Genshin Impact developer to pay $20-M settlement for FTC violations

The popular action-RPG video game Genshin Impact is facing serious charges as the Federal Trade Commission (FTC) has banned the game for selling loot boxes to teens under 16 without parental consent.

Singapore-based company COGNOSPHERE (under the selling name HoYoverse) has agreed to pay a $20 million settlement and abide by several restrictions on how it sells loot boxes and manages children’s personal data.

According to the FTC, COGNOSPHERE is accused of marketing the game to children and collecting data on them, which violates the Children’s Online Privacy Protection Act in the U.S. The agency further alleges that the company misleads children and other users about the real costs of in-game transactions by requiring them to buy virtual money through multiple currency exchanges.

"Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning," FTC Bureau of Consumer Protection Director Samuel Levine said. "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."

In response, COGNOSPHERE announced it will introduce new age-gate and parental consent protections for children and young teens, and increase in-game disclosures around virtual currency and rewards in the United States in the coming months.