Genshin Impact distributor hit with $20 million FTC fine

Genshin Imact distributor Cognosphere has been fined $20 million by the USA's FTC department for "Privacy Violations" and "Deceptive Loot Box Practices" and will no longer be allowed to sell random item containers (loot boxes) to players under 16 years of age.

The fine follows a complaint made by the US Department of Justice which alleged that Cognosphere had violated local child protection laws, and developer miHoYo has agreed to ban the sale of items to players under 16 unless they have parental consent.

The Federal Trade commission has published a press release regarding the matter.

Samuel Levine, Director of the FTC's Bureau of Consumer Protection stated:

“Genshin Impact deceived children, teens, and other players 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.”

The Press Release continues:

A complaint, filed by the Department of Justice upon referral from the Commission, alleged that Singapore-based Cognosphere Pte. Ltd and its California-based subsidiary Cognosphere LLC, which do business in the United States as HoYoverse, actively marketed Genshin Impact to children and collected personal information from them in violation of the Children’s Online Privacy Protection Rule (COPPA). The complaint further charged that HoYoverse deceived players about the odds of winning particular sought-after “five-star” loot box prizes and how much it would cost to open loot boxes to win the prizes. It also alleged that the confusing virtual currency system that players had to navigate to open loot boxes and the marketing and promotion tactics used to entice players to open loot boxes were unfair to children and teenagers.

It will be interesting to see the larger effect on games that rely on loot box sales for profits, but possibly more worrying is the company's collection of children's personal information without child consent, a direct breach of the COPPA rule which requires any online service that markets to children (and Genshin's bright cartoony graphics are cited as appealing directly to children) to obtain parental consent.

Clearly the industry is being bought into line with US standards, which I'm sure will bleed in to how business is conducted in the UK which has its own set of online laws and regulations that restrict gambling and how it is advertised to minors.