Million-Dollar Fine: Genshin Impact Developer Settles FTC Charges Over Data Privacy Lawsuit

FTC Cracks Down on Genshin Impact: $20M Settlement and Stricter Loot Box Regulations

The Federal Trade Commission (FTC) just announced a major breakthrough in its fight against predatory gaming practices. Genshin Impact developer Cognosphere has agreed to a $20 million settlement and a series of strict regulations to prevent the company from exploiting children and misrepresenting its loot boxes.

Deceiving Marketing and Misleading Practices

Cognosphere’s tactics were allegedly designed to deceive children and other players about the odds of winning prizes. They marketed loot boxes to kids through social media and in-game banners, collecting their personal information without obtaining proper consent from their parents. The company also required players to buy virtual money, often leading to costly transactions with little chance of winning the prizes they sought.

A Form of Legal Gambling?

For years, loot boxes have been likened to a form of legal gambling, with many gamers spending hundreds of dollars on in-game transactions with little chance of winning. The Bureau of Consumer Protection Director, Samuel Levine, warned that "players often spent hundreds of dollars on prizes they stood little chance of winning."

The FTC’s Demands

The FTC demands that Cognosphere delete any data collected from children under 13 whose parents have not provided consent. The company must also:

  • Offer a direct option to buy loot boxes, rather than just through virtual money
  • Stop misrepresenting pricing, features, and winning odds for loot boxes
  • Disclose exchange rates for multi-tiered virtual currency

This settlement is a crucial step in protecting children from exploitative practices in the gaming industry. As the FTC continues to monitor and regulate these issues, we can only hope that more game developers will follow Cognosphere’s lead in prioritizing transparency and player safety.

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