The Federal Trade Commission has fined the publisher of Genshin Impact $20 million for allegedly deceitfully marketing loot boxes to children and illegally collecting their data.
The FTC’s complaint alleges that Singapore-based Cognosphere deceived children and other users about the real costs of in-game transactions and the odds of obtaining rare prizes. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, says Genshin Impact tricked kids and teens into “spending hundreds of dollars on prizes they stood little chance of winning.
“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,” he added.
The complaint says Cognosphere misled players about the odds of winning, particularly when it came to sought-after “five-star” loot box prizes. The game allegedly also forced players to use a “confusing virtual currency system” that players had to navigate to open these loot boxes and used “unfair” marketing practices.
The FTC’s complaint also alleges that the company mishandled children’s data and personal information, collecting personal information from children under 13 without notifying parents about the information they collect from their children, a violation of the Children’s Online Privacy Protection Rule (COPPA).
In addition to the fine, the settlement means children under the age of 16 won’t be allowed to purchase loot boxes in the publisher’s video games without “a parent’s affirmative express consent.” The company will also be banned from misrepresenting loot box odds, prices, and features, and will need to allow users to buy them with money instead of in-game virtual currency. The order will also force the company to delete any personal information previously collected from children under 13 unless their parents gave consent.
“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,” Cognosphere’s US subsidiary HoYoverse said in a statement.
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Loot boxes—which are a huge part of how the mobile gaming industry makes money—have been a controversial topic for a long time, any many platforms have attempted to crack down on their misuse. In 2019, Google forced developers to “clearly disclose” the odds of winning. In December 2017, Apple instituted a similar rule for loot boxes, requiring developers on the App Store to disclose the odds of winning loot boxes.
Loot boxes are banned in many EU countries, such as the Netherlands and Belgium, as they are classified as a form of gambling, while countries like Spain and the UK are considering stricter regulations.
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About Will McCurdy
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