Genshin Impact Mockup

The Federal Trade Commission (FTC) has fined Genshin Impact developer HoYoverse £16.24 million ($20 million) following a report accusing the company of deceptively advertising loot boxes to children.

The report alleges the game misled players about the true costs involved and provided false information about the odds of winning rewards.

Violations of Children's Privacy Regulations

The FTC report states that HoYoverse violated the Children's Online Privacy Protection Rule (COPPA) by aggressively marketing Genshin Impact to minors and collecting personal data from young players.

Additionally, the complaint claims that the company misrepresented the expenses associated with loot boxes and the chances of winning rare "five-star" prizes. The virtual currency system, required for opening loot boxes, was criticised for its complexity, which the FTC argued was particularly unfair to children and teenagers.

The report further alleges that HoYoverse's marketing and promotional strategies were unjustly targeted at younger audiences, pressuring them into spending money on loot boxes with unclear pricing and odds.

However, according to the complaint, HoYoverse shared user IDs and device-related persistent identifiers with advertisers and third-party analytics companies to monitor player progress, purchases, settings, and friend lists.

Obscuring Game Item Value Through Purchases

FTC notes in its complaint that Genshin Impact's purchase procedure reveals that some kids have spent hundreds or even thousands of dollars to earn "five-star prizes" and that customers frequently have to pay hefty sums of real money to do so. According to the complaint, the method is complex and perplexing, especially for kids and teenagers.

To access loot boxes, players must convert virtual currency bundles for actual dollars, which must be exchanged several times. The exchange rates come in odd denominations. The complaint claims that this intricate structure deceives customers about how much money players regularly spend on loot boxes and how much they would probably have to pay to get specific rewards.

'The Game Is Directly Marketed to Children'

FTC also argues in their report that Genshin Impact employs cartoon graphics in the style of anime, vibrant and colourful animation, and several characters with childlike speech or appearance.

To market Genshin Impact to their audiences on social media sites like YouTube, TikTok, and the video game streaming website Twitch, HoYoverse has invested millions of dollars in employing social media influencers, many of whom are well-liked by kids.

According to the complaint, the company's influencer efforts and event banners give gamers the impression that their chances of winning the five-star award are higher than they are.

Samuel Levine, Director of the FTC's Bureau of Consumer Protection, said, "Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning. Companies that deploy these dark-pattern tactics will be held accountable if they deceive players, particularly kids and teens, about the true costs of in-game transactions."

What Is Genshin Impact Mandated To Do?

To comply with FTC standards, HoYoverse must implement several key measures. First, they must prohibit children under 16 from purchasing loot boxes in their video games without obtaining affirmative express consent from a parent. Additionally, they must provide an option for consumers to buy loot boxes directly with real money rather than exclusively using virtual currency.

HoYoverse must ensure they do not misrepresent loot box odds, prices, or features and disclose loot box odds and exchange rates for multi-tiered virtual currencies. They must also delete any personal information previously collected from children under 13 unless parental consent is obtained to retain the data.

Finally, HoYoverse must fully comply with the Children's Online Privacy Protection Act (COPPA), adhering to its notice and consent requirements.

Understanding The Game's Reach and Popularity

PrioriData notes that player penetration for Genshin Impact is highest in the United States, with 11.90% of its global player base hailing from said country. Meanwhile, Statista highlighted that The mobile app's in-app purchases brought in over 39.03 million dollars in October 2024. It also holds the distinction of becoming the fastest gaming app to achieve £4.05 billion ($5 billion) in global player expenditure.

Another data from Statista also highlights that Genshin players in the Americas and EMEA region are more likely to be female. At the same time, audiences in APAC are more likely to be male. This suggests that audiences vary by geography. The most significant disparity is shown in Brazil, where female Genshin Impact gamers were 1.4 times more prevalent as of March 2022.

Genshin Impact's global success is undeniable, captivating millions with its stunning open-world design, engaging narratives, and immersive gameplay. However, its popularity is also shadowed by concerns over specific gaming mechanics, such as loot boxes and virtual currency systems, which have drawn scrutiny from regulators like the FTC.

These practices, while lucrative, have raised questions about transparency, fairness, and protections for younger players. As Genshin Impact continues to dominate the gaming industry, addressing these issues could not only enhance its reputation but also set a positive precedent for ethical game design in the future.

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