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Federal Trade Commission announced on Friday what you do Genshin Impact Developer Cognosphere has agreed to a $20 million settlement and several restrictions on how it sells its loot boxes and handles children’s personal data. According to the FTC, the company “actively marketed” its loot boxes to children and misled players about their chances of winning prizes.
Cognosphere also allegedly “misled children and other users about the true costs of in-game transactions,” requiring them to buy virtual money that involved multiple currency exchanges. Players often spent “hundreds of dollars on prizes they had little chance of winning,” according to the Director of the Office of Consumer Protection, Samuel Levine. For years, loot boxes have been compared a form of legal gambling.
The complaint, presented by the Department of Justice, also accuses the Genshin Impact developer of marketing to children using approaches such as posts on social media channels and in-game banners. The company then allegedly collected their personal information in violation of the Children’s Online Privacy Protection Rule. Once the establishment is approved, the company is obliged to delete any data for children under 13 whose parents have not consented to the collection of their data.
Other requirements of the settlement include that Cognosphere must offer an option to purchase loot boxes directly and not only via virtual currency. It is also forbidden to falsify the prices, features and chances of winning for loot boxes, and must disclose the exchange rates for multi-level virtual currency.
