I remembered something else just after I posted this- i'm surprised it didn't come up in my first searches.
The other controversy was in Beyond: Two Souls. It was one of the first modern games to use motion capture for voice actors to get more realism. After release, people found that the devs had made a fully nude model of one of the characters. They never scanned the actor (Elliott Page) nude, but modeled what was missing. It doesn't appear in normal gameplay, but was accessible in debug mode.
Creepy as fuck.
Lol that's absolutely not an excuse, or else we would see dozens of games with this happen every year. Somehow almost every game to every feature tastefully censored nude scenes managed to do so without modeling genitalia, but Beyond: Two Souls is an exception.
In a world where modeling costs money, studios are looking to spend less time modeling than they need to. Not more.