symbol and a kind of digital peacocking.

Now, the in-game spending starts rather low. Aarush is quick to clarify that he only makes small transactions, usually 200 to 500 rupees at a time. A Delhi-based gaming company executive explained that games have perfected a spending ladder where the first step is deliberately tiny. Once you're inside, though, there's always another skin, another spin, another crate, and another limited time reward. In BGMI, for example, you can enter the economy for as less as 15 rupees. You see, the game's virtual currency buys you outfits, skins, royal passes that allow special missions, spins and crates. The authorized voucher store goes from 15 rupees all the way to 7,500 rupees. Shopping on Free Fire Max also starts very low at 9 rupees and goes up to 12,800. Call of Duty Mobile also starts at 99 rupees but goes all the way to almost 50,000 rupees. Now, the point isn't that a tween has 50,000 rupees sitting around to blow on Call of Duty points. It's that 15 rupees doesn't really sound like spending, but neither does the 30, 75 or 99 rupees after that. Though the amount starts small, it's a large part of India's gaming economy. Free Fire Max and BGMI together account for roughly 43 percent of India's in-app game spending. For Free Fire Max alone, 25 percent of its lifetime downloads come from India. Last year's gaming crackdown was designed to target real money games, platforms where players put money or something of monetary value at stake in the expectation of winning more money or another valuable return. It did not, however, settle the question of where loot boxes fit into ordinary video games. Because the trick here is that you're spending on the thrill of maybe getting something. The executive mentioned earlier said that you are not necessarily paying 75 rupees for a particular item. You are paying 75 rupees for a chance at an item. Maybe you get the rare skin. Maybe you get something nobody wants. Maybe you try again. And that distinction is precisely where the regulatory headache begins. The new gaming law uses a broad definition of other stakes. That includes credits, tokens and objects by whatever name called. That still leaves some uncertainty around in-app purchases, microtransactions and loot boxes. Particularly when the object you win can acquire value outside the game. So games such as Free Fire Max and BGMI can continue to sell virtual goods. The awkward bit is what happens when those virtual goods stop being quite so virtual. Paying 75 rupees and buying a skin to make a gaming avatar look cool is one thing. But what if the random skin can also be traded with someone else, who is willing to pay real money for it? Well, of course, there is an entire economy outside the game, where people are doing exactly that. Third party marketplaces such as Skin Baron, BitSkins, CS Money and DMarket, let players trade or sell skins for real money through payment methods including Paypal and cryptocurrency. The sums can be rather startling. Rare skins have sold for thousands of dollars with listings on Skin Baron reaching over $170,000.