Publisher Genshin Impact hit with $20 million fine for marketing loot boxes to children

The Federal Trade Commission has fined the publisher of Genshin Impact $20 million for allegedly fraudulently marketing loot boxes to children and illegally collecting their data.

The FTC’s complaint alleges that Singapore-based Cognosphere misled children and other users about the real costs of in-game transactions and the chances of winning rare prizes. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, says Genshin Impact tricked children and teenagers into “spending hundreds of dollars on prizes they had little chance of winning.

“Companies using these dark-pattern tactics will be held accountable if they mislead players, especially children and teenagers, about the true costs of in-game transactions,” he added.

The complaint alleges that Cognosphere misled players about their chances of winning, particularly when it came to the “five-star” claimed prizes. The game allegedly 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 misused children’s data and personal information by collecting personal information from children under 13 without notifying parents of the information they collect from their children, a violation of the Privacy Shield Rule. Children’s Internet Act (COPPA).

In addition to the fine, the settlement means that children under the age of 16 will not be allowed to purchase loot boxes in the publisher’s video games without “express positive parental consent.” The company will also be prohibited from misrepresenting lootbox odds, prizes and features, and will have to allow users to purchase them with cash 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 give 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. .

Loot boxes – which are a huge part of how the mobile gaming industry makes money – have been a controversial topic for a long time, with every major platform trying 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 chances 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 such as Spain and the UK are considering stricter regulations.

About Will McCurdy

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I’m a reporter covering the weekend news. Before joining PCMag in 2024, I held the lines at BBC News, The Guardian, The Times of London, The Daily Beast, Vice, Slate, Fast Company, The Evening Standard, The i, TechRadar and Decrypt Media.

I’ve been a PC gamer since you had to manually install games from multiple CD-ROMs. As a reporter, I am passionate about the intersection of technology and human lives. I’ve covered everything from crypto scandals to the art world, as well as conspiracy theories, UK politics and Russia and foreign affairs.

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