PC, latest version, Steam
Shared Realm with 1 other player, US server
Players are level 25 and 24 (campaign item drops are level 11, crucible item drops level 12)
Issue: When playing alone, bounty and challenge rewards drop at item level 12. As soon as a second player joins, bounty rewards drop at level 7.
Reproducible: Yes, consistently. Items go from 12 to 7, even in the rewards preview, as soon as a second player joins the realm.
Not tested: We have not yet explicitly tested if finishing a bounty locks it, but I’m pretty sure it happened before that I finished one solo, friend joined, rewards collected, level 7.
We’ve noticed this happening at least since we started getting level 8 item drops in the campaign missions. The rewards in coop are considerably under-leveled and mostly useless unless collected when solo.