Settlement Overview
HoYoverse, the company behind the popular game Genshin Impact, has agreed to pay a hefty sum of $20 million in response to allegations made by the U.S. Department of Justice, acting on behalf of the Federal Trade Commission (FTC).
The concerns arose from claims that the game developer violated children’s privacy laws and employed deceptive marketing strategies regarding loot box purchases.
Allegations of Misconduct
The FTC’s complaint accused HoYoverse’s Singapore-based entity, Cognosphere, of intentionally marketing to minors while improperly gathering personal information from young users.
These actions reportedly breached the Children’s Online Privacy Protection Act (COPPA).
The investigation revealed that HoYoverse recognized that many users on their platform were under the age of 13.
Despite this awareness, they continued to collect personal data and shared it with outsiders—all without the necessary parental permissions.
Furthermore, the FTC pointed out that HoYoverse misled consumers about both the odds and the costs associated with obtaining rare loot box items, particularly those coveted “five-star” rewards.
The loot box system in Genshin Impact has been described as convoluted, making it especially easy for younger players to feel confused about their actual expenditures.
Users were led to believe they had a better chance of winning high-value items than what reality would suggest.
Settlement Conditions
As part of the settlement conditions, HoYoverse will pay $20 million but will not admit to any wrongdoing.
They also agreed to implement changes ensuring that players under 16 cannot buy loot boxes without getting explicit consent from a parent.
If a federal judge approves this settlement, it will enforce specific limitations on HoYoverse.
One major requirement is that they can no longer sell loot boxes using virtual currencies unless there is an equivalent purchase option available using real money.
Additionally, HoYoverse will be obligated to clearly disclose the odds of winning loot box rewards as well as the conversion rates for any tiered virtual currencies used in the game.
Moreover, HoYoverse must delete any personal data previously collected from users under 13 that was obtained without parental consent.
The company is also tasked with ensuring ongoing compliance with COPPA regulations in the future.
Source: Eurogamer