Genshin Impact Loot Box System Overhaul Expected After $20M Fine by US Federal Trade Commission

In a significant development for the gaming community, the creators of Genshin Impact, Cognosphere—better recognized as HoYoverse—have consented to a $20 million settlement with the United States Federal Trade Commission (FTC). This settlement arises from allegations of deceptive practices related to loot boxes specifically targeting players under the age of 16. The lawsuit highlighted the company’s promotion of a “gambling model”aimed at a younger audience, as well as the unauthorized collection of their personal data.

Despite Genshin Impact’s ongoing success as an engaging open-world RPG, the settlement has cast a shadow over the game, raising serious concerns about the safeguarding of children’s data and privacy. Fans are understandably disappointed by these revelations, which tarnish the image of a title that has captivated millions worldwide.

According to Forbes, Genshin Impact generated an impressive $1 billion within its first six months on mobile devices, a figure it reportedly maintained for subsequent periods. Although the lawsuit centers around player exploitation practices, Polygon reported that the settlement funds will be directed to the U.S. Treasury rather than reimbursing affected players.

What Are the Allegations in the Genshin Impact Lawsuit?

Misleading Loot Boxes and Unauthorized Data Collection

The FTC’s complaint against Cognosphere zeroes in on the allegations of misleading players regarding the odds of obtaining rare items in Genshin Impact. The lawsuit argues that the developers concealed the actual costs associated with these transactions. The lawsuit articulately states:

Defendants [Cognosphere] widely advertise, and prominently feature within Genshin Impact, select “5-star” prizes, which consumers can obtain only by opening loot boxes. The odds of any given loot box containing the advertised prize are very low, and consumers commonly must purchase dozens of loot boxes, at the cost of hundreds of dollars, to obtain a single 5-star prize. Yet Defendants have misrepresented players’ odds of obtaining rare loot box prizes, and Defendants have misled players about the substantial expenditure likely required to obtain these prizes. – UNITED STATES OF AMERICA v. COGNOSPHERE, LLC, FTC Lawsuit.

Furthermore, the FTC raised issues regarding violations of the Children’s Online Privacy Protection Act (COPPA), indicating that Cognosphere collected personal data from young players without obtaining verifiable parental consent. The lawsuit particularly points out Genshin Impact’s appeal among younger audiences, as evidenced by its vibrant and engaging animation style.

How Has HoYoverse Responded, and What Changes Can Players Expect?

Commitment to Positive Change

In a recent statement, a spokesperson for Genshin Impact addressed the FTC’s concerns. While HoYoverse maintained that anime-style visuals appeal to a diverse audience, they acknowledged the validity of the settlement, emphasizing their desire to “value the trust of our community.”Moving forward, the developers plan to implement age-gate features and parental consent safeguards, as well as enhance transparency regarding in-game currency and rewards for U.S. players.

This commitment to improving the loot box mechanics not only seeks to align with FTC requirements but also aims to restore faith among their player base. The FTC’s actions serve as a pivotal reminder of the necessity for transparency in games that attract younger players. Meanwhile, as HoYoverse navigates these changes, fans eagerly anticipate the upcoming Genshin Impact 5.4 update, which promises an array of new content.

For further information, check out the following sources:
Forbes,
FTC,
Polygon.

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