I’m modeling a young girl in a dress and I know that inevitably there will be players that will up-skirt the character, and I’m wondering how to handle this conundrum. I know that Peach and Zelda have bloomers in Smash bros for this reason, but I’d like to avoid any additional modeling. Other than painting on some underwear, do people have any suggestions?
Some games just use a solid black plane slightly below the waistline I think.
Humm do your self a favor and Google Hot Coffee mod. Best practice NEVER built into you game the possibility that someone can hack your game and have all of your characters run around nude and assume that some one will pull it off and in the process change your game rating.
All of your character skins should default to a bathing suit and capping just below the hip line.
Do u know how hard it it to suppress the urge to make innapropriate jokes in a post with a title like this. 
Any way, i think most games just cut away the mesh part under the skirt. or you could just give the skirt
mesh extra geometry similar to what SincerelyGhostWritten says. I think the solution would depend
on 1. the animation of the character, constantly seeing that the character dosent have anything above the knees
might break the 4th wall to often , so the cover with a plane might be better.
2. If there are few instances where the player has a chance to see above the skirt line just remove all the geomtry underneath the skirt.
3. Is the games graphics stylized or realistic. Cutiing away everythin under the skirt ina stylized game works better. While
if it realistic graphics covering with darkness and shadow migh be better.
You could make it so that the game crashes as soon as a special part would be visible. Thatll show them perverts…