The maker of the video game Genshin Impact, Cognosphere, has agreed to pay a $20 million fine and to block children under 16 from making in-game purchases without parental consent to settle Federal Trade Commission allegations the company violated a children’s privacy law and deceived children and other users about the real costs of in-game transactions and odds of obtaining rare prizes.
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 does 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).
“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.”
Popular among children and teens, Genshin Impact is free to download but has generated significant revenue through the sale of in-game virtual currency and other content. Players advance in the game by collecting virtual heroes, forming a team and using heroes’ abilities to complete tasks. Five-star heroes are the most desirable to collect given their powers, and they can only be obtained by opening loot boxes, which players can purchase using virtual currency. Genshin Impact uses anime-style cartoon graphics, bright and colorful animation, and several characters who have the speech or appearance of children to appeal to children.
Under the proposed order, which must be approved by a federal judge before it can go into effect, Cognosphere Pte. Ltd and Cognosphere LLC will be required to a pay a $20 million monetary fine and make changes to address the allegations outlined in the complaint.
