The popular online game Genshin Impact, developed by Hoyoverse, has reached a settlement with the United States Federal Trade Commission (FTC) following allegations of violating consumer protection laws regarding loot boxes. The agreement entails a significant financial penalty and new restrictions aimed at protecting younger players from potentially exploitative in-game purchasing practices.
Settlement Details and Financial Penalty
As part of the settlement, Hoyoverse will pay a fine of $20 million. This decision comes after the FTC's investigation into the game's marketing and monetization strategies, which were found to be misleading, particularly for younger audiences. The FTC's press release highlighted that the developer would also be prohibited from allowing players under the age of 16 to make in-game purchases without obtaining explicit parental consent. This move reflects a growing concern over the impact of loot boxes and in-game purchases on minors.
Allegations of Deceptive Practices
The FTC's investigation revealed that Genshin Impact's marketing practices may have misled children and teenagers into spending substantial amounts of money on in-game rewards that were difficult to attain. Samuel Levine, the FTC Director of the Bureau of Consumer Protection, noted that the game's approach deceived players, leading them to invest hundreds of dollars in hopes of winning rare virtual items, which had low probabilities of being obtained. The FTC emphasized that such "dark-pattern tactics" would not be tolerated, particularly when they target vulnerable demographics like children and teenagers.
Violations of Consumer Protection Laws
Central to the FTC's case against Hoyoverse were allegations of violations of the Children's Online Privacy Protection Act (COPPA). The agency accused the developer of marketing Genshin Impact to children, collecting their personal information, and failing to adequately inform players about the odds of winning high-value loot box items. The FTC argued that the game's virtual currency system was not only confusing but also obscured the true costs associated with obtaining desirable items, resulting in children inadvertently spending large sums of money.
Future Compliance and Required Changes
In addition to the financial penalty and restrictions on sales to minors, Hoyoverse will be mandated to implement several changes to its operations. These include the requirement to disclose the odds of winning loot box prizes and the exchange rates for its virtual currency. Furthermore, the company must delete any personal information collected from children under the age of 13 and ensure compliance with COPPA regulations in future operations.
Conclusion
This settlement marks a significant step in the ongoing scrutiny of loot box mechanics in the gaming industry, particularly regarding their impact on young players. As regulatory bodies like the FTC increase their oversight, game developers may need to reevaluate their monetization strategies to ensure they comply with consumer protection laws. The outcome of this case could set a precedent for how similar cases are handled in the future, potentially leading to more stringent regulations on in-game purchases and marketing practices targeting minors.