Cognosphere (known by its trade name, HoYoverse), publisher of popular gacha games such as Genshin Impact, has agreed to pay a $20 million settlement with the Federal Trade Commission (FTC) in the United States.
The settlement stems from an FTC complaint that Genshin Impact violates the Children’s Online Privacy Protection Act. According to the complaint, HoYoverse has failed to notify parents that it collects information from children, misrepresents Loot Box odds and cost, promotes loot boxes to children and teens, and selling a mult-tier virtual currency system.
The FTC has been investigating Genshin for several years.
The complaint goes into explicit detail alleging how Genshin appeals, is marketed toward, and uses predatory gambling with children under the age of 13.
Here are some juicy bits:
Despite knowing specific users are under the age of 13, HoYoverse has continued to collect, use, and disclose personal information from these users’ Genshin Impact accounts without seeking verifiable parental consent.
HoYoverse requires consumers to engage in a complicated and confusing series of in-game transactions to open loot boxes, involving multiple types of in-game virtual currency with different exchange rates. The purchasing process obscures the reality that consumers commonly must spend large amounts of real money to obtain 5-star heroes. […] To reliably acquire 5-star prizes, players must spend real money, often in large sums, to open loot boxes.
Considered as a whole, Genshin Impact’s confusing series of real and virtual currency rates, from dollars to Genesis Crystals to Primogems to Wish tokens to loot boxes, in mismatched and unintuitive denominations, serves to mislead consumers, especially children and teenagers, about the amount of money that players spend on loot boxes on an ongoing basis, and the amount of money that players would likely need to spend to obtain certain prizes.
HoYoverse does not warn parents, children or teenagers at the point of download that the company makes money on the game by selling loot boxes, that the odds of winning featured prizes are very low, or that users can easily spend hundreds of dollars trying to obtain a single rare loot box prize. Consumers could not have reasonably avoided these practices that led to financial losses to themselves or their households.
The comprehensive complaint also mentions using popular children’s streamers to promote Genshin, and how the game’s art style, animation, and storytelling appeals to the under-13 crowd.
Cognosphere released an official statement on the Genshin FTC fine, believing “many of the FTC’s allegations are inaccurate,” but pledging to “introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards for players in the U.S. in the coming months.”
We enjoy Genshin and other online gacha games, but parents should be aware of their inherent gambling system, and make sure parental protections are in place for spending real money in a virtual game.