Hoyoverse Faces $20M Fine For Loot Box Mechanics

The publisher of Genshin Impact, HoYoverse, has consented to a $20 million settlement and agreed to implement improved child protection measures following a ruling from the Federal Trade Commission (FTC). The initial complaint claimed that Genshin Impact violated the Children’s Online Privacy Protection Act (COPPA) by directly targeting children while promoting loot boxes, which are akin to gambling mechanics.

The allegations assert that HoYoverse actively sought out influencers who produced content for games like Minecraft and Roblox to connect with a younger demographic. Additionally, the company reportedly appealed to children through a marketing campaign featuring “child-like” characters known as “Cute Force.”

While HoYoverse, also called Cognosphere, has agreed to the fine, the company contends that many claims made by the FTC are inaccurate. Part of the agreement includes significant changes, such as prohibiting individuals under the age of 16 from making purchases with parental consent.

Players will now have the ability to purchase loot boxes with real money directly, rather than having to convert funds into a digital currency, and all loot box odds displayed to users must be accurate. Furthermore, HoYoverse will be required to delete any personal information related to children under 13 unless a parent grants permission to retain such data.

Genshin Impact operates as a free-to-play title across various platforms, including iOS and Android, and has successfully generated over $5 billion in revenue through microtransactions. According to a FTC press release, the complaint highlights that the confusing system misleads consumers regarding the ongoing spending on loot boxes and the likely financial outlay needed to secure specific rewards.

This isn’t the first instance where the FTC has pursued action against a company for loot box practices. Epic Games reached a similar agreement in 2022 concerning Fortnite’s in-game mechanics. Although the settlement requires approval from a federal judge before becoming effective, the FTC is increasingly focused on safeguarding children from exploitative sales tactics.