Cognosphere has lost their legal battle against the US FTC and has agreed to a settlement over Genshin Impact.
The FTC shared a press release explaining the allegations. For one, Cognosphere failed to follow COPPA rules that required them to notify children’s parents they were collecting information. On top of that, FTC referred to the game’s banner events as loot boxes, and chastised them for selling loot boxes to children. And on top of that, they alleged that the monetization system was sufficiently confusing that it misled players about how much money they were spending on the game.
FTC’s Bureau of Consumer Protection director Samuel Levine put it this way:
“Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning. 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.”
For their part, Cognosphere shared this statement regarding the settlement:
“Animation-style games and shows are well-received by global audiences and players across various ages. Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults. While we believe many of the FTC’s allegations are inaccurate, we agreed to this settlement because we value the trust of our community and share a commitment to transparency for our players.
Under the agreement, we will introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards for players in the U.S. in the coming months.”
Under the terms of the settlement, Cognosphere will pay a $ 20 million penalty. In FTC’s words, they are also required to comply with as follows:
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.
While most child players are likely to have played and spent money for Genshin Impact on mobile, this will also lead to changes on PC and consoles. And there will be drastic changes to how the game will be monetized to comply with the FTC.
We suspect Cognosphere will adopt a monetization system similar to that used in Valorant, but we’ll see how this plays out in the coming weeks.
