Genshin Impact Developer Hit with $20 Million Fine and New Regulations Following FTC Lootbox Allegations

HoYoverse, the creative force behind Genshin Impact, finds itself in a challenging situation after being slapped with a $20 million fine by the Federal Trade Commission. The trouble stems from allegations that the company misled players with its marketing strategies.

The recent debacle arose when the US Department of Justice filed a complaint on behalf of the FTC, accusing HoYoverse of “unfairly marketing loot boxes to children” in a way that disguised the real costs and misled all players about their chances of winning rewards. Clearly, not the kind of headlines any company wants. As detailed in the FTC’s press release, HoYoverse has agreed to fork over a $20 million fine to resolve these charges. Additionally, the company must now prevent minors under 16 from making in-game purchases without their parents’ consent — a safeguard that, honestly, should have been there from the start.

In a statement, the FTC’s consumer protection director criticized HoYoverse, asserting, “Genshin Impact misled children, teens, and others into spending large amounts on prizes with minimal winning chances. Companies that resort to such deceptive strategies will be held accountable if they mislead players, especially younger audiences, about the actual expenses involved in in-game purchases.”

The FTC’s press release on the matter pointed out that the complaint alleges Genshin Impact’s purchasing system obscures how much real money consumers typically spend to secure “five-star prizes.” Some children have reportedly spent hundreds or even thousands of dollars chasing these elusive rewards. The process essentially requires players to trade real money for virtual currency, which is then complexly re-exchanged to unlock loot boxes, with bizarre exchange rates in play. This convoluted system is said to mislead players about the true cost of these purchases and what they might need to spend to snag particular prizes.

Furthermore, HoYoverse faces a new restriction: they can no longer sell loot boxes using virtual currency without offering consumers a straightforward option to buy them with real money. It seems like a hard lesson learned for HoYoverse — hopefully, they’ll steer clear of crafting currencies that seem to take advantage of players in the future.