Genshin Impact developer Cognosphere will pay a $20 million fine and block loot box sales to children under the age of 16 (unless they receive parental consent) to settle a dispute with the Federal Trade Commission (FTC).
Cognosphere, which trades as HoYoverse in the United States, was accused by the FTC of violating a children’s privacy law by deceiving young Genshin Impact players and others about the real cost of in-game transactions and the odds of obtaining rare prizes.
A complaint filed against the company by the Department of Justice (upon referral from the FTC) claims the studio “actively marketed Genshin Impact to children and collected personal information from them in violation of the Children’s Online Privacy Protection Rule (COPPA).”
It adds that HoYoverse didn’t accurately disclose the odds of winning “five-star” loot box prizes or adequately explain how much obtaining those items might cost. The company is also accused of obscuring that process by implementing a confusing in-game currency system.
According to the complaint, some children spent “hundreds or even thousands of dollars” in pursuit of rare prizes.
“Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection.
“Companies that deploy these dark-pattern tactics will be held accountable if they deceive players, particularly kids and teens, about the true costs of in-game transactions.”
A proposed order detailing the settlement explains Cognosphere will be required to pay a $20 million penalty. It will also be:
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.
The order must be approved by a federal judge before it can go into effect.
In a statement published on the HoYoverse website, Cognosphere said it will “strengthen and increase transparency” around its parental consent and virtual currency practices. It also described the FTC’s allegations as “inaccurate.”
“Animation-style games and shows are well-received by global audiences and players across various ages. Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults,” reads the statement.
“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.”