Allegedly concealed the true price of rare loot box items.
The developer of Genshin Impact, HoYoverse, has consented to pay $20 million to resolve a lawsuit filed by the U.S. Department of Justice on behalf of the Federal Trade Commission (FTC). The suit accuses the company of breaching children’s privacy regulations and misleading consumers about the actual costs associated with obtaining rare loot box rewards.
According to the FTC’s statement, the lawsuit claimed that Cognosphere, which operates under the name HoYoverse and is based in Singapore, was irresponsibly marketing Genshin Impact to minors. It also accused the company of gathering personal data from these users, which violates the Children’s Online Privacy Protection Act (COPPA). The FTC asserted that HoYoverse was aware that users under 13 were using their services, yet continued to collect and share their personal information without securing parental consent or adhering to other COPPA guidelines.
The lawsuit further alleged that HoYoverse misled players about the probabilities and actual costs of winning highly coveted “five-star” loot box rewards. It contended that Genshin Impact’s loot box system is “complex,” “difficult,” and “confusing,” particularly for teenagers and children, requiring players to “exchange real money for bundles of virtual currency,” which then must be converted repeatedly to unlock loot boxes.
Additionally, the lawsuit claimed that Genshin Impact’s purchasing process “misleads consumers about the amount of money they spend on loot boxes regularly and what they would likely need to invest to obtain specific rewards.” The company’s promotional campaigns and influencer partnerships also purportedly gave players the impression that they would have better chances of acquiring five-star rewards than was actually the case.
In reaction to these allegations, HoYoverse has agreed to pay $20 million to settle the lawsuit, meaning they do not admit nor deny the claims. They will also implement changes to prevent minors under the age of 16 from purchasing loot boxes without parental approval. The proposed settlement, which still requires federal court approval, also prohibits HoYoverse from promoting loot boxes using virtual currency without offering an option to purchase them with real money and mandates transparency concerning loot box odds and exchange rates for multi-tiered virtual currency.
Furthermore, HoYoverse must delete any personal information previously collected from users under 13 without parental permission and comply with COPPA in the future.