FTC fines HoYoverse over Genshin Impact’s gacha mechanics

The Federal Trade Commission (FTC) ruled that HoYoverse, the developer of Genshin Impact, Honkai: Star Rail, and Zenless Zone Zero, is to pay a fine of $20 million USD to settle charges. Additionally, the company agreed to abide by certain rules when it comes to its monetization in what could become a landmark ruling for similar games. This settlement follows a similar case involving Epic Games and Fortnite from the recent past.

“The maker of the video game Genshin Impact has agreed to pay $20 million and to block children under 16 from making in-game purchases without parental consent,” a press release by the FTC stated.

“Animation-style games and shows are well-received by global audiences and players across various ages,” HoYoverse commented in a statement on the ruling. “Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults. While we believe many of the FTC's allegations are inaccurate, we agreed to this settlement because we value the trust of our community and share a commitment to transparency for our players. Under the agreement, we will introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards for players in the U.S. in the coming months.”

The complaint against HoYoverse alleged several violations, such as Genshin Impact being marketed towards children and collecting their personal information, deceiving players about gacha odds, and obfuscating the real costs of participating in the system by using in-game currencies. Some of these charges certainly have more substance than others. For example, the FTC is using the existence of a hide-and-seek type mini-game as evidence of the game targeting children, which seems pretty silly.

As part of the settlement – if approved by a judge – HoYoverse will have to abide by the following rules:

• Prohibited from allowing children under 16 to purchase loot boxes in their video games without a parent’s affirmative express consent;
• Prohibited from selling loot boxes using virtual currency without providing an option for consumers to purchase them directly with real money;
• Prohibited from misrepresenting loot box odds, prices and features;
• Required to disclose loot box odds and exchange rates for multi-tiered virtual currency;
• Required to delete any personal information previously collected from children under 13 unless they obtain parental consent to retain such data; and
• Required to comply with COPPA including its notice and consent requirements.

It’s unclear how exactly these changes will be implemented and enforced. Their impact on users could be as simple as having to check a box to confirm that they’re 16 years or older. There may also be options to buy pulls directly with real money in the future – so instead of buying currency for $19.99 USD and then exchanging that for ten pulls, you’ll pay the money for the ten pulls directly.

Genshin Impact, like most developers releasing gacha games, is already openly displaying the rates for banners, though aspects of the system remain unclear, such as the exact odds for the “50/50” – the moment when players hit their guarantee for a rare character, which may or may not be the current rate-up character.

Having more transparency on these systems as well as their costs is certainly a good thing, as is keeping children away from any microtransactions in games.

However, here is where the FTC is opening itself up to charges of hypocrisy – big US companies like EA Sports, 2K Games, and Roblox have long been using similar mechanics in their own games while providing much less transparency than developers like HoYoverse, and yet the FTC is not taking any action against them.

If the FTC is serious about its goals, the likes of EA Sports FC, NBA 2K, Roblox, and Pokémon TCG Pocket will have to find themselves under increased scrutiny based on this precedent.