Genshin Impact Developer Will Pay $20 Million Fine to FTC Over Gacha System
Genshin Impact publisher Cognosphere (also called Hoyoverse) will settle a lawsuit by the US Federal Trade Commission over the sale of 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 “determining ) children and other users about the true value of in-game transfers and chances of winning rare prizes.” The company will also stop selling loot boxes to people under 16 without parental consent. The complaint not only concerns the sale of loot boxes to people under the age of 16, but also alleges that Hoyovers mishandled children’s data and personal information.
“Genshin Impact defrauded children, teenagers and other gamblers into spending hundreds of dollars on prizes they had little chance of winning,” FTC Consumer Protection Director Samuel Levin said in a press release. “Companies using these shady tactics will be held accountable if they deceive players, especially children and teens, about the true value of in-game transactions.”
The settlement awaits a judge’s approval before it goes into effect. Besides the $20 million fine, here’s what will change for the company, according to the FTC press release:
A Bloomberg report leading up to the findings said players who paid for loot boxes could receive refunds as part of the settlement, but the press release and subsequent court filings did not immediately make that clear. Polygon has reached out to the Federal Trade Commission for clarification. Hoyovers also has not yet responded to Polygon’s request for comment.
Genshin Impact is a free-to-play video game that uses a gacha monetization system that encourages players to convert real-world currency into in-game currency, which is used 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 – a bit of a gamble. According to the FTC, the system includes several in-game currencies that hide the amount of money spent to open loot boxes.
The Federal Trade Commission said Hoyoverse is spending “millions of dollars” to promote its gacha system to players, many of whom are children. An incident that comes to mind in 2021 was when Hoyovers paid Alia Shelesh, better known online as SSSniperWolf, over $100,000 to make two videos about Genshin Impact, and advised her to open loot boxes through an event banner for a character named Zhongli.
“In May 2021, an SSSniperwolf commercial was released,” the FTC complaint states. “It featured a segment in which a powerful woman opened twelve loot boxes in a row, conveying enthusiasm and excitement as she was instructed, and won the featured 5-star hero. She remarked: “We were too lucky tonight. I thought we’d be here all night, but the RNG (random number generator) ‘popped’, indicating her windfall, which Genshin Impact allegedly accidentally gave her a rare prize.”
The Federal Trade Commission said the video was edited “to depict fake winnings in a loot box in a manner that would not be possible in real life.” Genshin Impact game.” (The evidence provided by the Federal Trade Commission is that Genshin Impact only allows players to open 10 loot boxes in a row, but SSSniperwolf opens 12 continuously. According to the FTC, the video also used incorrect animation when opening 5-star prizes.)