More than half of all U.S. kids aged 6 to 16 are spending time on a video gaming app that could be exploiting them, with anti-consumer practices that are described as “child labor.” 

The app is called Roblox and if you’re over 25, you might only have a passing understanding of what it is (if you’ve heard of it at all). But Roblox executives are getting away with unchecked exploitation because they know that their audience — mostly children — doesn’t have power and that mainstream media and legislators aren’t paying attention. 

But the situation isn’t hopeless. The Federal Trade Commission has taken major recent actions in the gaming industry and it could play a critical role here. 

We just released an investigation into Roblox’s practices. Here’s what you need to know:

1. Roblox is not a game. It’s a social platform for children.

And on this platform, users design games for other users, meaning kids are designing games for other kids.

One-quarter of Roblox users are under nine years old. Another 29 percent are 9 to 12 years old. Only about 1 in 10 users is older than 25, according to analytics firm Statista.  

2. Roblox takes a massive cut from its users. 

When a user publishes a game or cosmetic item, Roblox takes a cut — as much as 70% — of their revenue. So even though Roblox has advertised that developing games on its platform is a “serious” money-making opportunity, the returns stack very, very slowly.

3. Roblox runs on an internal currency called Robux.

Roblox generated $2.4 billion in revenue during the 12 months ending June 30, 2023, and most of it was from the sale of Robux, an in-game currency that only works on the Roblox platform. That’s how users buy things like accessories for their in-game characters. It’s also the currency that users who publish games on Roblox get paid in. 

How much is Robux worth? $1 = 100 Robux. 

Well…at least that’s how much it’s worth when you purchase Robux to use on the platform. But when Roblox pays developers –– after taking their massive cut –– that 100 Robux is no longer worth $1. You see, Earned Robux are only worth about a third when they’re paid out.

That’s right, when you’re buying 100 Robux from them, they’re worth $1, but when they’re paying you, that same 100 Robux becomes only 35 cents.

4. Roblox makes it difficult to cash out Robux for real money.

You have to make $300 worth of Robux, or 30,000 Robux, in order to transfer your money out of the platform, which is not easy. That’s a significantly higher payout minimum than similar gaming apps. And because, as we mentioned, Earned Robux are always worth less, that 30,000 Robux isn’t worth $300 anymore. You’ll actually get around $105. 

Most Roblox developers never end up having to worry about their payments, though, since most are never able to cash out at all, and Roblox gets to keep their remaining money inside their system.

Many of the problems with Roblox stem from this fake money scam. Where have we seen this before? Video game journalist Quintin Smith compares Robux to the historical phenomenon of corporations paying workers in “company scrip.”

“You could only pay in the company town, in the company store. And if you wanted to exchange your scrip for U.S. dollars, the company charged you a fee to do that,” Smith said. “That is exactly what Roblox is doing, and it’s banned in America, but not on the internet.”

We spoke with a 15-year-old game developer named Antonio who has been publishing games on the Roblox platform for years. He’s incredibly talented and wants to make a career as a video game developer in the future. Antonio debunked another myth Roblox likes to spread — that publishing games is “free.”

“Publishing a game on the Roblox platform’s easy, like two buttons to click,” Antonio told us. “But then trying to get it to actually get views is harder.”

That’s because there are more than 50 million games on Roblox, but the section where most users find a new game to play — the Discover section — only shows the couple hundred most popular games. To get your game to show up there you have to bid for advertising. To be clear, you’re bidding money just for the chance to get views…it’s essentially gambling for advertising. And if your gamble doesn’t pay off, your game won’t even show up in the Discover section. Not exactly “free” as Roblox claims.

We also came across something called the Roblox Talent Hub, essentially a jobs board like Indeed but for children to work on Roblox games. Posters often write that they’re looking for applicants who are “13 years or older” and can pay shockingly low rates. We found one post that offered a total of 200 Robux — or $0.20 — as payment to direct production design for a game.

Smith told us, “I’ve spoken to Roblox developers who might be 14 and in school and…working 10, 12 hours on weekends, on each day of the weekend, just to try and get their game out” under pressure from bosses hiring through the Roblox Talent Hub.

But Roblox isn’t just guilty of labor exploitation. They’ve turned childhood into a candy-coated black market.

Roblox has literal online casinos where kids can gamble with their Robux. There are giant sponsored metaverses like Walmart Land and Nike Land, where children walk around vast digital malls spending their parent’s money on digital assets created by corporate America. Scams and thieves are rampant in these digital spaces, preying on the wallets of young children. 

And that’s not to mention the adult predators who tend to pop up in these spaces, chatting with kids across the world. 

Roblox users and advocates have been pushing the company to reform their payment policies for years, to no avail. The existing business model is making the company’s investors and executives very very rich. Roblox is worth more than $17 billion, and its CEO David Baszucki took home $232 million last year, profiting from millions of games and graphics made by children.

“The product is so good that it’s not going anywhere,” Smith said. “This is almost like a public utility…but it’s a utility with absolutely no oversight and no governments even understanding what it’s doing, let alone legislating against it.”

The Federal Trade CommissionFTC has been called upon to take action in major recent cases in the gaming sector. 

When we asked Antonio, the 15-year-old game developer, what changes he’d want to see Roblox make, he said:

1. Lower how much Robux you need to cash out.
2. Increase how much Robux are worth
3. Lower the cut Roblox takes

The Federal Trade Commission has become increasingly focused on consumer abuses in the gaming sector. The agency forced Epic Games, maker of the massively popular game Fortnite, to pay out a $245 million settlement for tricking their users into unwanted charges for their own in-game currency.

Last year, after the watchdog group Truth In Advertising filed a Federal Trade Commission complaint about Roblox’s deceptive advertising practices, the corporation instituted a positive, albeit very minor, change by hiding ads for users under the age of 13. But more must be done.