The Federal Trade Commission (FTC) has taken action against Genshin Impact publisher Cognosphere (also known as HoYoverse), ordering the company to pay a $20 million fine and implement stricter policies around in-game purchases for minors. The settlement comes after allegations that the game violated the Children’s Online Privacy Protection Act (COPPA) and used deceptive practices to encourage excessive spending on loot boxes.
Allegations of Deceptive Practices
According to the FTC, Genshin Impact misled children, teens, and other players into spending large amounts of money on loot boxes with minimal chances of winning valuable prizes. The complaint, filed by the U.S. Department of Justice, accused Cognosphere of:
- Marketing Genshin Impact to children while collecting their personal information without proper consent, violating COPPA regulations.
- Misrepresenting the odds and costs of obtaining rare prizes in loot boxes.
- Employing a “challenging and confusing” purchasing system designed to obscure how much players were spending.
“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, especially when they target kids and teens.”
What Are Dark Patterns?
Dark patterns, or deceptive UI designs, are intentionally crafted to trick users into actions they might not take otherwise—often leading to unintended purchases. This issue has drawn increasing scrutiny from regulators, particularly in the gaming industry.
In 2022, Epic Games settled a similar case for $520 million over allegations that Fortnite used dark patterns. Beyond gaming, the FTC has also filed complaints against companies like Amazon for employing manipulative tactics to secure automatically renewing subscriptions.
Settlement Details and New Policies
While Cognosphere has agreed to the settlement, the company stated that it believes many of the FTC’s allegations are inaccurate. Despite this, it has committed to changes aimed at improving transparency and protecting younger players:
- Children under 16 will need parental consent to purchase loot boxes.
- Loot boxes will be available for direct purchase with real money alongside virtual currency.
- Loot box odds and exchange rates for multi-tiered virtual currencies will be clearly disclosed.
- Personal data collected from players under 13 will be deleted unless parental consent is obtained.
- Full compliance with COPPA regulations, including notice and consent requirements.
Cognosphere’s Response
“Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults,” Cognosphere said in a statement. “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.”
The company also pledged to roll out new age-gate features, parental consent protections, and more transparent in-game disclosures for U.S. players in the coming months.
A Turning Point for the Gaming Industry?
This settlement highlights the increasing scrutiny of monetization practices in the gaming industry, particularly those targeting children and teens. With regulatory pressure mounting, companies may be forced to rethink how they design and market in-game purchases.
As Genshin Impact prepares to implement these changes, the case serves as a reminder of the importance of ethical practices in gaming and the consequences of misleading players. Stay tuned for further updates as this story develops.
