HoYoverse agrees to pay $20 million after FTC allegations of child privacy and loot boxes

The developer of Genshin Impact, HoYoverse, has reached a settlement with the Federal Trade Commission (FTC) of the United States to resolve allegations of violating children’s privacy and engaging in deceptive practices related to the game’s loot boxes. The fine amounts to 20 million dollars, setting a precedent in the video game industry.

The FTC's allegations

According to the FTC, HoYoverse violated the Children’s Online Privacy Protection Act (COPPA) by collecting personal information from children under 13 without obtaining proper parental consent. Additionally, the studio was accused of employing deceptive tactics to encourage in-game purchases, including:

Concealing the actual probabilities of obtaining certain rewards in loot boxes.
Presenting virtual currency transactions that made it difficult for players to understand the real costs.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated: “Genshin Impact misled children, teens, and other players into spending hundreds of dollars on rewards that had low chances of being won.”

The terms of the agreement

As part of the settlement, HoYoverse will implement a series of measures to ensure greater transparency and protection for minors. These include:

Mandatory parental consent: Loot box purchases by players under the age of 16 will require parental approval.
Transparency in probabilities: The odds of obtaining specific rewards in loot boxes must be clearly disclosed.
Direct purchase options: Players will be able to buy loot boxes directly with real money, in addition to using virtual currency.
Deletion of minors’ data: Information collected from children under the age of 13 will be deleted unless parental consent is obtained.

Impact on the video game industry

This case highlights the monetization practices in video games and the need to regulate loot boxes, a model criticized for being similar to gambling. The FTC has warned that it will not tolerate dark pattern tactics designed to deceive consumers, especially minors.

In response, a HoYoverse spokesperson stated: “While we believe that many of the FTC’s allegations are inaccurate, we have agreed to this settlement because we value the trust of our community.” The company will implement the necessary measures to comply with regulations in the United States.

What do you think about the regulation of loot boxes or gacha? Do you think similar measures should be implemented in other countries? Leave your opinion in the comments.