Genshin Impact maker agrees to pay $20m in FTC case accusing it of violating children’s privacy and deceiving players

Genshin Impact maker HoYoverse has agreed to pay $20m to settle a complaint – filed by the US Department of Justice on behalf of the Federal Trade Commission – accusing it of violating children’s privacy laws and deceiving users over the true cost of obtaining rare loot box prizes.

In the complaint, Singapore-based Cognosphere – which does business under the name HoYoverse – was accused of actively marketing Genshin Impact to children and of collecting their personal information in violation of the Children’s Online Privacy Protection Rule (COPPA). The FTC claimed that HoYoverse was aware children under 13 were using its service, but continued to collect their personal information – and share it with third-parties – without obtaining parental consent or complying with other COPPA requirements.

Additionally, the filing claimed HoYoverse deceived players regarding the odds of – and true cost of – winning particularly sought-after “five-star” loot box prizes. According to the complaint, Genshin Impact’s loot box system – said to require players to “exchange real dollars for bundles of virtual currency that then have to be re-exchanged multiple times to open loot boxes” – is “complicated”, “challenging”, and “confusing”, particularly for children and teens.

Not only did the FTC argue Genshin Impact’s purchasing process “misleads consumers about the amount of money [they] spend on loot boxes on an ongoing basis, and the amount of money [they] would likely need to spend to obtain certain prizes”, it claimed HoYoverse’s event banners and influencer campaigns gave players the impression they would have better odds of obtaining five-star prizes than was actually the case.

In response, HoYoverse has agreed to pay $20m to settle the complaint – meaning it neither admits or denies the allegations – and will make changes to prevent children under 16 from purchasing lootboxes without a parent’s express consent. The proposed settlement – which must be approved by a federal judge before it can go into effect – also prohibits HoYoverse from selling loot boxes using virtual currency without providing an option to purchase them with real money, and requires the company to disclose loot box odds and exchange rates for multi-tiered virtual currency.

Additionally, HoYoverse is required to delete any personal information previously collected from children under 13 without parental consent, and to comply with COPPA going forward.