Hoyoverse Settles FTC Lawsuit Over Loot Box Sales to Minors

In a significant legal development, the video game publisher Hoyoverse has agreed to settle a lawsuit filed by the United States Federal Trade Commission (FTC). The case centers around allegations of selling loot boxes to players under 16 years old and mishandling children's personal data. As part of the settlement, Hoyoverse will pay a $20 million fine and implement new policies to protect younger users. The company has also committed to ceasing the sale of loot boxes to minors without parental consent. This settlement underscores the growing scrutiny on in-game monetization practices, especially those that target younger audiences.

Details of the Settlement and Implications for Hoyoverse

In the vibrant world of digital entertainment, a storm has been brewing over the controversial practice of selling loot boxes to underage players. On this occasion, the FTC took action against Hoyoverse, the creator of the immensely popular game Genshin Impact. According to the complaint, the company allegedly misled both children and adult players about the true costs involved in acquiring rare in-game items through loot boxes. Additionally, it was accused of mishandling the personal information of young users, raising concerns about privacy and data security.

The settlement, awaiting judicial approval, mandates that Hoyoverse introduce robust age-gating mechanisms and obtain parental consent before allowing minors to purchase loot boxes. The company has acknowledged the need for greater transparency and trust-building measures. A spokesperson for Genshin Impact stated that while they believe many of the allegations are inaccurate, they are committed to enhancing player protections and disclosures moving forward.

One notable aspect of the case involves an influencer marketing campaign in May 2021. The FTC alleged that a promotional video featuring SSSniperwolf, a well-known content creator, falsely depicted the odds of winning rare prizes. The video showed the influencer opening 12 loot boxes consecutively, which the FTC claimed was impossible within the game’s rules. Furthermore, the animation used in the video did not match the actual game mechanics, suggesting a misleading portrayal of the loot box system.

Despite speculation, the $20 million fine will be paid to the U.S. Treasury rather than reimbursing individual players who purchased loot boxes. This decision reflects the legal framework governing such penalties.

From a broader perspective, this settlement serves as a wake-up call for the gaming industry. It highlights the importance of responsible marketing practices, especially when targeting younger audiences. Companies must prioritize transparency and ethical considerations to maintain public trust. For players, particularly parents and guardians, it reinforces the need for vigilance and awareness of in-game purchases and their potential financial and psychological impacts on children.