Genshin Impact Fined $20M for Loot Box Violations

Hoyoverse, the publisher of the popular game Genshin Impact, has reached a $20 million settlement with the Federal Trade Commission (FTC). The settlement resolves allegations that Hoyoverse violated the Children's Online Privacy Protection Rule (COPPA) and engaged in deceptive practices concerning in-game purchases.

The FTC's press release details the settlement, stating Hoyoverse will pay a $20 million fine and prohibit in-app purchases by users under 16 without parental consent. FTC Bureau of Consumer Protection Director Samuel Levine criticized Hoyoverse's practices, stating they misled players, particularly children and teens, into spending significant sums on in-game items with low odds of winning. He emphasized the FTC's commitment to holding companies accountable for employing deceptive tactics.

The FTC's primary claims against Hoyoverse include violations of COPPA through the marketing and data collection practices targeting children, as well as deceptive representations regarding the odds of obtaining "five-star" loot box prizes and the associated costs. The FTC alleges the game's virtual currency system was designed to be confusing and unfair, obscuring the high cost of acquiring desirable in-game items and leading to substantial spending by children.

In addition to the financial penalty and the ban on underage purchases, the settlement requires Hoyoverse to: clearly disclose loot box odds and virtual currency exchange rates; delete personal information collected from children under 13; and ensure future compliance with COPPA regulations. This settlement underscores the FTC's increased scrutiny of in-game purchases and the protection of children's online privacy.