The gaming industry's monetization practices face increased scrutiny as regulatory bodies take stronger action against potentially harmful business models targeting young players. The recent Federal Trade Commission (FTC) settlement with HoYoverse marks a significant moment in the ongoing debate about loot boxes and child protection in gaming.
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| The modern office environment of HoYoverse, where policy decisions affecting gaming monetization practices are made |
FTC Settlement Details
The Federal Trade Commission has reached a USD $20 million settlement with HoYoverse, the developer of the popular game Genshin Impact, over allegations of deceptive marketing practices and privacy violations. The settlement addresses multiple concerns regarding the game's monetization system and data collection practices, particularly those affecting younger players.
Privacy Violations and COPPA
A major component of the FTC's complaint centered on HoYoverse's violation of the Children's Online Privacy Protection Act (COPPA). The company allegedly collected personal information from children under 13 without obtaining proper parental consent, despite the game's anime-style graphics and child-like characters that specifically appeal to younger audiences.
Deceptive Monetization Practices
The FTC found that HoYoverse had misled players about both the cost and probability of obtaining rare five-star prizes through the game's loot box system. The company's use of complex virtual currency systems and aggressive promotional tactics allegedly obscured the true cost of purchases, leading to players, including children, spending hundreds or thousands of dollars pursuing these rare items.
Mandated Changes
Under the settlement terms, HoYoverse must implement several significant changes to its business practices. These include blocking purchases by players under 16 without parental approval, providing transparent disclosure of loot box odds and virtual currency exchange rates, and offering direct payment options for loot box purchases. The company must also delete previously collected data from children under 13 unless they receive parental consent.
Industry Impact
This landmark settlement serves as a warning to other game developers about the consequences of employing questionable monetization tactics, particularly those targeting younger players. The FTC's action signals increased regulatory attention to gaming industry practices, especially concerning loot boxes and child privacy protection.