Cognosphere, the publisher of Genshin Impact, agrees to a $20 million settlement with the FTC over alleged violations of children’s privacy laws.
According to the U.S. Federal Trade Commission (FTC) press release, Genshin Impact developer Cognosphere (known as HoYoverse) "allegedly unfairly marketed loot boxes to children that obscured real costs and misled all players about the odds of obtaining prizes." The game developer agreed to pay a $20 million fine and "to block children under 16 from making in-game purchases without parental consent".
FTC vs HoYoverse
The FTC filed a complaint alleging "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)". Samuel Levine, Director of the FTC’s Bureau of Consumer Protection accused Genshin Impact of deceiving children, teens, and other players into spending "hundreds of dollars on prizes they stood little chance of winning"
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In-game purchases
Even if Genshin Impact is a free-to-play game, there are some things you can buy in-game: cosmetics, Genesis Crystals to buy wishes and others. For those who aren't aware of the game, Genshin Impact has a system of characters with two rarities: four stars and five stars. However, to have those, you have to "wish" for them in a gacha system where you have some possibilities to get the character you want or not. For many people, it's so important to have that specific character, that they end up buying many resources to guarantee they have it.
The complaint alleges that the system is challenging and confusing, particularly for children and teens. The FTC also accuses HoYoverse of taking advantage of complicating currencies to force teens to spend money on their "Event Banners". They add that 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".
COPPA Violations
In addition, HoYoverse is accused of violating the COPPA Rule, which requires online services to inform parents of children under 13 "about the personal information they collect and to obtain verifiable parental consent". They add: "HoYoverse shared with third-party analytics firms and advertisers user IDs as well as device-related persistent identifiers to track players’ progress, purchases, settings, and friends lists, according to the complaint".
The company will be required to pay a $20 million fine and make changes to address this situation. This means:
- Prohibited from allowing children under 16 to purchase loot boxes in their video games without a parent’s affirmative express consent;
- Prohibited from selling loot boxes using virtual currency without providing an option for consumers to purchase them directly with real money;
- Prohibited from misrepresenting loot box odds, prices, and features;
- Required to disclose loot box odds and exchange rates for multi-tiered virtual currency;
- Required to delete any personal information previously collected from children under 13 unless they obtain parental consent to retain such data; and
- Required to comply with COPPA including its notice and consent requirements.
HoYoverse did not make a statement until this article is out. That's all for now. Stick around for more Genshin Impact news and updates on esports.gg.
