Genshin Impact developer to pay $20M fine to US Federal Trade Commission over loot box violations
The company will pay, and make changes to its disclosures
by
Nicole Carpenter
Genshin Impact publisher Cognosphere (which is also called Hoyoverse)
is settling a United States Federal Trade Commission lawsuit over selling loot boxes to players under the age of 16. It’ll pay a $20 million fine for allegedly violating U.S. children’s privacy laws and “deciev[ing] children and other users about the real costs of in-game translations and odds of obtaining rare prizes.” The company will also stop selling loot boxes to people under the age of 16 without parental consent. The complaint covers not only the act of selling loot boxes to people under the age of 16, but also alleges that Hoyoverse has mishandled children’s data and personal information.
“
Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning,”
FTC consumer protection director Samuel Levine said in a news release. “Companies that deploy these dark-pattern tactics will be held accountable if they deceive players, particularly kids and teens, about the true costs of in-game transactions.”
The
settlement is awaiting approval from a judge before it goes into effect. Beyond the $20 million fine, here’s what’s changing for the company, per the FTC news release:
- Prohibited from allowing children under 16 to purchase loot boxes in their video games without a parent’s affirmative express consent;
- Prohibited from selling loot boxes using virtual currency without providing an option for consumers to purchase them directly with real money;
- Prohibited from misrepresenting loot box odds, prices and features;
- Required to disclose loot box odds and exchange rates for multi-tiered virtual currency;
- Required to delete any personal information previously collected from children under 13 unless they obtain parental consent to retain such data; and
- Required to comply with COPPA including its notice and consent requirements.
“Animation-style games and shows are well-received by global audiences and players across various ages,” a
Genshin Impact spokesperson said in a statement to Polygon. “
Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults. While we believe many of the FTC’s allegations are inaccurate, we agreed to this settlement because we value the trust of our community and share a commitment to transparency for our players. Under the agreement, we will introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards for players in the U.S. in the coming months.“
A Bloomberg report ahead of the released findings suggested players who paid for loot boxes may be reimbursed as part of the settlement, but an FTC representative clarified to Polygon that the $20 million civil penalty will go to the U.S. Treasury, as is law.
Genshin Impact is a free-to-play video game that uses a gacha monetization system that encourages players to convert real-life currency into in-game currency that’s used to buy “wishes” to randomly unlock characters and weapons. The system means that people can end up spending a lot of money to pull rare characters or items — something akin to gambling. The system, the FTC said, includes multiple in-game currencies that obscure the amount of money spent to open its loot boxes.
The FTC alleged that Hoyoverse spends “millions of dollars” to promote its gacha system to its players, many of which are children. It brought up an instance in 2021 when Hoyoverse paid Alia Shelesh, better known online as SSSniperWolf, more than $100,000 to make two videos about
Genshin Impact, and directed her to open loot boxes via the Event Banner for a character called Zhongli.
“In May 2021, the SSSniperwolf promotional video was released,” the FTC wrote in the complaint. “It featured a segment in which the influencer opened twelve loot boxes in a row, conveying enthusiasm and excitement as she had been instructed, and won the featured 5-star hero. She remarked, ‘We are getting way too lucky tonight. I thought we were going to be here all night, but the RNG [random number generator] “bussin”,’ indicating her unexpected luck that
Genshin Impact had purportedly dispensed the rare prize to her by random chance.”
The FTC alleged the video was edited “to depict a fake loot box prize win, in a way that would have been impossible in the
Genshin Impact game.” (The proof provided by the FTC is that
Genshin Impact only allows players to open 10 loot boxes in a row, but SSSniperwolf opened 12 uninterrupted. The video also used the wrong animation when opening 5-star prizes, according to the FTC.)
Update: This story has been updated to include a statement from Hoyoverse and clarify details about the settlement fine.
www.polygon.com
