Genshin Impact Publisher Cognosphere (also called Hoyoverse) is currently settling a lawsuit filed by the US Federal Trade Commission for selling loot boxes to players under 16 years of age. It will pay a $20 million fine for allegedly violating U.S. children's privacy laws and Deciev[ing] Children and other users about the true cost of in-game translations and the chances of obtaining rare prizes.” The company will also stop selling loot boxes to those under 16 years of age without parental consent. The complaint not only concerns the sale of loot boxes to those under 16, but also claims that Hoyoverse mishandled children's data and personal information.
“Genshin Impact Children, teenagers and other players were deceived and tricked into spending hundreds of dollars on prizes they had little chance of winning.” Samuel Levine, FTC consumer protection director, said in a press release. “Companies that use these dark pattern tactics will be held accountable if they deceive players, especially children and teens, about the true cost of in-game transactions.”
The The settlement is awaiting approval by a judge before it takes effect. Aside from the $20 million penalty, here's what's changing for the company, according to the FTC press release:
A Bloomberg report ahead of the published results suggested that players who paid for loot boxes could receive a refund as part of the settlement, but the press release and subsequent court filings did not immediately make that clear. Polygon has contacted the FTC for clarification. Hoyoverse has also not yet responded to a request for comment.
Genshin Impact is a free-to-play video game that uses a gacha monetization system that encourages players to convert real currency into in-game currency, which they use to purchase “Wishes” to randomly unlock characters and weapons. The system means that people can end up spending a lot of money to get rare characters or items – something like gambling. The system, the FTC said, involves multiple in-game currencies that disguise the amount of money spent to open the loot boxes.
The FTC alleged that Hoyoverse spends “millions of dollars” promoting its gacha system to its players, many of whom are children. In 2021, a case arose when Hoyoverse paid Alia Shelesh, better known online as SSSniperWolf, more than $100,000 to make two videos about it Genshin Impact, and instructed them to open loot boxes for a character named Zhongli via the event banner.
“In May 2021, SSSniperwolf’s promotional video was released,” the FTC wrote in the complaint. “There was a segment where the influencer opened twelve loot boxes in a row, conveyed enthusiasm and excitement as she was told, and won the featured 5-star hero.” She noted, “We're way too lucky tonight. “I thought we were going to stay here all night, but the RNG [random number generator] “bussin,” indicating her unexpected good fortune Genshin Impact had supposedly assigned her the rare prize by chance.”
The FTC claimed the video was edited “to depict a fake loot box win in a manner that would have been impossible at the time.” Genshin Impact Game.” (The evidence provided by the FTC reads: Genshin Impact Players can only open 10 loot boxes in a row, but SSSniperwolf has 12 open continuously. According to the FTC, the video also used the wrong animation when opening 5-star prizes.)